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Mr. Love: I rise only because, for the third time, it has been suggested that the Bill is an electoral ploy. May I remind the hon. Gentleman that the young people concerned need to reach the age of 18 before they get access to their accounts?
Bob Spink: The hon. Gentleman is absolutely right, but the Bill is designed to influence parents and grandparents. That may be a good thing, because parents and grandparents will be able to invest in their children's future, and there can be no greater or better investment. That is one of the reasons why I shall support the Bill tonight. On balance, it is a good Bill, but I hope that we can find ways to improve it, and in
particular to widen its provisions so that those people who were born before 1 September 2002 can contribute to parallel funds.One of the ways in which the Bill is not good is that it extends means-testing, which is quite wrong. I am also disappointed that the Chancellor has not sought to focus on other more appropriate areas of welfare reform. At the very least, if he wishes genuinely to promote a savings culture and improve the savings ratio, he should simplify savings products rather than complicating them further.
I have made several negative points, but I acknowledge that if we can get the initiative right it may be worthy and something that we can all support. I shall try my best to make the scheme work for my constituents and their children, and on balance I shall support the Bill.
7.29 pm
Mr. Ian Liddell-Grainger (Bridgwater) (Con): Just for the record, I should mention for the fourth time that the Bill is an election ploy.
Unlike my hon. Friend the Member for Castle Point (Bob Spink), I do not think that I can praise the Liberal Democrats, because it would not be in my nature to do so. However, the hon. Member for Yeovil (Mr. Laws) gave us a pretty balanced view, on the face of it.
Norman Lamb: The hon. Gentleman agreed with him?
Mr. Liddell-Grainger: I would not go as far as that.
The Bill is interesting because it addresses the whole ethos of saving, which I suspect changed in this country during the late 1950s and the early 1960s. There used to be an idea that saving for the future represented pride in one's family and oneself. One of the Bill's biggest problems is that, regardless of the amount given to children, the extent to which it will be topped up, and the amount with which they end up at 18, the ethos of saving no longer exists among families. I am not suggesting that the Government can do anything about that, because they cannot, but they could help people to save in the longer term. I remember Post Office savings accounts from when I was a boy, but sadly, they will disappear in the near future, although again that is not the Government's fault. Surely it must be up to the Government to require people to save for the future. An enormous amount goes out for health and education from central Government. Surely the Bill could, and should, push down to people—normal people like us, with parents, children, grandchildren and great-grandchildren—the principle of saving for their future.
All Members of Parliament hold surgeries several times a month at which many people come to see us. We have all met families who we know will be unable to cope with the money that their children will receive when they turn 18. Such people might be on benefits or have enormous problems such as being single parents or having a disabled child. We know that children in such families will not be able to cope with their £900—perhaps more if money has been put aside—when they turn 18, and that they will face the biggest problems.
The Financial Secretary should consider carefully the Inland Revenue's role in the scheme. Perhaps the most powerful organisation in the country will be responsible for setting up accounts for people who cannot, or perhaps will not, cope with the money. The Inland Revenue will administer the scheme, because although the Government say that that will not happen, it will administer it indirectly. Additionally, it will know the background to children's upbringing and development when they turn 18. Surely it could encourage a situation in which the Government could get a child to invest the money rather than blowing it on fast women and booze, as many hon. Members ably put it. The success of the scheme will boil down to the fact that an 18-year-old who is given money will have the inclination to spend it.
Why should children save? Let us consider the problems that will be faced by people who will turn 18 in 10 years. They will face problems with pensions, the stock exchange, individual savings accounts, long-term investments and interest rates. Interest rates are not rising, so although there is less inflation, which is good, they are investment is not worth while. What possible reason would children have to invest rather than spending the money that they received when they turned 18? That will be true of people from all parts of society. Will 18-year-olds who receive £35,000 because their parents have put money aside for them invest that money in the stock exchange or a long-term scheme? The answer is probably not.
That takes me on to capping. Any person with financial savings knows that it is important to watch charges on savings carefully. The Government are right to want to cap charges, but that creates a problem because people in financial institutions must be persuaded to come up with policies and a reason to save money on behalf of their clients—the children. It is interesting to note that there has been an enormous amount of feedback from people who are worried about the suggested level of capping. One of the people who gave such feedback was, rather pithily, a representative of Virgin Money—that is probably the one thing that people will not get. He said:
- "How much will providers be allowed to charge? If the industry is allowed to raise charges substantially above the current 1 per cent. stakeholder level, the £250 the government is offering could soon be eaten up in charges."
The long-term ethos behind the Bill is to give children a start at the age of 18. Many hon. Members—some are in the Chamber but others are not—talked about children in care. As children in care do not receive child benefit, they will not be able to look forward to having more than £900 when they turn 18, but that represents a missed opportunity. Surely it would be better to pay
child benefit for children in care into the child trust fund to build up an amount that they could use when they turned 18. Such children face the problem of leaving care with virtually nothing behind them. Although we hope that they will have a good education and be able to stand on their own two feet, they do not, as was said early, have the seed capital to buy a Land Rover for the farm.The Bill could have addressed that problem, because the most vulnerable in society are those who could be most affected by such a measure—children in care are the most obvious category. Given the number of parents who have still not taken up tax credits—I am told that the figure is between 650,000 and 700,000 people—how do we know that people will take up the fund that they are given by the Inland Revenue? If children are not financially astute and aware and have not taken note of 18 years of statements about the investment, how will they know what to do in the future?
I shall move on to my final point, because I promised the Whip that I would not detain the House for too long. Let us consider how we could develop the scheme to secure people's futures. If children want to continue with their investment, who will advise them about the best route to take—the stock exchange, long-term investment, a bond or whatever? Children who want to continue to save and those whose parents continue to give them money will require advice. Given the Inland Revenue's unique ability to look into people's lives—I am not suggesting that there is a Big Brother syndrome—surely it could help people to invest in their long-term future and that of their families, which is important, because many people have children and indeed grandchildren. We have discovered today that the same is true of hon. Members.
The Bill has a lot going for it, such as encouraging long-term saving. However, it falls down because the Government have not thought through the ramifications of putting money in the pockets of people who will probably not have the financial ability to look after it themselves. What is the point of giving children money if they end up blowing it when they reach 18? The scheme should encourage people to save for the future so that they have a secure future.
7.38 pm
Mr. Paul Goodman (Wycombe) (Con): It is usual for any Member of the House with an interest in a Bill to declare that at the start of his or her speech. Although I have an interest in the Bill, I have difficulty declaring it at the start of my speech because it has already been declared for me. My hon. Friend the Member for Tatton (Mr. Osborne) made it clear that he, I, the Financial Secretary and the Chancellor—and, indeed, my hon. Friend the Member for Witney (Mr. Cameron)—have, or are expecting to have, children who will qualify for a child trust fund. [Interruption.] I hear rumblings from the far corner of the Chamber, so hon. Members might think that a cosy little club that favours the Bill outright is gathered around the Dispatch Box. My hon. Friend the Member for Tatton made it clear that we support the aim behind child trust funds to encourage a savings culture and the freedom, independence and dignity that go with that. That is why we will not divide the House and will try to improve the Bill in Committee.
Although we are discussing one of the Government's flagship Bills and main measures, Opposition Members have made more speeches, with four Back Benchers, than Labour Members, of whom only two have spoken.
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