| Previous Section | Index | Home Page |
5 Jan 2004 : Column 156W—continued
Child Trust Funds
Mr. Gardiner: To ask the Chancellor of the Exchequer if he will offer incentives for contributions to child trust funds for those in receipt of child tax credit. [145698]
Ruth Kelly: The child trust fund will benefit all children while making sure that most help goes to those who need it most.
The Government endowments are a powerful incentive for a child's family to save. All eligible children will receive a Government endowment of £250. Children in households with a finalised claim to child tax credit (CTC) and income below the CTC threshold, currently £13,230, will receive an additional Government endowment of £250, making £500 in total. The Government will make further payments into accounts when children turn seven, and again, there will be an additional payment for the poorest children.
Mr. Gardiner: To ask the Chancellor of the Exchequer if he will establish a website dedicated to providing financial education for (a) children and (b) parents on child trust funds. [145699]
Ruth Kelly: The Inland Revenue is developing a dedicated website to provide a one-stop shop for information on the Child Trust Fund (CTF). It will include resources for a variety of audiences including parents, family members, children and teachers.
The Government will also work with the Financial Services Authority (FSA) to include the CTF in their consumer information activity. This will include incorporating the CTF into the FSA consumer website.
Mr. Gardiner: To ask the Chancellor of the Exchequer which parent will have legal responsibility for their child's trust fund should they divorce. [145701]
Ruth Kelly: The situation for the CTF will be a matter of general law.
When a married couple separates or divorces, both parents retain parental responsibility. They are required to make an arrangement at the time of the divorce or separation specifying the arrangements for the child, which in practice, covers matters like living arrangements and contact arrangements, but would be encouraged to seek advice and agreement on other issues which could include the child's Child Trust Fund.
The general law reflects the principle that parents should not be regarded as losing their position and ability to take decisions about their children, simply because they are in dispute with one another about a particular matter.
Mr. Gardiner: To ask the Chancellor of the Exchequer what scoping exercise his Department has conducted to assess the likely contributions those on low incomes will make to child trust funds. [145702]
Ruth Kelly: We have asked Deloitte, an independent consultancy, to carry out detailed quantitative and qualitative research on the impact of different charge cap structures on the Child Trust Fund (CTF) market. This research includes analysis of likely contributions into CTF accounts.
5 Jan 2004 : Column 157W
Mr. Gardiner: To ask the Chancellor of the Exchequer what will happen to contributions and interest payments made to a Child Trust Fund while the Inland Revenue is considering whether or not a child is eligible for the topped-up endowment. [145703]
Ruth Kelly: The Government will pay an initial endowment of £250 into every eligible child's CTF account soon after it is opened. Children in families receiving child tax credit (CTC) and with a household income below the CTC threshold (currently £13,230) will receive an additional £250. This will be added to the CTF account once the CTC award for that year is confirmed.
Any contributions made into the CTF account or interest arising on the funds in that account in the period between payment of the initial Government endowment and the additional endowment will remain in the CTF account and no tax charge will arise on any income and gains.
Mr. Gardiner: To ask the Chancellor of the Exchequer if he will allow investment companies to charge a basic administration fee for Child Trust Funds which would be topped-up by a performance-related administration fee. [145704]
Ruth Kelly: Draft regulations setting out the charges for Child Trust Fund accounts will be published during the passage of the Bill.
Mr. Gardiner: To ask the Chancellor of the Exchequer whether parents under 18 will be able to make decisions on trust funds for their children. [145705]
Ruth Kelly: In England Wales and Northern Ireland where a parent under the age of 18 has a child who is eligible for a CTF account it will not be possible for that parent to manage their child's CTF account. This is because although parents have parental responsibility for their children under the Children Act 1989 they do not have the legal capacity to enter into binding contracts to purchase equities.
As a result they are not able to make decisions about CTF accounts. In these circumstances the Inland Revenue will open a stakeholder account CTF account on behalf of the child. Once the parent reaches the age of 18, they will be able to assume responsibility for managing their child's CTF account.
The situation is different in Scotland where 16 year olds are entitled to make their own decisions about their property, including CTF accounts. This means that a parent aged between 16 and 18 in Scotland will be able to manage their child's CTF account.
5 Jan 2004 : Column 158W
Council Tax
Mr. Willetts: To ask the Chancellor of the Exchequer what the average council tax was (a) gross and (b) net of rebates as a percentage of equivalised disposable income in each income quintile for (i) pensioner households and (ii) non-pensioner households in 1997–98. [146086]
Ruth Kelly: The information requested falls within the responsibility of the National Statistician, who has been asked to reply.
Letter from Dr. Mike Pepper to Mr. David Willetts dated 5 January 2004:
- The National Statistician has been asked to reply to your recent question on the average gross and net council tax as a percentage of equivalised disposable income in each income quintile for (i) pensioner households and (ii) non-pensioner households in 1997–98 [146086]. I am replying in his absence.
- Estimates for council taxes are based on the analysis "The effects of taxes and benefits on household income 2001–02" produced by the ONS and published on the National Statistics website on October 21st 2003. The analysis can be obtained from the House of Commons Library or from the National Statistics website at: http://www.statistics.gov.uk/taxesbenefits. It includes measures of income inequality for the United Kingdom as a whole based on data from the Expenditure and Food Survey. This is a sample survey covering about 7,500 households in the UK and sample sizes are only sufficient to give approximate estimates for pensioner households.
- Pensioner households have been defined as those where the Head of Household is retired or unoccupied and aged 65 or more and male, or 60 years of age or more and female, and economically inactive. Answers to other recent parliamentary questions about council tax broken down by household type, relating to 2001–02, have used the definition of the Household Reference Person rather than the Head of Household. Detailed information on the definition of these identifiers can be found on the National Statistics website.
- Council tax is not paid in Northern Ireland. Estimates for 1997–98 for Great Britain are shown in the following table for gross and net council tax as a percentage of disposable income for all pensioner households (single and couples) and non pensioner households, and for all households. Equivalised income has been used to divide households into quintiles. However, the estimates of Council tax as a percentage of income use unequivalised rather than equivalised income (i.e. without the adjustment for household size). Equivalisation is a standard methodology that takes into account the size and composition of households and adjusts their incomes to recognise differing demands on resources. It is used for ranking households in particular. It is more usual to analyse unequivalised income in relation to expenditure items (which are unequivalised) such as Council tax. However, if the same equivalisation factors were applied to income and expenditure, the factors would cancel each other out and the percentages would remain the same.
(41) Household reference person is economically inactive and over minimum state pension age.
(42) Council tax is not paid in Northern Ireland
(43) Equivalised disposable income at the boundary point between two quintile groups.
(44) Net council taxes after deducting benefits and discounts.
Source:
Office for National Statistics, based on the analysis 'The effects of taxes and benefits on household income,' published on the National Statistics website
5 Jan 2004 : Column 159W
Mr. Willetts: To ask the Chancellor of the Exchequer what the (a) average equivalised disposable income and (b) gross council tax in money terms was for each income quintile in 2001–02; and if he will make a statement. [146153]
Ruth Kelly: The information requested falls within the responsibility of the National Statistician, who has been asked to reply.
Letter from Mike Pepper to Mr. David Willetts, dated 5 January 2004:
- The National Statistician has been asked to reply to your recent question asking for average equivalised disposable income and gross council tax for each income quintile group in 2001–02 [146153]. I am replying in his absence.
- Estimates in the following table are produced from the Office for National Statistics' analysis "The effects of taxes and benefits on household income" published on the National Statistics website on October 21st 2003 at http://www.statistics.gov.uk/taxesbenefits. The analysis includes measures of income inequality for the United Kingdom as a whole based on data from the Expenditure and Food Survey. This is a sample survey covering about 7,500 households in the UK and sample sizes are only sufficient to give approximate estimates. In particular, results for the lowest quintile are less reliable than for others because of greater variability and because it includes households with members in a state of occupational transition.
- The table shows for 2001–02, the average disposable income and average gross council tax paid by all households in Great Britain and for each income quintile group where households are ranked by equivalised disposable income. Although equivalised income has been used to divide households into quintiles, the estimates of average disposable income and average gross council tax are unequivalised. Equivalisation is a standard methodology that takes into account the size and composition of households and adjusts their incomes to recognise differing demands on resources, and is used for ranking households in particular. However, it is more usual to analyse unequivalised income in relation to an expenditure item such as Council tax which is not equivalised.
(45) Council tax is not paid in Northern Ireland
(46) Boundary point between equivalised disposable income quintiles
Source:
Office for National Statistics, based on the analysis 'The effects of taxes and benefits on household income', published on the ONS website.
5 Jan 2004 : Column 160W
| Next Section | Index | Home Page |