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Ruth Kelly: As the hon. Member for Tatton (Mr. Osborne) explained, the main purpose of new clause 4 and the connected amendments is to reduce the age at which young people can have full legal control over their child trust fund accounts from 18 to 16. In Committee, he set out a case for allowing 16 and 17-year-olds in England, Wales and Northern Ireland to manage their child trust fund accounts, as 16 and 17-year-olds in Scotland will be able to. I do not believe that this is a devolution issue. The hon. Member for Angus (Mr. Weir) made an appropriate and fair point.
This is not a problem for the Government, but I accept that it is an opportunity for us. As the hon. Members for Tatton and for Yeovil (Mr. Laws) pointed out, one aim of the child trust fund scheme is to improve people's financial education. In Committee, I accepted the argument that we should use the opportunity to consider whether children of 16 and 17 in England, Wales and Northern Ireland should also be able to manage their child trust fund accounts. The hon. Member for Tatton also argued that, following financial education classes, children of 16 and 17 could well be better placed to make informed decisions than their parents.
3.45 pm
The hon. Gentleman was clear about his intention to restrict solely to child trust funds the change in the law allowing persons aged 16 and 17 in England, Wales and Northern Ireland to enter into contracts to buy or sell equities. I am persuaded by those arguments. Further to the points that he made, I can see that if young people take a responsible role in managing their accounts, that will encourage them to make better and more considered decisions about how to use those funds when they turn 18 and gain access to them. Lowering the age of majority for the child trust fund will help very young parents, who will be able to administer their own child's account once they are 16, not 18. However, new clause 4 and the related amendments are not drafted in the best way to achieve those objectives. I think that the hon. Member for Tatton would accept that the Government amendments will better allow 16 and 17-year-olds in England, Wales and Northern Ireland to manage their child trust fund accounts by making a simpler change to the Bill.
The Government amendments give children aged 16 in England, Wales and Northern Ireland the legal capacity to give instructions for the management of their child trust fund accounts. That does not alter the rule that there can be no withdrawals from the account until the age of 18. We do not want to give children wider capacity to engage in all sorts of investment contracts—nor, I believe, do the Opposition. The advantage of the amendment is that it does not require the alteration of any other statute, so the drafting is more direct.
I understand that the hon. Gentleman is concerned about the position of under-age parents and tabled new clause 5 to address the fact that parents under 18 would not be able to manage the child trust fund accounts of their children. Delegating parental responsibility would be a radical departure from general law, which provides that parental responsibility cannot, as a personal responsibility, be transferred. I hope that his concerns will be allayed by the Government amendments, which mean that parents over the age of 16 will be able to manage their children's accounts. Statistics show that the vast majority of under-age parents are between the ages of 16 and 18. However, it remains the case that, as I outlined in Committee, if a parent is under the age of 16, their child's account will be opened directly by the Inland Revenue and invested in a stakeholder product.
Government amendments Nos. 33 and 34 ensure that, at any one time, only one person can give instructions about managing a child trust fund account. Where the child is aged 16 or over, it will usually be the child—otherwise, it will be a responsible person such as a parent or someone else with parental responsibility. That is to prevent possible confusion where more than one person has parental responsibility.
On those grounds, I ask the hon. Member for Tatton to withdraw his new clause and associated amendments and to support the Government amendments.
The amendments tabled by the hon. Member for Yeovil would allow 16-year-olds entering full-time employment to access their funds. On Second Reading, he argued that there was no obvious reason why those 16-year-olds should have to wait two years before accessing the funds in their child trust fund accounts,
and he argued that again today. I am afraid that, as he suspected, that is a step too far for the Government. We have heard persuasive arguments that children should have to wait until they are 21, or even 25, to gain access to the funds, so that they are mature enough to decide how to use them. I do not accept that. The age of 18 strikes an appropriate balance, because it recognises that a child has reached the age of maturity, but does not allow undue access before then.
Mr. Laws: Does the Financial Secretary accept that young people who go into full-time work at the age of 16 assume enormous responsibilities, yet the Government's position is that they cannot exercise responsibility over the money in their child trust fund accounts and use it sensibly?
Ruth Kelly: I would not argue that in any particular case, whether a child is entering full-time employment at 16 or full-time education, they may or may not be responsible enough to exercise and make reasonable judgments about their future. An appropriate balance must be struck for the majority of children between allowing them to have access to the funds to further their goals, and forcing them to wait until they are sufficiently mature to make those decisions in their best interests. I do not think that the particular category of children who enter full-time employment at the age of 16 should be singled out. We must decide what is the appropriate age of maturity at which such decisions can be sensibly made. A balance must be struck, and that balance should be struck at the age of 18. For those reasons, the hon. Gentleman should accept the Government's case.
Mr. Osborne: This is an extraordinary moment that I must savour. I doubt whether in my time in opposition, which will of course be short-lived, I will again be able to point to an area of the law that I helped to change in such an obvious way. As a result of the Government amendments and the arguments that I advanced, 16 and 17-year-olds will now have the power to manage their own child trust fund accounts. I hope that that teaches them about providing savings for themselves, and that it helps them when they learn about child trust fund management in their classrooms. I look forward to 16 and 17-year-olds around the country writing to me to thank me for this new right that I have secured for them, but I suspect that I may have to wait a long time for the first letter.
The Financial Secretary is right that the Government amendments are far simpler and more elegant than mine. I merely took her at her word when she said that the matter was complex, so I went off to think of some complex thing that I had to do. As it turns out, it is simple. I am genuinely delighted that the Financial Secretary has listened and responded—she is a model, and other Ministers should follow her example—and secured the agreement of senior members of the Government Whips Office. I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
New Clause 6
Additional Contributions by Inland Revenue for Children in Care
'(1) If this section applies to a child the Inland Revenue must inform the account provider with whom a child trust fund is held by the child that this section applies to the child.
(2) If the account provider makes a claim to the Inland Revenue in accordance with regulations, the Inland Revenue must pay to the account provider such amount as is prescribed by regulations.
(3) The amount prescribed by regulations under subsection (2) shall be calculated so as to represent a percentage of the average value of subscriptions to child trust funds made during the preceding financial year.
(4) On receipt of payment the account provider must credit the child trust fund with the amount of the payment.
(5) This section applies to a child if—
(a) a child trust fund is held by the child, and
(b) the child was first an eligible child by virtue of section 2(1)(b).'.—[Mr. George Osborne.]
Brought up, and read the First time.
Mr. George Osborne: I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker : With this, it will be convenient to discuss the following: New clause 10—Additional contributions by Inland Revenue for children in care (No. 2)—
'(1) If this section applies to a child the Inland Revenue must inform the account provider with whom a child trust fund is held by the child that this section applies to the child.
(2) If the account provider makes a claim to the Inland Revenue in accordance with regulations, the Inland Revenue must pay to the account provider in respect of each year during which this section applies to the child such amount as is determined in accordance with the provisions of subsection (3).
(3) That amount shall be twelve times the minimum amount prescribed by regulations for any subscription.
(4) On receipt of the payment the account provider must credit the child trust fund with the amount of the payment.
(5) This section applies to a child if—
(a) a child trust fund is held by the child, and
(b) the child is an eligible child by virtue of section 2(1)(b).'.
Amendment No. 69, in page 4, line 34 [Clause 8], at end insert—
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