Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 240-259)


26 OCTOBER 2005

  Q240  Mr Ruffley: So you are not worried by that take-up? You are happy with that take-up?

  Dawn Primarolo: In the sense that every single child will get an account—

  Q241  Mr Ruffley: Not the policy, the take-up, you are happy with it?

  Dawn Primarolo: Was the Conservative Government happy with the low take-up when family credit came in? No. They presumably engaged in an advertising campaign to push up take-up. The Government is about to do that.

  Q242  Mr Ruffley: No, Minister, I would like to talk about the future not the past, to coin a phrase. What is your policy on this? Is the take-up good enough?

  Dawn Primarolo: The take-up will be 100% within 12 months because either the parent opens the account—and there is publicity and there will be some new publicity in order to encourage them to open the accounts—or if at the end of the 12-month period an account has not been opened HMRC opens it in the child's name and that is how the trust fund works.

  Q243  Mr Ruffley: What percentage of the 1.9 million vouchers sent out are to those who are low income households, those who receive the £500, which is what any household with an income of less than £13,500 gets? What percentage of the 1.9 gets that?

  Dawn Primarolo: I am sorry I do not have that figure right to hand now.

  Q244  Mr Ruffley: You do not?

  Dawn Primarolo: No, I am sorry, I do not.

  Q245  Mr Ruffley: I am a bit surprised because this is a flagship policy for the Chancellor and it is meant to be targeting those less well off in income and asset equality terms so I am a bit surprised you do not know the percentage.

  Dawn Primarolo: Mr Ruffley, you can be disappointed with my performance but I am covering quite a range of subjects today and I am just being perfectly honest with the Committee. That particular statistic escapes me at this point but I am happy to let you have it.[4]

  Q246 Mr Ruffley: Could we have it?

  Dawn Primarolo: Of course, I just said that.

  Q247  Mr Ruffley: Because it is targeting those poor households and I think it is an important point.

  Dawn Primarolo: No problem but they will not end up without having an account because it will be opened.

  Q248  Mr Ruffley: But it would be quite interesting, would it not, to disclose what proportion of those low-income households getting the £500 by the end of 12 months falls to the default position, ie the HMRC setting it up without them having any active take-up?

  Dawn Primarolo: I will certainly make sure that you have the figures on that, yes.[5]

  Q249 Mr Ruffley: Have you done any work on the take-up so far in the low-income households?

  Dawn Primarolo: Yes and the targeted advertising is pushing for all parents to ensure that they are aware that they can invest the child trust fund, but the default position, as you put it, is the sure knowledge that they will still get the trust fund because HMRC will open it on their child's behalf. Regrettably, I do not have the details that you have asked me for income breakdown, I cannot get it up in my mind immediately, but I will make sure the Committee get it, of course, no problem.[6]

  Q250 Mr Ruffley: Could you advise us how much the Government has spent on advertising this to date?

  Dawn Primarolo: By completion—I might as well give you the up-to-date figures of the October/November advertising campaign—it would have been £6.8 million. I do have that figure.

  Q251  Mr Ruffley: Just going back to the group who obviously are most deserving, those who get £500 rather than £250, are you going to analyse whether they are going beyond the default position, whether they are actually actively opening accounts, to discover whether or not we are actually getting to those people who would appear to most need help to show that they are actively engaged rather than relying on the default position?

  Dawn Primarolo: Yes, absolutely, we will have to do that but given the period of time in which it has been available I do not have that specific information at the present time but, yes, of course you are quite right in terms of what the behaviour has been and who has been stepping forward.

  Q252  Mr Ruffley: Are you happy to make that information, as and when it is available, available to this Committee rather than just being internal work?

  Dawn Primarolo: There is no problem, of course.[7]

  Q253 Mr Ruffley: My final question, Paymaster, is has the Government set HMRC a specific target for active take-up, if I could put it that way, over and beyond the default position?

  Dawn Primarolo: No, it has not.

  Q254  Mr Ruffley: Is that something that you might contemplate doing?

  Dawn Primarolo: I think we need to get it as high as we can. We have the default position which is the 100% and I think that has been made clear before by the Financial Secretary in discussions on this, so there was not a target set and we want to get that as high as possible, but there is a default position which is the 100% take-up.

  Q255  Mr Ruffley: I understand the default position but when the current Secretary of State for Education spoke on this before this Committee before setting up the child trust fund, the burden of her argument, which I happened to agree with (albeit privately, at the time!) was that it was meant to be targeted on those least able to—

  Dawn Primarolo: I hope you will agree privately with me in the future, Mr Ruffley, and I look forward to it!

  Q256  Mr Ruffley: No, my point is that I remember the honourable Member for Bolton West did spend quite a lot of time explaining that she wanted a culture of better financial education for those who did not have any history in their family of building up assets and stores of wealth. That was why they were getting £500 rather than £250 but it also went beyond the default position because the default position, with the very greatest of respect, in the architecture of the fund, is not going to deliver the kind of returns at the age of 18 than if there was more active investing, and therefore what I am driving at here is that it would be useful for you to consider having a specific target for those in the £500 category whether or not they are going beyond the default position and for us to have a target for that. Is that something you might concede?

  Dawn Primarolo: Yes, you describe excellently the very objective of the policy. It is not just about opening the account; it is about being a contributor to that, and, of course, we would need to consider, as you rightly say, the active involvement and, if it is appropriate, yes, of course I am not ruling out the question of targets. It will be a matter to consider at that stage.

  Q257  Mr Ruffley: I would only say the more active management of the account you have the more asset inequality you get rid of, by definition. The default position is not going to close any asset inequality, which is what I think we are all in the business of talking about.

  Dawn Primarolo: That is the policy, Mr Ruffley, and I am not saying I have got a closed mind on this. The Government did not have targets on the introduction but it should not be read from that that there would not be targets in the future, and of course we will consider it.

  Q258  Ms Keeble: Last week we heard from National Savings that they do not offer a child trust fund product because it does not offer any product with full, unprotected exposure to equities. Why do not you allow the child trust fund vouchers to be invested in some of National Savings' cash-based products?

  Dawn Primarolo: There are three accounts, the savings account, the stakeholder's account and the equity account. Without looking more closely at what National Savings have said, I am not in a position to say why they have decided not to offer any of those accounts.

  Q259  Ms Keeble: Could we perhaps ask for more detail because it does seem for this client group that perhaps the National Savings brand might be a particularly attractive one, and yet they said they could not offer a product and it did seem to be a bit of a missed opportunity.

  Dawn Primarolo: I will do that. Perhaps you will forgive me. Within the Department all the different areas that are covered are divided between ministers. I was here answering for the Department on its Spring Departmental Report. The child trust fund is of course something I should be able to answer questions on but I am not the lead minister, so the specific question you asked me there is not one, as was Mr Ruffley's one, that I am immediately able to answer because I am not the lead minister, but I will make sure that you get a proper answer to that. My officials did try and explain to the Clerk that I will do my best on these subjects but I am not the lead minister.

  Chairman: We do understand that. Maybe we should pursue that with the Economic Minister. Mr Viggers?

4   Ev 45 Back

5   Ev 45 Back

6   Ev 45 Back

7   Ev 45 Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2005
Prepared 15 December 2005