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'regulations under subsection (2) or determined in accordance with the provisions of section [uprating of Inland Revenue contributions in line with inflation]'.

Amendment No. 13, in page 6, line 14 [Clause 10], at end insert—

'(1A) Regulations under subsection (1) may prescribe a further contribution of nil in respect of any child trust fund held by a child born on or before 31st August 2002.'.

Amendment No. 68, in page 6, line 15 [Clause 10], leave out subsection (2) and insert—

'(2) Regulations under this subsection shall prescribe the initial amounts of contributions payable under subsection (1), which shall be expressed as amounts payable to children reaching a

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specified age during any period beginning with 1st April and ending with 31st March of the following calendar year ("the original contributions").'.

Mr. Osborne: I thank the Minister for her remarks about new clause 1 and her commitment to looking again at the terminal illness clause. I join my hon. Friend the Member for Witney (Mr. Cameron) in his remarks about considering the scheme for parents with disabled children.

New clauses 3, 8 and 9 and the consequential amendments would allow the responsible person to open a child trust fund for a child born before 1 September 2002 but without the initial Government contribution or any top-up at age seven—so my proposal should not add significantly to the burden on the taxpayer; I would not have secured the support of my right hon. and hon. Friends in the Treasury team otherwise.

Parents could set up a child trust fund account for an older child for savings of up to £1,200 a year, with a tax-free sum for the child when he or she turns 18. Amendments Nos. 8, 11, 12 and 13 make it clear that there would not be a Government contribution. In Committee, I restricted that arrangement to children born since 1992, who are not now teenagers. That arrangement drew some criticism—particularly from the hon. Member for Hastings and Rye (Mr. Foster), who commented:

"I support the principles that the hon. Member for Tatton displays in wishing to extend the benefits of this excellent scheme, which I wholly support. However, he is too modest in seeking . . . to extend it only to those born after 1992. If we want to benefit all children, we should extend it to all children. For that reason, I shall not support an amendment that simply creates a divide different from that which already exists."—[Official Report, Standing Committee A, 6 January 2004; c. 25.]

I was happy to heed the hon. Gentleman, so the proposed amendments broaden the scope of the scheme, opening it up to all children born after 1988. By the time the scheme is introduced, it will be open to all children under the age of 18. The hon. Member for Hastings and Rye is not in his place but I look forward to his support when he reads my comments in Hansard tomorrow.

The benefits of extending trust funds to all children are obvious. The Government want to encourage children to save, and parents to save for their children, which is wholly admirable—but why restrict that ambition to newborn children? Why not give parents the opportunity—not force them—to open trust funds for older children who were not lucky enough to be born when the scheme was up and running? That would help people such as the Minister and myself, who will have children who qualify and children who do not. We may find it difficult to explain, when our children reach 18, why one has a child trust fund and another does not.

The Minister and the hon. Member for Yeovil (Mr. Laws) have made the point that other savings vehicles are available, but as my hon. Friend the Member for Witney said, that argument could be deployed against the entire concept of a child trust fund—the beauty of which is their simplicity and the fact that all children could have one. Such funds allow parents to tell their children, "You're all getting the same, except the initial

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contribution." Parents with older children might be encouraged to save because that would piggyback on the Government's publicity campaign that the Financial Secretary is planning to coincide with the launch of child trust funds. My proposal would also remove the potential disincentive for parents such as myself, who may not want to single out one child for special treatment, and could be discouraged if they have some children who qualify and some who do not.

My proposal has widespread cross-party support, such as that of the Treasury Sub-Committee, whose excellent report concluded:

"We consider that the natural reaction of parents with children born on either side of the cut-off date will be to try to see that they are treated equally. This may mean that those parents with sufficient financial resources will make additional provision for children who do not qualify for a Child Trust Fund account. We believe they would be encouraged to do this if Child Trust Fund accounts, identical in all respects save the absence of a Government endowment, were available for their other children . . . In light of the evidence that the costs of the Treasury of the extra tax relief afforded by Child Trust Funds is negligible, we recommend that consideration be given to extending the availability of Child Trust Fund accounts but without Government endowments, to children before 1 September 2002."

Both Labour Members who spoke on Second Reading also supported my proposal. I must say that as this is Government flagship policy, the Labour Whips did poorly in fielding only two speakers—and half the Labour Members in the Chamber at the moment are Whips.

In Committee, the proposed change was supported by the hon. Member for Dumbarton (Mr. McFall), the Chairman of the Treasury Select Committee, and by the hon. Member for Hastings and Rye—and I have overcome his objection that my amendment was not ambitious enough. The initial objections of the Financial Secretary were difficult to understand—that is a polite way of putting it. They were not made on the grounds of cost because the hon. Lady had already told the Sub-Committee:

"We had to make a costing assumption for the purposes of the Red Book and we came up with the conclusion that the cost of the extra tax relief"—

for the entire scheme—

would be negligible."

The cost of extending the scheme to older children would also be negligible.

The Financial Secretary deployed a curious argument to do with the administrative burdens on financial providers. She said on Second Reading:

"We have looked at that"—

that is, the proposed extension of the scheme—

"extremely carefully, and I am disappointed to tell the House that the administrative burden on providers of allowing all children from previous cohorts to benefit from an identical tax-free vehicle is disproportionate to the benefits that would be offered."

The hon. Member for Hastings and Rye intervened to ask:

"Is that not a problem anyway? As time goes on, greater numbers will apply, so in 18 years' time people would have to deal with that volume of applications in any event."

The Financial Secretary had to concede that the hon. Gentleman was right and that

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"a greater number of children will have such accounts over time, but providers have made it quite clear that the scheme needs to be phased in."—[Official Report, 15 December 2003; Vol. 415, c. 1394.]

I do not know which financial providers the Minister had spoken to, but all the financial providers and trade organisation representatives to whom I spoke were in favour of extending child trust funds to elder children.

The Minister's argument on Second Reading was comprehensively knocked down by the chief executive of Children's Mutual, David White, who wrote to all members of Standing Committee A:

"The Minister in her remarks at Second Reading argued that one reason for not extending the Child Trust Fund to ineligible children is that it would impose a burden on providers. We would be happy to work with the Government on how any administrative burden could be overcome, something we believe to be possible."

Thankfully, the Minister listened to the arguments advanced in Committee with the help of some of the more vocal Labour Members, and said:

"Having heard the strength of feeling on the matter, I am perfectly willing to talk to providers to see whether they think that there would be a gap that needed addressing."

She continued:

"I undertake to ask providers whether they believe that such unmet demand exists or is likely to exist so that we can review the situation in the future."—[Official Report, Standing Committee A, 6 January 2004; c. 30.]

The Minister was true to her word. I happened to bump into David White in the Commons about two days later. He said, "Thanks very much for what's going on in Committee, because the Inland Revenue has already been in touch with Children's Mutual, and no doubt others, and is working up a scheme." He confirms those comments in the briefing that his company has provided to all Members for this debate, which says:

"We are delighted that the Government has agreed to consider opening up the Child Trust Fund wrapper to families of children born before September 2002 and look forward to continuing discussions on this development."

I have tabled the new clause and the amendments so that we can discuss these matters now, on Report. I confess that they are much less elegant than the amendments that I tabled in Committee, but I was told that I had to come up with a different device so that we could discuss the same subject on Report. I have come up with a slightly less elegant version of what we did in Committee, but it is really only a device for getting some assurances from the Minister that discussions are ongoing, that she is talking to the providers, and that she is prepared to identify the regulatory changes that are needed, if any. She has indicated that none may be necessary. She may be right about that, but will she give me some specific assurances? That is the reason for all these amendments. If some regulatory changes are required, will she give an undertaking to make them?

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