House of Commons Standing Cttee on Delegated Legislation (pt 2)

Draft Child Trust Funds (Amendment) Regulations 2005

The Chairman: Order. We are not here to debate the general terms. The hon. Gentleman must keep within the scope of the regulations and return to child trust funds.

Mr. Osborne: Thank you, Mrs. Adams, but I am explaining why such an instrument is necessary. Because the migration has not taken place and there are still people in receipt of income support and jobseeker's allowance child elements, which was not supposed to be the case this year, the Government are having to amend the legislation. Perhaps I could get from the Financial Secretary some indication of how long he thinks the statutory instrument will be required—in other words, exactly when will people be migrated on to the child tax credit? Presumably the statutory instrument is time-limited, given that in two or three years' time no-one will fall into its scope, so when will the process be complete? He said, using cryptic language, that ''for a while longer than was envisaged''—that was the exact phrase he used in his opening speech—people would still be in receipt of the child element of the benefits. He said the process had been ''slowed down''—again I quote from his opening remarks. Perhaps he can tell us when exactly he expects the process to be completed.

Can the hon. Gentleman tell us why the process is necessary at all? I thought all new claimants of income support and jobseeker's allowance were no longer awarded the child element, but were immediately given child tax credit, in which case they would automatically be eligible for the child trust funds. That is what the Government said last April. Since the statutory instrument applies only to people who become eligible for a child trust fund after this April, will anyone qualify for it? He must be envisaging that the parents of children born after April this year will still be given the child element of those two benefits, rather than the new child tax credit. I thought that, as a first step in the process, the Government had said

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that new people who were eligible would be given the child tax credit. How many people does he expect to be caught by the problem we are discussing today?

Will the Financial Secretary also explain, to satisfy my intellectual curiosity, why he is using the provisions of section 10 of the Child Trust Funds Act instead of amending section 9? He is using the ''further'' element, which was designed for the payment to people at the age of seven. The definition of the means-tested element that went to newborn children was called the ''supplementary'' element, I remember from my dealings with the Act. Have the Government had to use provisions in the Act that were really designed for payments to older children to correct their error?

Finally, I ask the hon. Gentleman about the administration and advertising of child tax credits. Perhaps I should have declared an interest: I, or rather my daughter, will be a recipient of a child trust fund, although my son will not. That is one of the issues that was discussed in Committee. We have received a letter from Gordon Brown telling us that we will get the child trust fund payment for my daughter, but we have not received a voucher.

Some people in Committee, including myself, raised the somewhat coincidental timing—hundreds of thousands of cheques will go out in April 2005. Will the Financial Secretary, who has used the opportunity to talk broadly about child trust funds and their administration, say something about what will happen if a general election campaign is underway in April? Will Government advertising, which I understand is normally suspended during an election campaign, be suspended at the same time as child trust funds are being launched? If so, what impact does the Financial Secretary think the suspension will have on parents' ability to understand what the child trust fund is, what they are supposed to do with the cheque or voucher that they receive and what they need to do to contact a provider? Will he give us a glimpse of the contingency planning for the unlikely event that a general election campaign is under way in April?

10.11 am

Mr. Geoffrey Robinson (Coventry, North-West) (Lab): Welcome to the Chair, Mrs. Adams. I do not intend to delay the Committee for long. I note that the Liberal party, which strangely dissented from the legislation, is absent from the Committee. They are dissenting absentees.

I welcome the regulations, which constitute an amendment to the 2004 Act. All Labour Members and, in fairness, many Conservatives have welcomed the measure as imaginative and constructive. As my hon. Friend the Financial Secretary rightly said, it will give every child a start in life, encourage saving and help to achieve a much-needed change in the attitude to saving in this country.

It would not be right to get into the nit-picking technical points that, to my surprise, the Conservative spokesman got into. I ask simply whether my hon. Friend the Financial Secretary can assure us that

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everybody who needs to be covered will be covered once the regulations have been adopted, as I am sure they will be. There is a gap in the provisions that could stretch from when they were first introduced in September 2002 to after 2005. For Government Members, who feel deeply about those matters and take a great interest in them, it is important that low-income families get that second payment. I doubt that the family of the hon. Member for Tatton will qualify for it, but there is a—[Interruption.] My children are too old to qualify.

It is vital that everybody is covered and we welcome the necessary technical measures. It is encouraging to know that the whole programme will be operational—all being well—by 6 April. As I understand it, 2 million children have already received notification of their eligibility, or will do shortly, and will receive the money in due course. We can extend the regulations a warm welcome.

10.14 am

Mr. Timms: I welcome the support for child trust funds from the hon. Member for Tatton, who took part in the consideration of the Child Trust Funds Bill, and from my hon. Friend the Member for Coventry, North-West (Mr. Robinson), who has consistently over a lengthy period taken a close interest in the development of ideas around asset-based welfare. I pay tribute to him for the influence that he has wielded in that area.

The hon. Gentleman spent most of his time talking not so much about child trust funds as the delay in the child tax credit system migration. That is understandable. He said that I conceded that things had proceeded slower than we wanted. That is a little grudging: I stated it; I did not concede it. It did not have to be dragged out of me: it was the central point of my opening remarks. It is not a matter for apology, but a good example of effective management of IT implementation.

When, as often happens in government, very large, complex systems are implemented, it is important that the Government are able to make changes if it emerges that they are needed to eliminate risks that become apparent during the course of a project. That is why the Paymaster General made her statement in October. There is no significant downside for the recipients of benefit, child trust funds or child tax credits. It is simply a question of ensuring that every child who is entitled receives the payment that is due.

The hon. Member for Tatton asked how many people would be affected. It is estimated that of the approximately 2 million children who will receive vouchers between now and the start of the new financial year, 34,000 will receive the second payment by virtue of the amendment,. He asked about the anticipated timing of the migration. After the renewal cycle has been completed and a further major IT release is in place—it is due in April—we shall be able to make a decision about timing and make an announcement. Once the migration is complete, the process will no longer be needed because all the children affected will be covered by the child tax credit.

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Mr. Osborne: Will the 34,000 children the Minister mentioned be those who are born after April this year? Children born in future should be covered by child tax credit. If they are not born after this year, will they not already be covered by section 9 of the Act, which deals with children born between September 2002 and April 2005, who are already covered by a provision that their parents might be in receipt of the child element of income support and income-based jobseeker's allowance?

Mr. Timms: Babies born into existing families—in other words, not the first child—where the family is receiving jobseeker's allowance or income support need the change in order to qualify. If they are the family's first child, they go straight to child tax credit. The picture is slightly complex, but the net effect of the changes is to ensure that everyone receives what is due to them.

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The hon. Gentleman asked about advertising and what would happen in the event of a general election being called. I can confirm that if an election were called, the Government would comply fully with all the usual rules concerning the handling of information. Advertising would be suspended for the duration of the election campaign. Vouchers and information packs would still be sent to parents because that is part of the operation of the child trust fund. There is, however, some flexibility in the advertising plan to allow for the contingency of an election being called. People will have the information that they need.

I hope that the Committee will agree that this change should be made and support the regulations.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Child Trust Funds (Amendment) Regulations 2005.

Committee rose at twenty minutes past Ten o'clock.