Examination of Witnesses (Questions 240-259)
RT HON
DAWN PRIMAROLO
MP, MR MIKE
HANSON AND
MISS SARAH
WALKER
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?
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