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Mr. Dawson: Will the hon. Gentleman take into consideration the fact that the poorest 30 per cent. of students going into higher education will have substantial grant assistance? Might that not complement the asset that they will have in the child trust fund?

Mr. Laws: I accept the veracity of the hon. Gentleman's point, but it does not address my concern that Government policy appears to be heading in two contradictory directions. On one hand, there is the desire and willingness for people to have large financial liabilities at the age of 18, and the Government say, "Don't worry, you can pay it off through your income. You'll earn a lot of money over your life in employment. You shouldn't be worried about having the debt." On the other hand, the Government say that it is vital to give children a financial asset at the beginning of their working life. Those two things are clearly contradictory.

The final objective of the Bill was to encourage parents and children to develop the savings habit. That implies that the Government expect additional saving as a consequence of the Bill; otherwise the Bill would simply shift the savings habit from one savings vehicle to another. I have not seen a shred of evidence that suggests that the Financial Secretary knows whether the Bill will increase saving. Not only has she been unwilling to put a target on the additional savings, but she has been unwilling even to estimate the extent to which the Bill will increase saving. That suggests a certain scepticism on the part of the Government, or at the very least uncertainty about whether their policy will deliver one of the stated objectives.

The Financial Secretary will say that the Government have received many representations from individuals and corporate entities welcoming the Bill. As I pointed out earlier, that is not surprising, given that the financial market providers ought to gain business from the activity envisaged in it.

Lest it seem that these are only Liberal Democrat objections, I want to bring the House back to some of the comments that have been made by independent bodies that have scrutinised the Bill—[Interruption.] They include not only the Institute for Fiscal Studies, as the hon. Member for Tatton suggests, but the Treasury Sub-Committee, whose Chairman commented that the proposals in the Bill were likely to be of most benefit to better-off families. That must surely worry the Financial Secretary.

In connection with the Government's four objectives, I draw the Financial Secretary's attention to comments made by the Institute for Fiscal Studies. In its report of October 2001, it evaluated the savings gateway and the child trust fund and concluded that


The Minister should take the IFS's representations seriously, because I can think of no more independent and credible body that has made representations to the Government on the Bill. Its criticisms have covered a

3 Feb 2004 : Column 729

wide variety of areas. For example, it also questions whether the educational aspects of the Bill are best delivered through the child trust fund or could be better delivered through improved financial education.

In its paper to the Treasury Sub-Committee in November 2003, the IFS summed up its position by saying that the policy has not been satisfactorily justified, and went on to say:


That takes me to my final point. Several hon. Members remarked on how valuable the policy will be in dealing with child poverty, which was one of the reasons that the Prime Minister cited in launching it a couple of years ago. However, they have all entirely missed the fact that it will not deal with child poverty at all, because the assets will not be available until the age of 18. That is presumably why the IFS, in its "green Budget" of 2002, concluded its assessment of asset-based welfare by saying:


Perhaps the most important reason why Liberal Democrat Members will vote against the Bill is that we question not only whether it will deliver on its objectives, but whether this is the best use of a very large amount of Government money, starting at £250 million per year and probably going up to £350 million or £400 million per year. If the Government are really concerned about child poverty, as the Prime Minister suggested when he launched the policy, the money should be focused on the early years, where the roots of inequality in our society are based.

Mr. Dawson: Is not the hon. Gentleman overlooking the generational nature of poverty, whereby one poor generation begets another; and is not this policy entirely complementary to the work that the Government are doing on Sure Start, and in many other respects, to help people out of poverty at a crucial stage of their lives?

Mr. Laws: It is of far less importance than the other good work that the Government are doing in trying to tackle inequalities of opportunity and child poverty, particularly in the early years. At a time when so many of the population, including many children living in poverty, do not have access to services such as Sure Start, the Government's first priority should be to extend the provision of those services, not to launch a Bill whose policy is supposed to be evidence based, but where evidence that the policy will work is in such short supply.

3 Feb 2004 : Column 730

6.40 pm

Mr. Weir: The Scottish National party supports the Bill. Perhaps some of the claims for it have been overplayed, but it is none the less an interesting idea and an interesting way forward, and we have supported it throughout its various stages.

However, there are still some concerns about the Bill, and I share some of the concerns of the hon. Member for Yeovil (Mr. Laws), although not his opposition to it. I raised on Second Reading, in Committee and again today the whole question of access for lower-income families. We have seen movement on many areas from the Financial Secretary—or potential movement, as we have yet to see the outcome, which will be interesting over the next year or so. We even saw perhaps a slight indication of movement on the question of deposit-based accounts, but the absence of those will be a serious drawback for low-income families.

We live in a society in which hundreds of thousands of low-income families do not even have a bank account. Those people are to be encouraged to make their first financial investment an equity-based one, which many will not understand. As the Financial Secretary said in Committee, if my understanding is correct, most of the selling will be direct, and little will be done through face-to-face interviews. I fear that many people will end up with an investment that they do not understand, and in which they will be unable to invest in future years.

As to whether the scheme is a success, the real question, as the Treasury Sub-Committee said, and as was generally accepted on Second Reading, is whether parents will invest in these funds in the future. The absence of a building society account option will mean that many low-income families will not be able to invest, and it will fail on that level.

Secondly, the scheme may fail in relation to the minimum investment being set at £10. We discussed in Committee setting the minimum at anything between £5 and £20. For someone with two or three children, living on a low income, £10 will be an impossible target to meet on a regular monthly basis. As a result, in many cases the £250 initial investment will be all that is invested. That, too, will be judged a failure of the policy.

As I said, the policy merits support, and we will support it tonight, but I ask the Minister to review it as it goes forward. We must look at how lower-income families deal with it. If we find that there is no addition to the initial investment, and that many low-income families are not able to top it up as we would desire them to do, we will need to look again at the policy. We will need to consider again whether alternative investments, which they understand, with which they are happy, and which provide them with access to saving and to the whole banking and insurance business, would be better for those families. Although we have reservations, we support the Bill, and we look forward to seeing how the scheme works out in the future.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 415, Noes 45.

3 Feb 2004 : Column 731

Division No. 43
[6:43 pm


AYES


Abbott, Ms Diane
Ainger, Nick
Ainsworth, Bob (Cov'try NE)
Ainsworth, Peter (E Surrey)
Alexander, Douglas
Allen, Graham
Anderson, rh Donald (Swansea E)
Anderson, Janet (Rossendale & Darwen)
Armstrong, rh Ms Hilary
Atherton, Ms Candy
Atkins, Charlotte
Atkinson, David (Bour'mth E)
Austin, John
Bailey, Adrian
Baird, Vera
Baldry, Tony
Barker, Gregory
Barnes, Harry
Barron, rh Kevin
Battle, John
Bayley, Hugh
Beard, Nigel
Beckett, rh Margaret
Begg, Miss Anne
Beggs, Roy (E Antrim)
Bell, Sir Stuart
Bellingham, Henry
Bennett, Andrew
Berry, Roger
Best, Harold
Betts, Clive
Blackman, Liz
Blizzard, Bob
Borrow, David
Boswell, Tim
Bottomley, Peter (Worthing W)
Bottomley, rh Virginia (SW Surrey)
Bradley, rh Keith (Withington)
Bradley, Peter (The Wrekin)
Brazier, Julian
Brennan, Kevin
Brown, rh Gordon (Dunfermline E)
Brown, rh Nicholas (Newcastle E Wallsend)
Brown, Russell (Dumfries)
Browne, Desmond
Browning, Mrs Angela
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, Andy
Burns, Simon
Burnside, David
Burt, Alistair
Byers, rh Stephen
Cameron, David
Campbell, Alan (Tynemouth)
Campbell, Mrs Anne (C'bridge)
Campbell, Ronnie (Blyth V)
Caplin, Ivor
Caton, Martin
Cawsey, Ian (Brigg)
Challen, Colin
Chapman, Ben (Wirral S)
Chapman, Sir Sydney (Chipping Barnet)
Chaytor, David
Clapham, Michael
Clark, Mrs Helen (Peterborough)
Clark, Dr. Lynda (Edinburgh Pentlands)
Clark, Paul (Gillingham)
Clarke, rh Kenneth (Rushcliffe)
Clarke, rh Tom (Coatbridge & Chryston)
Clelland, David
Clifton-Brown, Geoffrey
Cohen, Harry
Colman, Tony
Conway, Derek
Cook, Frank (Stockton N)
Cook, rh Robin (Livingston)
Cooper, Yvette
Corbyn, Jeremy
Corston, Jean
Cox, Tom (Tooting)
Cranston, Ross
Crausby, David
Cruddas, Jon
Cryer, Ann (Keighley)
Cryer, John (Hornchurch)
Cummings, John
Cunningham, rh Dr. Jack (Copeland)
Cunningham, Tony (Workington)
Curtis-Thomas, Mrs Claire
Dalyell, Tam
Darling, rh Alistair
Davey, Valerie (Bristol W)
David, Wayne
Davidson, Ian
Davies, rh Denzil (Llanelli)
Davies, Geraint (Croydon C)
Davies, Quentin (Grantham & Stamford)
Dawson, Hilton
Dean, Mrs Janet
Denham, rh John
Dhanda, Parmjit
Dismore, Andrew
Dobbin, Jim (Heywood)
Dobson, rh Frank
Donohoe, Brian H.
Doran, Frank
Dorrell, rh Stephen
Dowd, Jim (Lewisham W)
Duncan, Peter (Galloway)
Eagle, Angela (Wallasey)
Eagle, Maria (L'pool Garston)
Edwards, Huw
Ellman, Mrs Louise
Ennis, Jeff (Barnsley E)
Etherington, Bill
Evans, Nigel
Ewing, Annabelle
Fabricant, Michael
Farrelly, Paul
Fisher, Mark
Fitzsimons, Mrs Lorna
Flint, Caroline
Flook, Adrian
Flynn, Paul (Newport W)
Foster, rh Derek
Foster, Michael (Worcester)
Foster, Michael Jabez (Hastings & Rye)
Foulkes, rh George
Francis, Dr. Hywel
Francois, Mark
Gale, Roger (N Thanet)
Garnier, Edward
George, rh Bruce (Walsall S)
Gerrard, Neil
Gibson, Dr. Ian
Gillan, Mrs Cheryl
Gilroy, Linda
Godsiff, Roger
Goggins, Paul
Greenway, John
Grieve, Dominic
Griffiths, Jane (Reading E)
Griffiths, Win (Bridgend)
Grogan, John
Hain, rh Peter
Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Hamilton, David (Midlothian)
Hamilton, Fabian (Leeds NE)
Hammond, Philip
Hanson, David
Harris, Tom (Glasgow Cathcart)
Havard, Dai (Merthyr Tydfil & Rhymney)
Hawkins, Nick
Healey, John
Heathcoat-Amory, rh David
Henderson, Doug (Newcastle N)
Henderson, Ivan (Harwich)
Hendrick, Mark
Hepburn, Stephen
Heppell, John
Hermon, Lady
Hesford, Stephen
Hewitt, rh Ms Patricia
Heyes, David
Hill, Keith (Streatham)
Hinchliffe, David
Hoban, Mark (Fareham)
Hoey, Kate (Vauxhall)
Hood, Jimmy (Clydesdale)
Hoon, rh Geoffrey
Hope, Phil (Corby)
Hopkins, Kelvin
Howarth, rh Alan (Newport E)
Howarth, George (Knowsley N & Sefton E)
Howarth, Gerald (Aldershot)
Howells, Dr. Kim
Hoyle, Lindsay
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Hunter, Andrew
Iddon, Dr. Brian
Illsley, Eric
Ingram, rh Adam
Irranca-Davies, Huw
Jack, rh Michael
Jackson, Glenda (Hampstead & Highgate)
Jackson, Helen (Hillsborough)
Jackson, Robert (Wantage)
Jamieson, David
Jenkin, Bernard
Jenkins, Brian
Johnson, Alan (Hull W)
Jones, Helen (Warrington N)
Jones, Jon Owen (Cardiff C)
Jones, Kevan (N Durham)
Jones, Lynne (Selly Oak)
Jones, Martyn (Clwyd S)
Jowell, rh Tessa
Joyce, Eric (Falkirk W)
Keen, Alan (Feltham)
Keen, Ann (Brentford)
Kelly, Ruth (Bolton W)
Kemp, Fraser
Key, Robert (Salisbury)
Khabra, Piara S.
Kidney, David
Kilfoyle, Peter
King, Andy (Rugby)
Knight, rh Greg (E Yorkshire)
Knight, Jim (S Dorset)
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Lait, Mrs Jacqui
Lammy, David
Laxton, Bob (Derby N)
Lazarowicz, Mark
Lepper, David
Leslie, Christopher
Levitt, Tom (High Peak)
Lewis, Ivan (Bury S)
Lewis, Dr. Julian (New Forest E)
Liddell, rh Mrs Helen
Liddell-Grainger, Ian
Lidington, David
Linton, Martin
Lloyd, Tony (Manchester C)
Llwyd, Elfyn
Loughton, Tim
Love, Andrew
Lucas, Ian (Wrexham)
Luff, Peter (M-Worcs)
Luke, Iain (Dundee E)
Lyons, John (Strathkelvin)
McAvoy, Thomas
McCabe, Stephen
McCartney, rh Ian
McDonagh, Siobhain
MacDonald, Calum
McDonnell, John
MacDougall, John
McFall, John
McGuire, Mrs Anne
McIntosh, Miss Anne
McIsaac, Shona
Mackay, rh Andrew
McKechin, Ann
McKenna, Rosemary
McLoughlin, Patrick
McNulty, Tony
MacShane, Denis
Mactaggart, Fiona
McWalter, Tony
McWilliam, John
Mahmood, Khalid
Mahon, Mrs Alice
Mallaber, Judy
Mann, John (Bassetlaw)
Marris, Rob (Wolverh'ton SW)
Marsden, Gordon (Blackpool S)
Marshall, David (Glasgow Shettleston)
Marshall, Jim (Leicester S)
Martlew, Eric
Mawhinney, rh Sir Brian
Meacher, rh Michael
Meale, Alan (Mansfield)
Merron, Gillian
Michael, rh Alun
Milburn, rh Alan
Miliband, David
Miller, Andrew
Mitchell, Andrew (Sutton Coldfield)
Moffatt, Laura
Mole, Chris
Moonie, Dr. Lewis
Moran, Margaret
Mountford, Kali
Mudie, George
Munn, Ms Meg
Murphy, Denis (Wansbeck)
Murphy, Jim (Eastwood)
Murrison, Dr. Andrew
Naysmith, Dr. Doug
Norman, Archie
O'Brien, Bill (Normanton)
O'Hara, Edward
Olner, Bill
O'Neill, Martin
Osborne, George (Tatton)
Ottaway, Richard
Owen, Albert
Page, Richard
Palmer, Dr. Nick
Paterson, Owen
Pearson, Ian
Perham, Linda
Picking, Anne
Pickthall, Colin
Pike, Peter (Burnley)
Plaskitt, James
Pollard, Kerry
Pond, Chris (Gravesham)
Pope, Greg (Hyndburn)
Pound, Stephen
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Price, Adam (E Carmarthen & Dinefwr)
Prosser, Gwyn
Purchase, Ken
Quin, rh Joyce
Quinn, Lawrie
Rapson, Syd (Portsmouth N)
Raynsford, rh Nick
Redwood, rh John
Reed, Andy (Loughborough)
Robertson, Angus (Moray)
Robertson, Hugh (Faversham & M-Kent)
Robertson, John (Glasgow Anniesland)
Robinson, Geoffrey (Coventry NW)
Roche, Mrs Barbara
Rooney, Terry
Rosindell, Andrew
Ross, Ernie (Dundee W)
Roy, Frank (Motherwell)
Ruane, Chris
Ruddock, Joan
Ruffley, David
Ryan, Joan (Enfield N)
Salmond, Alex
Salter, Martin
Sarwar, Mohammad
Savidge, Malcolm
Sawford, Phil
Sedgemore, Brian
Selous, Andrew
Shaw, Jonathan
Sheerman, Barry
Shephard, rh Mrs Gillian
Sheridan, Jim
Short, rh Clare
Simmonds, Mark
Simpson, Alan (Nottingham S)
Skinner, Dennis
Smith, rh Andrew (Oxford E)
Smith, rh Chris (Islington S & Finsbury)
Smith, Geraldine (Morecambe & Lunesdale)
Smith, John (Glamorgan)
Smith, Llew (Blaenau Gwent)
Smyth, Rev. Martin (Belfast S)
Soames, Nicholas
Soley, Clive
Southworth, Helen
Spink, Bob (Castle Point)
Squire, Rachel
Stanley, rh Sir John
Starkey, Dr. Phyllis
Steinberg, Gerry
Stewart, David (Inverness E & Lochaber)
Stewart, Ian (Eccles)
Stinchcombe, Paul
Strang, rh Dr. Gavin
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Gerry
Swayne, Desmond
Swire, Hugo (E Devon)
Tami, Mark (Alyn)
Tapsell, Sir Peter
Taylor, David (NW Leics)
Taylor, Ian (Esher)
Taylor, John (Solihull)
Taylor, Dr. Richard (Wyre F)
Taylor, Sir Teddy
Thomas, Simon (Ceredigion)
Tipping, Paddy
Todd, Mark (S Derbyshire)
Touhig, Don (Islwyn)
Tredinnick, David
Trickett, Jon
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)
Turner, Dr. Desmond (Brighton Kemptown)
Turner, Neil (Wigan)
Tynan, Bill (Hamilton S)
Tyrie, Andrew
Vaz, Keith (Leicester E)
Vis, Dr. Rudi
Walley, Ms Joan
Walter, Robert
Ward, Claire
Wareing, Robert N.
Waterson, Nigel
Watkinson, Angela
Watson, Tom (W Bromwich E)
Watts, David
Weir, Michael
White, Brian
Whitehead, Dr. Alan
Wicks, Malcolm
Wiggin, Bill
Williams, Hywel (Caernarfon)
Wills, Michael
Winnick, David
Winterton, Ms Rosie (Doncaster C)
Wishart, Pete
Woodward, Shaun
Woolas, Phil
Worthington, Tony
Wright, Anthony D. (Gt Yarmouth)
Wright, David (Telford)
Wright, Tony (Cannock)
Wyatt, Derek
Young, rh Sir George

Tellers for the Ayes:


Vernon Coaker and
Jim Fitzpatrick


NOES


Allan, Richard
Baker, Norman
Barrett, John
Beith, rh A. J.
Brake, Tom (Carshalton)
Breed, Colin
Brooke, Mrs Annette L.
Bruce, Malcolm
Burstow, Paul
Cable, Dr. Vincent
Calton, Mrs Patsy
Campbell, rh Sir Menzies (NE Fife)
Carmichael, Alistair
Chidgey, David
Cotter, Brian
Davey, Edward (Kingston)
Doughty, Sue
Foster, Don (Bath)
George, Andrew (St. Ives)
Gidley, Sandra
Green, Matthew (Ludlow)
Hancock, Mike
Harris, Dr. Evan (Oxford W & Abingdon)
Holmes, Paul
Jones, Nigel (Cheltenham)
Keetch, Paul
Kirkwood, Sir Archy
Lamb, Norman
Laws, David (Yeovil)
Oaten, Mark (Winchester)
Öpik, Lembit
Pugh, Dr. John
Reid, Alan (Argyll & Bute)
Rendel, David
Russell, Bob (Colchester)
Sanders, Adrian
Smith, Sir Robert (W Ab'd'ns & Kincardine)
Stunell, Andrew
Taylor, Matthew (Truro)
Teather, Sarah
Thurso, John
Tonge, Dr. Jenny
Tyler, Paul (N Cornwall)
Webb, Steve (Northavon)
Williams, Roger (Brecon)

Tellers for the Noes:


Richard Younger-Ross and
Mr. David Heath

Question accordingly agreed to.

3 Feb 2004 : Column 734

Bill read the Third time, and passed.


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