The
Committee consisted of the following
Members:
Binley,
Mr. Brian
(Northampton, South)
(Con)
Breed,
Mr. Colin
(South-East Cornwall)
(LD)
Burgon,
Colin
(Elmet)
(Lab)
Cable,
Dr. Vincent
(Twickenham)
(LD)
Davidson,
Mr. Ian
(Glasgow, South-West)
(Lab/Co-op)
Duddridge,
James
(Rochford and Southend, East)
(Con)
Fallon,
Mr. Michael
(Sevenoaks)
(Con)
Hoban,
Mr. Mark
(Fareham)
(Con)
Hodgson,
Mrs. Sharon
(Gateshead, East and Washington, West)
(Lab)
Liddell-Grainger,
Mr. Ian
(Bridgwater)
(Con)
McCarthy-Fry,
Sarah
(Exchequer Secretary to the
Treasury)
McDonagh,
Siobhain
(Mitcham and Morden)
(Lab)
MacShane,
Mr. Denis
(Rotherham)
(Lab)
Michael,
Alun
(Cardiff, South and Penarth)
(Lab/Co-op)
Mudie,
Mr. George
(Leeds, East)
(Lab)
Southworth,
Helen
(Warrington, South)
(Lab)
Gosia McBride, Committee
Clerk
attended the
Committee
Eighth
Delegated Legislation
Committee
Wednesday 10
February
2010
[Mr.
Bill Olner in the
Chair]
Draft Child Trust Funds (Amendment) Regulations 2010
2.30
pm
The
Exchequer Secretary to the Treasury (Sarah McCarthy-Fry):
I beg to
move,
That
the Committee has considered the draft Child Trust Funds (Amendment)
Regulations
2010.
It
is a pleasure to serve again under your chairmanship, Mr.
Olner.
The
draft regulations introduce new Government payments to the child trust
fund accounts of all disabled and severely disabled eligible children.
As members of the Committee know, a child trust fund is a long-term
savings and investment account for children born after
1 September 2002. Children are eligible if they
live in the UK, if child benefit has been awarded to them
and if they are not subject to any immigration restrictions.
The child
trust fund is an integral part of the Governments savings
strategy. It is an ambitious initiative that will ensure that every
child, regardless of their background, has a financial asset at the age
of 18. It promotes positive attitudes towards saving, and will
strengthen the financial education of both children and adults by
bringing financial education to
life.
Parents
are sent a child trust fund voucher automatically once they have been
awarded child benefit, and they use the voucher to open the account of
their choice. To date, three quarters of parents have opened accounts
on behalf of their child. No eligible child misses out, because if
parents do not use the voucher within 12 months, HMRC opens
a stakeholder account with a financial provider on behalf of the
child.
Eligible
children receive a Government contribution of £250 into their
child trust fund account when it is first opened, and again when they
become seven years old. Children from lower-income families receive a
further £250 initially and again at age seven. Special
arrangements are also in place to ensure that children in care, who may
not receive a child benefit award, do not miss out on an
account.
The Child
Trust Funds Act 2004 allows the Treasury to make regulations that
provide for further Government payments to be made into the accounts of
eligible children. For example, the regulations for contributions at
age seven were made under those provisions. Recognising that
children with disabilities may need extra support to make the most of
their potential on entering adulthood, at Budget 2009, the Chancellor
announced that the Government will contribute an additional £100
into the child trust funds of disabled children every year, with
severely disabled children receiving a total of £200 each
year.
Children who
are entitled to disability living allowance at any point within a tax
year will receive £100 into their child trust fund. Children who
at any point in a tax year are entitled to the highest weekly rate of
the care component of disability living allowance will receive
£200 into their child trust fund. That is in line with the
definition of severe disability used elsewhere in the tax system. The
first of those new payments will be made directly into child trust fund
accounts in April 2010 for children who are entitled to disability
living allowance at any point in the 2009-10 tax
year.
The
Governments intention is to make such payments to disabled
children throughout the life of their child trust fund. This secondary
legislation provides for payments until 2018, when the first eligible
children will turn 16, because that is what is achievable under the
current primary legislation. The Government intend to amend the child
trust fund primary legislation, as soon as the parliamentary timetable
allows before 2018, to enable payments to be made to the child trust
fund accounts of all eligible disabled children, including
those aged 16 and
17.
Payments
will be made into the accounts of disabled children using the same
system used for other such Government contributions, such as the
payments at age seven. Child trust fund providers already
know and use the system, and they will not have to make any changes to
their IT infrastructure to cope with the new payments. The impact on
business will therefore be
minimal.
Her
Majestys Revenue and Customs will extend existing
data feeds from the Department for Work and Pensions to get information
about which children are entitled to disability living allowance and
thus to the new child trust fund payments. As with the other Government
contributions into child trust funds, payments will be
automatic and no claim will be required on behalf of the child. To
ensure that no eligible child will miss out, officials from both
Departments are working closely together to make sure that parents,
legal guardians and carers are aware of their childrens
entitlements.
To
conclude, the Government recognise that children with disabilities
often have greater financial needs on entering adulthood, and therefore
need extra support to make the most of their potential. The regulations
provide for the Government to make annual £100 contributions
into the child trust funds of eligible disabled children, and
£200 payments into the accounts of severely disabled children,
starting this April. I commend the regulations to the
Committee.
2.34
pm
Mr.
Mark Hoban (Fareham) (Con): It is a pleasure to serve
under your chairmanship once more, Mr. Olner. Although we in
the Conservative party intend some reforms for child trust funds, we
recognise that additional support is required for children with
disabilities, and we have no objections to this statutory
instrument.
2.35
pm
Mr.
Colin Breed (South-East Cornwall) (LD): Although the
Liberal Democrats also believe that the modest amount of money that is
made available to trust funds might be better spent in other areas, it
is clear that
disabled children have a greater need than the ordinary child.
Therefore, if there is an opportunity to address that, I have no doubt
that it must be a good thing. Provision for disabled children is one
area in which public policy should perhaps be considered a little
morewe have all come across particular cases of that. I have no
objection to this statutory instrument, although at some stage there
will have to be a wider-ranging review of the value of expenditure on
trust funds. On that basis, I am happy to support the
regulations.
2.36
pm
Sarah
McCarthy-Fry: All I need to say is that I thank both hon.
Gentleman for their support, and I commend the regulations to the
Committee.
Question
put and agreed
to.
2.36
pm
Committee
rose.