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26 Oct 2010 : Column 229

Paul Maynard: It would be very easy to dismiss health in pregnancy grants, as some Opposition Members seem to think that we are doing. I am not doing that. My constituency has significant pockets of poverty, and if Conservative seats were ranked in order of deprivation, mine would be somewhere near the top. I spent a fascinating Friday a couple of weeks ago with our family nurse partnership, a pilot project that is working with young mothers-to-be in the most deprived quartile of the population in the most deprived areas of the constituency. They receive intensive support from the moment they become pregnant to beyond the birth. It is a fantastic project and it costs £3,000 per mother. The project also works with the father. It addresses issues such as self-esteem, improving literacy and numeracy, helping the father to get back into work and ensuring that the father feels part of the birth.

To my mind, the project achieves far more than a £190 health in pregnancy grant. One might argue that it is a significantly greater amount of money, but I would argue that it represents a different approach to policy making. The hon. Member for Nottingham North (Mr Allen) is looking at early intervention on behalf of the Government and he is a strong supporter of the family nurse partnership. I think that it makes a much greater difference to outcomes if we have evidence-based policy. My hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) was correct to pursue the Opposition about the lack of medical evidence for improvements in the health of pregnant women-

Catherine McKinnell: Will the hon. Gentleman give way?

Paul Maynard: No, and the quote that I heard from the hon. Lady did not pass the quality threshold for the British Medical Journal and nor was it ever likely to do so, coming as it did from a press release.

It is also worth bearing in mind that we give other targeted interventions for pregnant women that are designed to assist them. The Minister has referred already to the Sure Start payment and the healthy start payment, and the latter is specifically designed to support women who wish to improve their dietary health by purchasing fruit, vegetables, vitamins and other things that will assist them. Interventions must be properly targeted and not just handed out. It is all very well to oppose this measure, but not to do so by reference to generalities. These proposals have to be considered in the round, and those Opposition Members who may not like this proposal need to suggest what they would do instead and how they would seek to cut the deficit that they have left behind.

This Bill is the start of something new and radical. I am a great fan of Ronald Reagan, the former President of the United States-as we all should be. He always said that he lived on the sunrise side of the mountain and I always try to do so too. Although my glass is often half empty, when I consider things I try to take an optimistic view, and I consider this to be an important measure. It says that-unlike the previous Administration -no longer will we pass legislation year after year without bothering to ascertain whether it achieves its purpose. We will pass legislation based on the evidence of whether what has gone before has worked and whether it assists in meeting the wider challenges of public policy that we face-both economic and social. I urge
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the House to support this Bill, not just because it will assist us in reducing the deficit, but because it introduces the concept of evidence-based, high-quality public policy making, and that is sorely needed in this country today.

6.54 pm

Teresa Pearce (Erith and Thamesmead) (Lab): I am grateful for the opportunity to speak about clause 1 of this Bill today. In 2005, the child trust funds were launched in an attempt to build financial education and encourage habitual saving. The scheme was progressive in that it gave additional financial help to those who needed it most, with larger sums given to children from low-income families, children with no families-those in care-and disabled children.

The Government's decision to introduce this Bill to phase out and then stop all Government payments to child trust funds is short-sighted and unfair. It is short-sighted because it scraps a popular scheme that encourages young people to save, without putting a replacement mechanism in its place. It is unfair because it is part of a package of measures contained in the comprehensive spending review that asks children and families-and children with no families-to play a bigger role in reducing the deficit than the banks and large corporations.

Ministers have failed to say what they would put in place of child trust funds to encourage families, and low-income families in particular, to save specifically for their children's future. In answer to a written question on 20 October asking what the Department for Work and Pensions is doing to encourage saving among low-income families, the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb) cited a number of general initiatives to encourage adults to save for later life, but failed to mention any plans to encourage parents and children-and children without parents-to put money aside to help with the transition to adulthood.

At the moment, it seems inevitable that the winding down of child trust funds will reverse recent efforts to increase the financial literacy of young people in this country. Financial knowledge and education in this country are at a worryingly low level. The savings ratio, which measures what proportion of earnings people in Britain are putting aside as savings, recently fell to the lowest level in seven quarters. That is no doubt linked to the recession, with wage freezes reducing household income while the cost of living continues to rise. With more strain being placed on family budgets and people having to dip into their savings, families need more help, not less, to put money away for their children's future.

Child trust funds have an important role to play in helping young people engage with financial institutions early in their lives and to develop saving as a habit. The funds also provide young people with a level of financial independence and therefore responsibility. It is particularly important for children from low-income families, where such a significant financial asset accessed at age 18 can help with social mobility. Studies show that young adults with a small amount of capital at the beginning of adulthood had a significant advantage 10 years later over those who did not.

Child trust funds are a good way of reaching families who otherwise may not save. Stopping the child trust fund scheme will only increase the chance that social
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mobility will remain static. Parents with financial knowledge and greater means will likely continue to put money aside for their children's future and instil in their children the value of saving. The children of parents who lack these resources, or children with no parents, will fall behind. The Government say that child trust funds have not been successful, but as no recipient has yet reached the age of 18, I do not understand how that can be judged.

HMRC statistics show that 10,841 vouchers were issued in my constituency and more than 8,000 child trust funds were opened by parents or guardians, with the remaining ones opened by the Revenue on the child's behalf. So the initial take-up rate has been positive. The most important point that needs to be made in this debate is that the Government are not proposing to stop Government payments to child trust funds in order to reallocate the money for children elsewhere. The funding is simply being cut, with the relatively modest cost of child trust funds-£320 million this financial year-going towards reducing the deficit. Thus, a valuable scheme to help young people is to be sacrificed in the name of short-term expediency.

The Financial Secretary to the Treasury says that the eradication of the deficit is the Government's "top priority". However, if this is the Government's main priority, they would do better to look at the state of the UK tax system where the top five retail banks stand to cut around £19 billion from their tax bills in the future because of huge losses during the economic downturn, despite being saved by the UK Government through an £850 billion bail-out.

The tax payments that those banks are expected to contribute to the Government are nowhere near the expectations of most people in the UK. Banks are not being told to bear their fair share of the deficit burden that was run up because of their reckless behaviour. Instead, it is children and families, and children with no families who are being asked to bear the brunt of the cuts through the scrapping of schemes such as the child trust fund. The Chancellor used the word "fair" 24 times during his statement last Wednesday, but in reality his spending review takes more money away from children to help reduce the deficit than from the banks responsible for it.

On a personal note, as I stand here this evening, my youngest daughter is in hospital in Dartford, in labour with her first baby. She was born in 1979 under a Tory Government, and my granddaughter will be born in 2010, also under a Tory Government. The previous Tory Government came for my daughter's school milk, but at least she was five when they took it from her. From my granddaughter, however, they are taking away the child trust fund when she has just been born, and the health in pregnancy provisions before she is even born. It seems that the priorities of the Tory party are always the same.

7.1 pm

Richard Graham (Gloucester) (Con): Before coming here I read a document from the Save Child Savings alliance, which hon. Members might have had a chance to look at. I thought it would be helpful to run through some of its points about why it is so important to maintain and retain child trust funds, and answer them
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one by one. Its first major point is that child trust funds are all about fostering a long-term savings culture. I am sure that everyone in the House, from whatever party, will agree that that is a major national goal. However, the point about a long-term savings culture is that every form of fund or saving, including pensions, is exactly that-savings. So we cannot look at CTFs in isolation. The SCS alliance's second major point is that keeping CTFs will help to protect the savings culture in the UK. To that, we could add the CTFs' original goal of spreading financial literacy.

The question at stake this evening, therefore, concerns two main points: first, how effective have CTFs been in delivering either their original goals or the aims suggested by the SCS alliance? Secondly, what choices and other alternatives are available to provide the best for our nation's children? The results so far show that CTFs have, over their lifetime of just over five years, accumulated £2 billion of assets, which is a reasonable absolute figure on its own. However, £1.4 billion of that was provided by the Government, and only £600 million by the families and friends of those participating. As mentioned by my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard), the take-up amounts to 70%, with 24% of open accounts having received no contribution from participating families or friends.

Many better forms of savings are available in the marketplace for achieving the same ends. In particular, I highlight the existing individual savings accounts, which came from the original personal equity plans of the 1980s. These provide significantly more investment options, have, by and large-although not altogether-delivered better performance and have much lower costs. They can be designated to children, which is important, and cost the taxpayer nothing.

Owen Smith: Is that not an unfair comparison, because the ISAs have been in place for much longer than the child trust funds? It is extremely early in the life of CTFs for one to conclude that they will not achieve what they might achieve, and what we would hope they would achieve. A good point was made earlier about the point at which families tend to invest in long-term savings for their children. We can safely assume that more would have been paid in by families and friends at later stages, as more expendable income became available.

Richard Graham: The hon. Gentleman is right that this is a short period of history over which to judge them, but the fact remains that the annual management costs for CTFs, at 1.5%, are significantly higher than most of us would need to pay for an alternative form of savings. That will not alter over time. In answer to the suggestion that, in time, parents, families and friends might put more into the accounts, there is nothing to prevent them from opening an ISA or, as the Minister suggested, a new denomination of children's ISA-if one becomes available-in their child's name. Although I think that half the point made by the hon. Member for Pontypridd (Owen Smith) is right, I do not think that the overall impact of CTFs would be positive.

Catherine McKinnell: The hon. Gentleman made a point about accessibility and the fact that 25% of child trust funds set up by the state are not taken up by the individuals. How does he suggest that that 25% of
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people benefiting from those savings funds will benefit from ISAs, given that they are unlikely to walk into a financial institution to arrange one for their children?

Richard Graham: I have a specific suggestion on that, which I will come to in a moment. Meanwhile, I am sure that the hon. Lady will have noted earlier the intervention from my distinguished colleague on the Work and Pensions Committee, the hon. Member for Stretford and Urmston (Kate Green), who in an earlier career pointed out that CTFs do not necessarily reach the most vulnerable families. Arguably that was a flaw in the concept at the beginning.

Kate Green: It is important to clarify this point. I did not say that they did not reach the poorest. I said that it was difficult for the poorest to participate in the savings element. However, as my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) just pointed out, with an ISA product there would not be any element of asset building for the very poorest, because they would be unable to save for themselves.

Richard Graham: The only difference is that CTFs are funded by the Government, so we come to the argument about whether that funding can be used more effectively in the context of the goals. I was going to come on to that. I suggested that there are alternative forms of savings that are more effective than CTFs, have lower management fees and better performance, and come at no cost to the taxpayer.

I come to the next point made by the SCS alliance. It argues that CTFs have been

Members will agree that everything is relative. Clearly, CTFs did better than the previous Government's attempt to create a savings scheme-the stakeholder scheme-which is a scheme that not even the right hon. Member for Delyn (Mr Hanson), in one of his more elaborate flights of fancy, could conceivably describe as having been an outstanding success. However, by comparison with the success of other savings schemes not run by the Government, CTFs have done only a relatively modest job.

The important thing is that, although Governments can, do and should create the structure for savings schemes, their track record in running them is not good. For example, do Members believe that we should be paying people to work for Her Majesty's Revenue and Customs and spend their time advertising and promoting CTFs, or do we believe that they should be ensuring that benefits go to the right people and that we all pay the tax that we should pay? HMRC should not be in the advertising business.

Catherine McKinnell rose -

Richard Graham: I have given way to the hon. Lady already, but I am happy to do so again

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. If hon. Members are going to give way, they should give way quickly. If not, the hon. Member trying to intervene must sit down.

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Catherine McKinnell: On the hon. Gentleman's point about HMRC officials spending their time promoting savings accounts to children and parents, the idea is to give a hand-up, rather than a handout. Rather than benefits being handed out to families, the idea is to encourage saving in a family and to make it accessible to families that would not otherwise easily access saving funds. That is a hand-up, rather than a handout, and I would have expected Government Members to support such a programme.

Richard Graham: The answer is that we all want to encourage hand-ups to everybody, through whatever means possible, but that brings us to the second point about the difficult decision that the Government have had to take in their proposals-and which we as individual Members have to take-which is: what are the alternatives? I will come to that in one second, but on the Government's role in running saving schemes, one crucial lesson that I hope will be learnt from the stakeholder experience and, now, from CTFs is that the Government should operate such schemes at arm's length. When it comes to the creation of the national employment savings trust-or NEST-by the Department for Work and Pensions, I very much hope that that lesson will be taken on board.

The question then is one of choice. What could we do for our children with the money that the Government have been spending on CTFs that would be more effective? My belief is that the best investment that any of us can make as parents for our children is an investment in education. Therefore, Members need to focus on several crucial changes that have been made in the education of our children. Those changes will cost the Government and the taxpayer significant amounts of money, but that is an investment on which I believe we will all see a significant return. First, the retention of Sure Start children's centres, which were begun by Labour, is an important move by the Education Secretary. Secondly, there is an extension of the availability of free education to every three and four-year-old in the country. Thirdly and most significantly, there is the poor pupil premium, which will cost the Government some £7 billion over this Parliament and which comes on top of baseline funding for schools.

I really believe that the most important thing that any of us can invest in is education. This is not about money: I do not believe that there is any evidence that financial literacy in this country has improved as a result of CTFs, nor, in a sense, could it, because the children are not involved. Children benefit from financial literacy programmes that go into schools and talk about what type of mobile telephone package they should have and so on, not from being given a lump sum of money that goes into an account with which they have no involvement. From the choices available to the Government, the best way to spend the money was and should be in education. For that reason, I shall be supporting the Bill.

7.13 pm

Jim Shannon (Strangford) (DUP): It is a sorry day on which we are debating this Bill on the Floor of the House. It is a sorry day too, when we realise that the people whom the Bill will hurt are those whom we have always had concerns about. The hon. Member for Blackpool North and Cleveleys (Paul Maynard) said
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that he could not see the real benefits of the schemes. As the elected representative for Strangford, I can quite clearly see the benefits for the people who come to my office-the people I help, the people I see every day. The attacks and the changes for children and pregnant women are wrong. The policy and the strategy that the Government have put forward will unduly hurt those who can ill afford it, and who will feel the impact more than most. I understand the need for the coalition-indeed, the need for us all-to look at how we can best save moneys, but the question has to be asked: is this Bill the best way forward? Is the best way forward to deprive those who can least afford it, and who will feel the impact more than most?

I did some research on Strangford-with the help of the staff in this place, of course. The number of parents or guardians in my constituency who have taken advantage of child trust fund vouchers totalled just shy of 6,800, with some 5,000 being for accounts opened by the parents or guardians and just under 2,000 for accounts opened by HMRC. The figures for Northern Ireland are clear, and they send a message. Northern Ireland has taken advantage of the scheme, and the area that I represent is part of that. Some 123,000 vouchers were issued before April 2008. My constituency has the third highest take-up of vouchers by percentage. For me, and for where I work and live, that clearly shows that the child trust fund puts money into the pockets of those who will need it in the time to come. It also enables young children eventually-when they turn 18-to be presented with a tax-free fund. I believe that the child trust fund should and could have done that, if it had been given the opportunity.

Mark Durkan (Foyle) (SDLP): The hon. Gentleman will recall, from his time in the Northern Ireland Assembly, the strong campaign that was fought there to ensure that credit unions in Northern Ireland could become providers of child trust funds. That campaign was fought in this House too, such was the demand to ensure that child trust funds were used in Northern Ireland and to improve direct take-up, with more choices being made by parents. That campaign was backed by all parties and all communities in Northern Ireland. That is how popular child trust funds were.

Jim Shannon: I thank the hon. Gentleman for his intervention. The credit unions facilitated that role for child trust funds, as other Members have mentioned. The scheme was extremely popular in the area that I represent and in Northern Ireland as a whole. The figures that have been released clearly show that.

Parents did channel moneys and savings through for their children, but with respect I feel that the coalition-our Government-has stopped a worthwhile scheme, which will hurt the pockets of those who need help most. The ripples of that will come through in the next few months.

Dr William McCrea (South Antrim) (DUP): The hon. Member for Blackpool North and Cleveleys (Paul Maynard), who spoke on behalf of the coalition a short time ago, suggested that the best way to encourage savings was to have a piggy bank in the bedroom. With the greatest respect, when we think about the amount of money that the parents of many of those children will have to pay and how much less they will have to spend
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on their children, we have to ask: where will they get that money to put into the piggy bank, and will that not increase the divide in our society and penalise its poorest members?

Jim Shannon: It has been mentioned by others that, for a great many in this House, there is an equality issue with this Bill. It will disadvantage those who can least afford it, and will give an advantage to those who perhaps do not need such schemes. We will eventually end up with inequality in our society. Northern Ireland was offering an example of how things could move forward, and the take-up of the child trust fund was an example of that.

The saving gateway account was a pilot scheme, and it never got as far as Northern Ireland-unfortunately. I was hoping that we could take advantage of the spin-offs for our constituents. There were certainly high expectations on the part of many, and that gave hope to a great many people. Again, the scheme was a savings account that involved the Government matching savers' moneys, which encouraged people to be part of the process. Unfortunately, if the Bill receives its Second Reading, that scheme will also be knocked on the head, and that concerns me. I find it disconcerting that the saving gateway account should be banished to the dusty shelves somewhere, along with the opportunity that it could have given to those who need it most.

The health in pregnancy grant never was a good sum of money, but it did help those whom it was supposed to help. The hon. Member for Blackpool North and Cleveleys referred to the Ronseal test and the rhododendron test. The Ronseal test is whether something does what it says on the tin, and I have to say that the health in pregnancy grant did what it said on the tin. As a representative, I can honestly say that it did deliver.

Sarah Newton (Truro and Falmouth) (Con): There is absolutely no doubt that women's health during pregnancy is vital, but I really must take issue with the hon. Gentleman. The health in pregnancy grant was a universal benefit, so a mother of three children such as me could have received it and, in these extremely difficult financial times, we have to make difficult decisions to ensure that the available resources are targeted where they are most needed. The Government are really targeting support for families on lower incomes in a huge range of ways. Does the hon. Gentleman not agree that it is far better to target the limited resources at the families in the greatest need-

Mr Deputy Speaker (Mr Lindsay Hoyle): Order.

Jim Shannon: Thank you, Mr Deputy Speaker. I am sorry that the hon. Lady does not see this issue as clearly as I and many Members on the Opposition Benches see it. The grant did help people, because many of them came into my office and my advice centre, and I could see that they were benefiting from it. We have to target those people, but I do not believe that that will happen under the coalition's proposals. Those who need help the most will be disadvantaged and will feel the pain from the changes more than anyone else. I understand that qualification for the grant was conditional on the involvement of a GP, a midwife, a welfare officer or a social worker.

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Dr McCrea: Will my hon. Friend tease this out a little further? I am not sure what part of the coalition's proposals targets the people the hon. Member for Truro and Falmouth (Sarah Newton) is talking about. The proposals deal with the removal of vital money, rather than with giving it to anyone.

Jim Shannon: I thank my hon. Friend for that intervention. We are clearly moving towards that, and if the Bill receives a Second Reading tonight, the opportunities will no longer be there for those who need them.

Sarah Newton: Will the hon. Gentleman give way?

Jim Shannon: As long as the intervention is shorter than the last one.

Sarah Newton: I would like to respond to the question from the hon. Member for South Antrim (Dr McCrea), because I can think of many clear ways of targeting people. We are absolutely committed to our investment in the national health service, to support for Sure Start centres and to the increased investment in district nursing through the Sure Start centres. As a result, a whole range of services will be available to pregnant mothers.

Jim Shannon: I thank the hon. Lady for her shorter intervention. I appreciate those opportunities for advancement, but the scheme we are discussing is targeted at a section of the community in which I can see its benefit. I have met many people who have been specifically targeted to receive the grant of £190. I dispute the view of those who think that many of the people who have received it should not have done so. That is certainly not my experience. Some coalition Members have referred to the grant as a gimmick, but I can tell them that it was not a gimmick to the people of Strangford whom I represent. It was something that they were able to use and take advantage of.

Household names such as the Royal College of Midwives have expressed disappointment at the decision to abolish the health in pregnancy grant, which, apart from providing pregnant women with much-needed financial support, provided an opportunity for midwives to communicate health advice to those women and their families. When such an astute body makes a statement like that, we need to take note. We cannot ignore it.

The National Childbirth Trust has also stated:

That is not Jim Shannon speaking; that is a quote from the NCT. Cutting pregnancy and maternity grants as well as cutting child benefits and tax credits will make things even more difficult for new parents and those wanting to start a family. I am very worried that parents and parents-to-be have been singled out unfairly. The coalition Government should stick to their commitment to making the UK more family friendly, but I believe that the Bill will change all that.

What will these measures mean for those who were destined to gain advantage for their health and their children's health, and to stay out of the poverty trap? Some hon. Members have talked about the poverty trap today. The constituency that I represent has areas of deprivation, and I am sure that other Members are similarly disposed. I see my constituents regularly, and I
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have to tell the House that they will be disadvantaged by the proposals. I want to make it clear that I am here to represent them, and I hope that the Bill will be defeated. If it is, we will have done some good work here tonight.

I want the coalition Government to state exactly how they intend to stop even more people dropping into the poverty trap that I regularly see in my constituency. Will the Minister tell us what they are going to do to give hope to the people who will lose out as a result of the Bill? Are there any plans to fill that gap? Other Opposition Members have asked that question tonight. What is to be done to fill the gap, which has now widened? That question needs to be answered, and I am asking it on behalf of the people of Strangford and Northern Ireland whom I have the privilege of representing, and of the 123,000 people who took up the child trust fund and the 25,000 who benefited from the health in pregnancy grant. There are people out there who need that money and who benefit from it. I urge the coalition to think seriously about their proposals, because they will have a serious impact on the most vulnerable in society. That is something that I cannot support, and nor will I.

7.26 pm

George Freeman (Mid Norfolk) (Con): It is a pleasure to follow the hon. Member for Strangford (Jim Shannon). I am conscious of the number of Members who want to speak tonight, so I shall try to be brief. I want to make three key points. First, we need to draw breath and remind ourselves why we are having to take these measures. Secondly, I want to draw the House's attention to some of what I believe to be the flawed thinking underlying the measures that we are withdrawing. Thirdly, I shall touch on the lack of support for them from a number of independent commentators whom one might have expected to be more vocal.

We heard a lot from Opposition Members earlier, accusing us in somewhat hysterical tones-it is nice that they have now calmed down a little-of unwarranted glee at cutting back from the most vulnerable in society. Those accusations almost reached the point of suggesting that that was what we had come into politics for, which is the most appalling and, frankly, shameful accusation, and one that they do not need to nod their heads at now.

It is worth reminding the House, and those listening in the Gallery, why the coalition is having to take these measures. It gives us no pleasure at all, but the truth is that we have inherited from Labour an historic crisis in our public finances. We have a debt of £700 billion, and debt interest would be set to rise to £67 billion a year if we had not set about tackling it, which these measures are part of. Our current debt interest payments are £120 million a day. Opposition Members need to bear all that in mind before they accuse the coalition of irresponsible measures. The irresponsibility is illustrated by the deficit that they bequeathed to us and to the future generations that we are all trying to help.

Without a plan to tackle the deficit, there would be a real risk that confidence in this country's public finances would collapse, that international markets would lose confidence in our gilts, and that interest rates would start to rise. That would trigger the real catastrophe that we are trying to avoid. Everyone knows that we have to tackle the deficit. Surely no serious commentator, and
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no serious politician on the Opposition Benches, would suggest otherwise. It is simply disingenuous and mischievous to claim to be a serious party of government and then to scream foul when a responsible Government take the important measures to deal with the legacy that it has left us.

The flawed thinking behind some of the payments that the Bill covers can be seen as philosophical, economic and practical. First, as a number of speakers have highlighted, the measures do not target the poorest in society; they do not, in fact, do anything to tackle the really deep and challenging poverty traps into which many people fell through the complex layers of tax credits that the former Prime Minister insisted on imposing. They do nothing to undermine the dependency on the state, which all progressives in this House now seek to try to unravel. Anyone reading the work of Professor Giddens-new Labour's philosopher-king-would understand that that is not an accident. In his seminal book-I commend it to Labour Members who have not read it-he sets about defining modern citizenship as a dependency on the state. It should be no surprise to us that the last Government took every opportunity they could to increase dependency on the state. Those of us in the coalition who want to release citizens from dependency would take issue with that philosophy.

Economically, there has been some flawed thinking. At a time when Labour Members were building up historic debt to £700 billion, some of my constituents might well have considered it something of a gimmick to set about giving back small amounts of money that the beneficiaries will not receive for 18 years in some form of apparent largesse when what people were really going to inherit was a historic deficit and all that went with it.

I defer to my hon. Friend the Member for Gloucester (Richard Graham) in respect of his earlier comments on the inefficiencies in management. I noticed in the Library briefing that management fees were running at £700 million, so it is odd to hear Labour Members defending putting money into the pockets of fund managers.

Finally, let me deal with the lack of support for these measures from independent commentators, whom we might have expected to be more vocal. When I went to the Library to find out what responses there had been to these cuts, I found two examples to which I would like to draw the House's attention. Barnardo's, commenting on the child poverty figures, said:

The report of the Child Poverty Action Group-other Members have mentioned it-provides another example. Its briefing of 2005 pointed out that the child trust fund would not benefit children until they were 18, stating:

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On the grounds of the nature of the deficit we have to deal with, the flawed thinking behind the policy and the lack of support for it, it seems to me that, far from being an hysterical over-reaction, these measures are perfectly reasonable and sensible, particularly in the light of the coalition's commitment, set out in the Budget and the comprehensive spending review last week, to the retention of Sure Start, the introduction of the £7 billion pupil premium, the targeting of child benefit at the most needy families and tax credits. Some Members have already referred to them.

Alison McGovern: Will the hon. Gentleman give way?

George Freeman: I am just wrapping up.

Also important is the Institute for Fiscal Studies' analysis, showing the Budget measures will not increase child poverty. Far from being irresponsible, I suggest to the House and to people more widely, that these are regrettable, but responsible, measures from a Government who take seriously their responsibilities to tackle the deficit left by the previous Government.

7.34 pm

Kate Green (Stretford and Urmston) (Lab): This is an incredibly serious debate and I would like to address what I believe are important points raised on both sides of the House. I shall deal with all three elements of the Bill-the health in pregnancy grant, the child trust fund and the saving gateway proposals-in the context of what I understand to be important drivers for this Government, such as reducing inequalities, improving social mobility and improving child outcomes. I shall also consider the extent to which the proposals meet the Government's own fairness test.

I start with the proposal to abolish the health in pregnancy grant. There is considerable evidence to show the impact of poor maternal nutrition-during pregnancy and, importantly, prior to conception-on low birth weight, and the impact of that on a series of outcomes for child development down the line, including educational attainment and health outcomes. I certainly agree with the Conservative Members who said that a grant in the seventh month of pregnancy was not sufficiently early to achieve everything we would want to improve the well-being of pregnant women and their unborn children.

For women on low incomes, affording a healthy diet is a challenge. Indeed, women reliant on safety net benefits will, if they are under 25, have an income of £51.85 a week; and if they are over 25, £65.45 a week. Those amounts are sufficient to meet the minimum income standard determined by the Joseph Rowntree Foundation-£44 a week in order to afford a healthy diet. However, once we take into account other expenditure that has to be met out of those benefit payments-fuel, clothes, travel, personal items, insurance, utilities and so forth-it means in practice that women conceiving and bearing children on benefits could find themselves with as little as £10 a week to spend on food. Clearly, none of us could eat a healthy diet on that.

It is right, as Opposition Members have repeatedly pointed out, that despite its perhaps unfortunate name, the health in pregnancy grant has the potential to achieve much more than simply help with a healthy diet. It helps to meet a number of the costs associated with
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preparing for and coping with the arrival of a new baby. Obviously, parents across the income spectrum will be grateful for any help. Although I was rather pooh-poohed by the Minister when I suggested that such a grant is likely to be spent pretty readily so it will also help the economy, there is lots of evidence to show that if we give money to parents at a time when their costs rise, they will go out and spend it quickly-they need to; there are items that they must buy. This will make a modest contribution to our economic regeneration, although that was hardly the overriding reason for introducing the grant in the first place.

Alison McGovern: Does my hon. Friend agree that this is similar to other kinds of grant such as the winter fuel payment, which we award in cash terms to get people through what is an expensive time? It is most efficient not to cross-question what it is actually spent on, but these grants are important in recognising that people go through difficult and expensive times.

Kate Green: That is absolutely right on a number of fronts. First, as my hon. Friend says, this sort of grant is designed to help with specific expensive times in the course of people's lives. It is important to recognise that specifying what it gets spent on is not necessary to ensure that it does good. In fact, there is a lot of evidence to show that if we give more money to parents, particularly to mothers, they will spend it on things that will help their kids.

I understand the concerns of Government Members about universal benefits, but this is a universal benefit. It goes to people who are financially better off as well as to those in greater need. As Opposition Members have repeatedly sought to explain, universal benefits are the most effective for reaching the poorest. They are the easiest to administer and the easiest to claim; there are no complicated cliff edges or recalculations. As such, I believe it is important to retain a range of universal benefits within the totality of support for families with children. I therefore think that the health in pregnancy grant has a useful role to play.

Even if we accept for a moment Government Members' concerns that the benefit has been poorly targeted, that is hardly a case for scrapping it outright, especially when basic benefits are too low for the poorest women to be able to afford to eat healthily before their child is born. Surely, far from seeking to abolish the benefit, an ambitious Government who were keen to improve the outcomes of the poorest families and children would want to extend its scope or consider other ways of improving the adequacy of out-of-work benefits.

George Freeman: I am enjoying the hon. Lady's speech and I acknowledge her expertise. In recommending the extension of the benefit, however, will she explain where she would get the money from?

Kate Green: There is work to be done to consider the balance of taxation versus spending cuts, as Labour Members have repeatedly pointed out. As for where the money is taken from, it is notable that the coalition Government, whether by accident or design-I suspect that it is more by accident, but I give them the benefit of
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the doubt-have taken more from women and children. An evening up of the way in which the spending axe fell might provide more scope.

Far from seeking to improve the financial position of some of the poorest in society-those who are reliant on safety-net benefits-some of the coalition's measures will make matters worse: the changes to housing benefit; the VAT rise, which will reduce the spending power of the poorest; and the plans to link safety-net benefits to the consumer prices index, which will, over time, significantly reduce the value of those benefits to low-income families, and will therefore have an impact on the disposable incomes of the poorest women before conception, during pregnancy and after birth. I urge Government Members to think about how they would address that.

Chris Williamson (Derby North) (Lab): Does my hon. Friend agree that the policies pursued by the Con-Dem coalition will lead at best to the economy growing slowly, and at worst to a double-dip recession, which will result in a much lower income tax take for the Exchequer? Our proposals to improve and support growth in the economy would generate the tax revenues that would enable us to fund schemes such as the health in pregnancy grant.

Kate Green: Absolutely. Although you will not want this evening's debate to extend into the whole range of economic policy, Mr Deputy Speaker, clearly, a strategy for growth and increasing tax receipts will be vital to protect the poorest families.

Sarah Newton: I, too, appreciate the hon. Lady's expertise, but I must point her to the growth in the UK economy, which I hope she is reading about in the newspapers. We should celebrate the fact that we have the second-fastest growth rate in the G20.

Kate Green: I very much welcome the growth in the UK economy in the third quarter of this year, but, with respect, it is early days for Government Members to take all the credit for that. I suspect that it was the fiscal stimulus put into the economy by the previous Chancellor of the Exchequer that underpinned the ability of businesses to continue to hire and of people to stay in work. All Labour Members genuinely hope that that long tail effect will continue, but we feel that it is at risk.

On the savings aspects of the Bill, I cannot understand the Government's logic, given their stated ambitions to reduce inequality and to encourage a savings habit and, in the case of the Secretary of State for Work and Pensions, the strong focus on helping people to reduce and stay out of debt. The child trust fund and saving gateway have helped low-income savers to acquire a savings habit and have assisted their money management. As child poverty has fallen since 2005, the child poverty impact of the measures is beside the point, because they have not diverted money from successful strategies to tackle child poverty, but are in addition to those strategies. They were intended to take on board the evidence of the protective effect of having an asset, which is especially important in social mobility.

Cathy Jamieson: Does my hon. Friend agree it is vital that looked-after children have that asset built? Given that their parents are not in a position to do that, we
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have a responsibility, as corporate parents, to find another way, if the Government will not reinstate child trust funds.

Kate Green: I hope that Conservative Members and the Minister will hear that contribution in the spirit in which we all feel it. This country has a poor record on outcomes for looked-after children, who enter adult life singularly poorly provided for financially. The child trust fund was a small step towards beginning to rectify that. As my hon. Friend says-and I hope the Government heed this-if the child trust fund is no longer to be the mechanism through which looked-after children are given some sort of nest egg with which to embark on adult life, I hope that Ministers will look for another way to secure the financial futures of such children. It is not sufficient to say that we will improve education, health and Sure Start support, important though those are. Plenty of evidence shows the importance for young people, especially those from disadvantaged backgrounds-and looked-after young people most of all-of having a financial asset behind them.

The hon. Member for Gloucester (Richard Graham), who I am sorry is no longer in the Chamber, cited the briefing that some Members had received from the Save Child Savings alliance. I was struck by the numbers he shared with us: 4.5 million child trust fund accounts are open; £2 billion is under management; and £22 million a month is saved in those funds. That is a lot of money being saved and set aside for our children's futures. I strongly urge the Government to take note of that success. The vast majority of families saving are on modest, medium or lower incomes, certainly of less than £50,000, and many of them on much less. The hon. Gentleman mentioned that, I think, 24% of families were not saving at all. He is right to draw attention to the position of those families, but I question what they will save with instead, if we remove the child trust fund. If the Government do not save on behalf of the poorest children, I very much doubt that a tax break, for families who probably do not pay tax anyway, will suddenly magic up savings for the poorest children. I ask the Government to address that point.

The child trust fund is well targeted for its purpose, which is to deliver an asset to young people as they start out on adult life. Better-off families can afford to support their children with university fees, renting their first flat, buying their first car, perhaps starting a business, having a gap year-all markers of social stability, and therefore at the heart of what the Government rightly want young people from low-income backgrounds to be able to participate in. I am genuinely at a loss to understand why a Government who repeatedly, and unjustly, lambast Labour's record in relation to social mobility and inequality, should totally dismantle a savings vehicle that has the potential to reduce inequalities, and instead propose a savings vehicle that will widen those inequalities by benefiting only those who are better off.

I am just as puzzled by the Government's attitude to the saving gateway. Pilots in different parts of the country have shown that, coupled with outreach and money advice, it helped to support a savings habit, provided low-income families with a cushion enabling them to cope with crises, allowed them to build up modest assets over time, and made possible additional savings that would not have been possible otherwise.

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I am surprised-more than surprised; indeed, I am shocked-that a Government who are happy to extend tax breaks to savers and to maintain them on ISA savings, pension contributions and inheritance tax will not provide support to boost the savings of the poorest. I ask Ministers how that can possibly be fair.

Alison McGovern: I thank my hon. Friend for giving way again. She is making a comprehensive and excellent speech. Does she agree that what the financial services sector needs now are additional deposits, and that offering tax breaks to those who are already saving will not be half as effective as continuing programmes which, according to all the evidence, produced those additional deposits and improved the savings culture?

Kate Green: I think that the Government should be very wary about dismantling a scheme that has generated additional savings, for exactly the reason that my hon. Friend has given.

What concerns me most is the impact of the Bill on the Government's commitment to reducing inequality. We already have a significantly unequal distribution of assets. Up to 20% of households have no assets at all. The highest-earning 10% hold half the assets, and two thirds of households have savings of less than £3,000. I accept that we are not handing on a proud record to the incoming Government, but I would have expected them to conduct a rigorous equality impact assessment of their own proposals as a result of their determination to do a little better than that.

The equality impact assessment that accompanies the Bill is thin in the extreme. It fails in any way to recognise the lower earning power in the labour market of women, disabled people and members of ethnic minorities: a lower earning power that translates into a lesser ability to set money aside in savings, and ultimately, therefore, into lower asset holding. Its analysis of the saving habits of members of ethnic minorities is scanty, although research from the Runnymede Trust would have informed the Government quite quickly that at least 60% of Asian and black British families have no savings at all. The fact that that is twice the number of white households in the same position should concern us greatly.

Sarah Newton: I am just as passionate about the inequalities in our country as Labour Members, and I am sure that I speak for all Conservative Members. Our drive to enter politics was prompted by a wish to end the vast inequalities that have arisen over the past decade. Does the hon. Lady agree that the best way to help people to help themselves in that regard is through education and employment?

Kate Green: It is not a case of either/or. We should be doing everything possible. We should be maximising families' financial stability and security through education, employment and a redistribution of income and wealth.

One misconception should be properly analysed. It is absolutely not the case that inequality rose exponentially under Labour. In fact, it more or less flatlined. It rose a bit during the last couple of years of Labour government, but according to the Institute for Fiscal Studies-admittedly not the Government's favourite think tank-without the measures taken by Labour between 1997 and 2010,
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given the trends experienced under the previous Conservative Government, it would have been very much worse.

The hon. Lady and other Members on the Government Benches are right to say that we are all anxious to reduce inequalities; what I do not understand is how on earth the Government think that proposals of this kind will do that. How on earth do they think that removing the saving gateway will address the gender inequality involved in the fact that women have 40% less in savings than men? How on earth do they think that removing the child trust fund and the saving gateway-benefits that provided extra money or extra access for people with disabilities-will deal with the inequality of disabled people?

John Hemming (Birmingham, Yardley) (LD): The hon. Lady asks how on earth the Bill will reduce inequality. It will do so by removing universal benefits and replacing them with targeted benefits.

Kate Green: First, let me remind the hon. Gentleman of what I said earlier about the effectiveness of universal benefits in reaching the poorest. Secondly, even if we accept the hon. Gentleman's contention on its own terms, it does not provide a case for abolishing those benefits. It may provide a case for retaining the existing structures and targeting them for a time. Obviously I do not want that to happen-I want us to maintain as much universal support as we can-but at the very least I ask Government Members why they want to rip the whole thing up and throw it out, rather than trying to target it more effectively.

John Hemming rose-

Kate Green: I will not give way, because I am about to end my speech.

I urge the Government to reconsider their proposal to abolish these benefits. I ask them to examine ways in which they might be able to maintain structures that have been effective, and have the potential to continue to be effective, in supporting the poorest families in the immediate future and-this is also important-in the longer term. Unless they come up with credible alternatives to reduce and remove income and wealth inequalities, I will not support their proposals, and I will not support the Second Reading of the Bill.

Several hon. Members rose -

Mr Deputy Speaker (Mr Nigel Evans): Order. As hon. Members will have just observed, a number wish to speak in the debate. The winding-up speeches will begin at 9.40 pm. If everyone is to have an opportunity to speak-and I know that a number of Members have been present throughout the debate-I must ask those whom I call to exercise time restraint so that their colleagues can contribute as well.

7.56 pm

Jacob Rees-Mogg (North East Somerset) (Con): Thank you for calling me, Mr Deputy Speaker. I feel slightly guilty that you have had to do so three times in almost
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as many days. I assure you that I am not modelling myself on Psmith-with a silent "P"-and his haunting of John Bickersdyke, which you will remember from the book "Psmith in the City". I am really not trying to do that, and I will be as brief as I can while discussing this important Bill.

Benjamin Disraeli famously said that the job of the Opposition was to oppose, and we have seen that today. Indeed, we have seen it all afternoon. We have seen rather specious opposition to the Bill. Whenever the subject of where the money is to come from arises, there is no answer. VAT should not go up to pay for our bills; benefits should not be cut to pay for our bills; so we must spend, and we must have no increase in taxation. What happens to the nation's finances at that point? What happens to the national debt? What happens to the deficit? We go down the sorry road towards bankruptcy. That really is what Opposition Members have been arguing for. It is the "do nothing" school; the argument that, like Nero, we should fiddle while Rome burns.

Chris Williamson: Will the hon. Gentleman give way?

Jacob Rees-Mogg: I should be delighted.

Chris Williamson: Will the hon. Gentleman at least acknowledge that before the economic downturn, the debt ratio in this country was lower than the debt ratio that the Labour Government inherited in 1997? The fact is that it was the Labour Government who introduced measures to keep people in their homes and in employment, and to prevent the appalling circumstances to which ordinary working people were subject in the 1980s when the hon. Gentleman's party cast people aside.

Jacob Rees-Mogg: The hon. Gentleman's point is fundamentally flawed. In 1997, the socialist Government decided to stick to Conservative spending targets. That is the one sensible decision that they made. It is not surprising that they managed to reduce the public debt by doing what the Conservatives had said that they would do. As for the deficit that built up before the crisis hit, there was a structural deficit-probably equivalent to 7% or 8% of GDP-which had resulted from excessive and extravagant expenditure. That is the nub of what we are debating today. We need to examine these benefits, and establish whether they are right in principle.

I will declare an interest. My three children have been the fortunate beneficiaries of £250 each-£250 spent extraordinarily well, Members may think, beneficially and wisely, so that in 18 years' time my children will have something to spend when they are a little older. Is this really a sensible use of taxpayers' money? It is too small a sum to make a difference even with the benefits of compound interest, yet too large a sum for our public finances to stand when aggregated across the whole of the economy and the total number of children who will be born. It is a wrong benefit, which is rightly being abolished. To contradict the hon. Member for Stretford and Urmston (Kate Green), who spoke before me, it is also a benefit that cannot be spent for 18 years; it will be of no economic benefit until the child is 18.

Kate Green: I apologise if I have misled the hon. Gentleman, but what I said was that the health in pregnancy grant would be spent immediately. I absolutely
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accept that the child trust fund moneys are locked up until the child reaches the age of 18.

Jacob Rees-Mogg: I thank the hon. Lady for that useful clarification.

The health in pregnancy benefit is paid to ladies towards the end of their pregnancy so that they can eat properly. Again, my wife was entitled to it. I have in the past been mobbed up somewhat on nannies and issues relating to that subject, but the one type of nanny of which I most firmly disapprove is the nanny state. This patronising approach, saying to these ladies, "You ought to eat your greens and here's some money so you can do so," is not what government is about. The Government are here to allow people to lead their lives as freely as they possibly may, without interference from the state while also providing a safety net for those who fall on hard times, not to tell people how to lead their lives, at the expense of the taxpayer and the economy.

Catherine McKinnell: Does the hon. Gentleman agree that a "lady" of very low income who finds herself pregnant and expecting her baby in three months' time will have increased expenditure relating to both the pregnancy and the upcoming birth?

Jacob Rees-Mogg: The hon. Lady makes a brilliant and inspired point with which I completely agree, and it is therefore wise to ensure that such benefits as there are are directed to the people who need them, not wasted on people who do not need them. [Interruption.] If the hon. Member for Nottingham East (Chris Leslie) wants to say something, I am more than happy to give way.

Chris Leslie (Nottingham East) (Lab/Co-op): The Bill does not achieve what the hon. Gentleman wants, however. While I am on my feet, may I ask him whether he knows how many children in the United Kingdom are born with spina bifida each year, possibly as a result of a folic acid deficiency?

Jacob Rees-Mogg: The hon. Gentleman says the Bill does not say where the money is going to be spent, but that is an absurd point to make because the public finances are in such a weak condition that, at this moment, money needs to be saved. The first principle for the Government-their first ambition and intention-must be to get the finances of this country on to a stable footing so that they can then, with economic growth, ensure that the money is there to help people in the future.

Sarah Newton: I quite understand that the hon. Member for Nottingham East (Chris Leslie) might not know about this-his partner may never have had a child-but folic acid should be taken before and during pregnancy to avoid the dreadful condition he mentioned, and all the supplements are available on the NHS.

Jacob Rees-Mogg: My hon. Friend makes an extraordinarily good and important point. The payment of this £190 comes too late in the process to be of benefit to people whose children may be at risk of spina bifida.

Chris Leslie: I would be surprised if many mothers-I certainly include my wife in this, when we were having our daughter-were able to discover that folic acid is
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available on the NHS. A multivitamin and folic acid supplement costs about £10, I think. Do the hon. Gentleman and the hon. Lady really think it is absolutely essential that these women having children should potentially be deprived of help to pay for that folic acid supplement because of this deficit reduction strategy?

Jacob Rees-Mogg: As my hon. Friend the Member for Truro and Falmouth (Sarah Newton) wonderfully and accurately pointed out, the hon. Gentleman had got the wrong part of the pregnancy; we have to go back, not forward.

Sarah Newton: The whole issue of maternal health is incredibly important. The problem with this benefit is that how the mum is to spend the money is completely unspecified. There is absolutely no guarantee whatever that the money will be spent in the way that has been suggested. It is far better, therefore, that a mum is supported through comprehensive care in the NHS so that she is informed of the choices and provided with the resources to enable her and her baby to thrive.

Jacob Rees-Mogg: My hon. Friend is absolutely right and spot on. That is a most helpful intervention. There is no point in giving money late in the day to everybody-those who need it and those who do not need it alike-for an unspecified purpose when other ways of spending money may prove to be more useful.

Kerry McCarthy (Bristol East) (Lab): The hon. Gentleman is saying that benefits should be targeted rather than universal and that they should be for a very specific purpose-that the state should dictate what the benefit money is spent on, which contradicts what he said earlier about the nanny state. Given his support for targeting benefits, how does he justify the Government's continued support for the winter fuel allowance?

Jacob Rees-Mogg: The winter fuel allowance goes to the elderly, many of whom will have paid full national insurance contributions, and it is therefore in some sense a recompense for what they have paid in. I think that to look after the old in society is an important and virtuous thing to do. It is right to give that help so that people can be warm in their homes, but we are talking at present about £250 for children when they are born that will give them a pitiful amount a few years later. We are talking about £190 given to every woman who is going to have a baby for no necessary benefit to her because she may not need the money or it may be received too late for her to address some of the problems referred to earlier. Those two benefits are therefore unnecessary and wrong.

The third benefit is the Government's matching of personal savings, and there is a misconception here. Saving from a deficit is a dis-saving to the economy because there are costs associated with allocating that saving. To put that more simply, if someone borrows money from one account to put into another account they will pay a higher rate of interest on their borrowings than they will receive on their savings so, net, the country is dis-saving by topping up savings accounts. Opposition Members are therefore wrong to say that this is an encouragement to saving.

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We need to look at all that is being done in the broader context. We have this phenomenal deficit-our highest peacetime deficit-which the Government have, in a workmanlike and serious-minded way, decided to tackle. They have decided to bring the deficit down so that we may have the conditions for economic growth. The essence of good government and of a sensible Treasury policy is to ensure that there are the conditions where business can thrive, jobs can be created and money can cascade through the economy. That is what really lifts people out of-

Chris Williamson: Will the hon. Gentleman give way?

Jacob Rees-Mogg: Of course I will.

Chris Williamson: The hon. Gentleman referred to job creation. Will he therefore comment on the fact that almost 500,000 jobs will go in the public sector as a direct consequence of the comprehensive spending review, followed by a further 500,000 jobs at least to go in the private sector? How does the hon. Gentleman square that circle?

Jacob Rees-Mogg: I am not going to try to square circles, which I believe is not possible, but those figures are fundamentally contentious, and it is also worth bearing in mind that outside the private sector the country has no income. Every penny spent by the Government either has to be raised in taxation or borrowed.

Chris Williamson: Is the hon. Gentleman therefore contesting the figures of the Office for Budget Responsibility?

Jacob Rees-Mogg: The hon. Gentleman knows the figures are contentious because he cited the figure of how many jobs will go in the private sector, but he is ignoring the jobs that will be created. We find ourselves in the extraordinary situation that 700,000 public sector jobs were created by the last Government without the money to pay for it. We cannot run a system under which we employ people and pay them what are essentially tokens because we have no real money. Are we to follow California and pay servants of the state IOUs because there is no proper currency with which to pay them? Are we going to so debauch our currency and print even more of it that there are no funds with which to pay people? Are we going to destroy our gilt market so that the Government are unable to raise money? No, Her Majesty's Government have been brave, courageous and right, and they have taken tough decisions. They have taken decisions mocked by Labour Members because they dared not do this; they talked quietly in secret rooms about how much they were going to cut. These cuts then get leaked in the newspapers because Labour Members dare not come boldly to this House to say what they want to do.

Chris Williamson: I beg your pardon, Mr Deputy Speaker, and that of the House for continuing to intervene on the hon. Gentleman, but I cannot allow him to get away with his remarks. I wonder whether he studied history at all when he went to school and university, and whether he would care to ponder on what happened in
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the 1930s in America, when its plans put people back into work, compared with what happened then in this country. The prospectus that is being followed by this Administration was similar to what was done in the 1930s and saw mass unemployment.

Jacob Rees-Mogg: I am grateful to the hon. Gentleman for his kind and helpful intervention, because I happen to have with me some economic data from the 1930s. I believe they will prove helpful because they are from the United Kingdom. It is a common error-if I may say so, it is a schoolboy error-to confuse the situation in the United Kingdom with that in the United States in that decade. In 1931, public spending in the United Kingdom was £1.174 billion, a figure that had been cut to £1.061 billion by 1934. Unemployment peaked in 1932 and gross domestic product grew from £4.399 billion in 1931 to £4.813 billion in 1934. So there was a percentage cut of nine-odd per cent. in public spending accompanied by a 9% rise in GDP, and unemployment peaked long before the cut in public spending was at its maximum point.

So in fact this Government are rightly following what the British Government did in the 1930s, and the key thing, which I will give credit to the Labour Government for, was coming off the gold standard. In 1931, having an active monetary policy meant that the economy could grow even while public spending was being cut. Her Majesty's previous Government, the one that she dispensed with on 6 May or thereabouts, allowed the pound to fall so much and allowed the Bank of England to ease quantitatively-or print money, to put it in less jargonistic terms-that the increased money supply created the conditions where this Government can and must cut fiscally, and can have economic growth and falling unemployment. We are already seeing some of the fruits of that coming through in the figures announced today.

Gregg McClymont: I was listening closely to the hon. Gentleman's comments. Given what he was saying, will he support a further round of quantitative easing if that is necessary to stimulate the economy, given the possibility of a prolonged-

Mr Deputy Speaker (Mr Nigel Evans): Order. This is going rather wide of the mark and now may be an appropriate time to remind colleagues that we have the wind-ups at 9.40 pm. I would be grateful if Mr Rees-Mogg could show some restraint, as well as everybody else that follows.

Jacob Rees-Mogg: I would have finished by now, but I have taken a number of interventions, which it is a privilege to do. [ Interruption. ] It is a privilege, because the interventions are very interesting and they allow us to get to the nub of this difficult matter. Of course it is not popular to take something away. Of course it is easy to stand up raging about £190 being taken away from women who are about to be pushing prams. Of course the decision to take £250 away from their children is a hard one, but it is right, because the country cannot afford this. If the economy is to grow, we must have sound public finances. If that happens and if people can keep their own money, rather than have it taken from one pocket by the Government to be put into another pocket by another Department of the same Government,
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we can get economic growth and we can see what we saw in the 1980s, when the economy boomed, individuals got increasingly prosperous and Britain was back among the top world nations. That is what I want to see, that is what the Government are doing and that is why I am thrilled to be supporting the Bill.

8.14 pm

Simon Danczuk (Rochdale) (Lab): I wish to turn my attention to the child trust fund, in particular, and to start by quoting the Chancellor. In a speech made just 12 months ago to the Conservative party conference, he said:

As we have heard tonight from Conservative Members, many of them believe that the benefits we are discussing tonight should not be universal and that we should target them much more closely. That has been a common theme throughout this evening's debate.

Only the Liberal Democrats have never really been in favour of the child trust fund. They have continually proposed to scrap it, although they have not had the decency to turn up to this debate in number. So we have to ask ourselves what the situation really is. Who is the driving force in the coalition Government in terms of punishing the poor? Is it the Conservatives, who want to target their benefits more closely, as we have heard today, or is it the Liberal Democrats, who are happy and enthusiastic about increasing VAT, raising tuition fees and cutting the child trust fund?

The reality of the Chancellor's logic in scrapping the child trust fund is that the most vulnerable will be hit hardest. I can tell colleagues that the child trust fund is neglected in terms of the attention it gets, as has been shown by Conservative Members during today's debate. The fund is a very important tool to encourage saving, particularly for the less well-off. I know that from speaking to parents across my constituency, particularly mothers. It has continually encouraged them to start saving on behalf of their children and it has started them thinking about the future for their children. We cannot underestimate the importance of the child trust fund in that regard. Although I readily accept that what children will receive is between £500 and £1,000, which is never going to pull people out of poverty in a short time, there is absolutely no doubt that it has been a catalyst to get people to start saving. As has been said, it has also encouraged families and friends to start contributing to the savings of young children.

I have described the trust fund as one of the best hand-ups, rather than handouts. As has been said, the Save Child Savings alliance has described the child trust fund as

There is irony in the Government cutting the child trust fund at this time, because one of the key reasons for its introduction was to encourage people to engage with financial institutions. People are suspicious of such institutions and, if ever there were a time when we needed to encourage them, it is certainly now. Yet, the Government are scrapping this initiative and the other initiatives dealt with in this Bill, which actually encourage that engagement.

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The Government's decision to scrap the child trust fund will, in effect, create a situation where-we heard about this just before I spoke-the elite in society will be continually pumping and stashing thousands of pounds into the personal, private child trust funds that many of the wealthy already have. That dichotomy will continue. What we will have in poorer communities-in parts of Rochdale-is poor families who will be unable to get that start in life for their children, with no £250 or £500 to kick-start their saving. Although the wealthy will continue to have their opportunities in life, the poorer and more vulnerable will not have those opportunities. Come 18, when the children from the wealthier families have the chance to have a good time at university and have a better opportunity to go off on a gap year, to buy a car or take driving lessons, which is all well and good, the reality for the poorer people and the more vulnerable, whom we often see in Rochdale, is that because of these cuts, which could have been avoided, they will not have those opportunities. They are being taken away from them by the Conservatives, ably assisted-especially in this instance-by the Liberal Democrats.

The contrast could not be more obvious. In many respects, the axing of the child trust fund defines the differences between the Labour Government and the coalition Government. The Labour Government were intent on providing a hand-up and not a handout, whereas the coalition Government are not prepared to provide either a hand-up or a handout.

Harriett Baldwin (West Worcestershire) (Con): I am trying to follow the intellectual train of the hon. Gentleman's very powerfully expressed argument. I noted that it had something to do with targeting and Liberal Democrats, but perhaps I am picking up the wrong sequence of words. He started with an eloquent argument in favour of universal benefits. Does that mean that he is in favour of continuing to give these grants to my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg)?

Simon Danczuk: I will be quite clear about the position I take in that regard. Let me clarify my point: I was stating that many Conservatives have identified tonight that they do not believe in universal benefits and that they are prepared to have more targeted benefits. If that is the case, why did they not put that in the Bill? That is the reality. My point is that the only people in the coalition Government who want to scrap the benefits altogether are the Liberal Democrats, so is it the Liberal Democrats who are pushing the Conservatives more to the right, towards scrapping benefits completely?

This type of Bill, like the CSR, will confirm to the people of Rochdale that the coalition Government are not on the side of fairness, but are on the side of the wealthy.

8.23 pm

Alex Cunningham (Stockton North) (Lab): Despite what we have heard from those on the Government Benches tonight, it is still very clear that with today's Bill, the coalition will deliver yet another blow to hard-working families and the most vulnerable.

The Prime Minister said he wanted this Government to be

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So, I want to know why the coalition is again hitting hardest families with children. That is not my analysis or the analysis of my colleagues on the shadow Front Bench, but the conclusion of the Institute for Fiscal Studies. The Deputy Prime Minister spent last week attacking that much respected think-tank for daring to tell the truth about the coalition's damaging cuts, describing its methods of measuring the fairness of the controversial spending review as

but that is what is nonsense. The Deputy Prime Minister argued that the rich will pay the most as a result of the spending review and that anyone who argues otherwise is "frightening people".

Perhaps I could refer the Deputy Prime Minister and other Ministers not to the latest IFS report but to the Christian Bible and the story of the widow's mite. It will be familiar to many, and tells the story of a widow quietly giving her last mite to the temple while a rich man makes a great show of handing over a considerable sum, but a sum that is insignificant as part of his overall wealth. It seems that the poor in our country need to give their all and stay quiet, too.

Although the rich of this country might pay more both in terms of actual cash and as a percentage of their overall income than those on the lowest incomes, their pain will be negligible in comparison with that of a family in my constituency who might lose £10 or £20 a week, which could be the difference between feeding themselves properly and missing meals. I doubt that they will be quiet, like that widow, when they have nothing left and still have mouths to fill.

Hard-working families in my constituency do not need Labour MPs or the Institute for Fiscal Studies to frighten them; they can see for themselves the damage that the coalition Government are doing. They remember how Teesside suffered under the last Tory Government and they are frightened that the Government are cutting harder and faster than we have ever seen.

Others have highlighted these points. We have heard about the cuts to child benefit, cuts to housing benefit, the scrapping of the education maintenance allowance, and the cut to the child care element of working tax credit that equates to a loss of up to £1,560 per year for families who are already struggling with the burden of extortionate child care costs.

Harriett Baldwin: Does the hon. Gentleman agree with the helpful suggestion made by my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) about the fact that these grants have been going to people like him? He argued for a change in favour of more fiscal rectitude, which would mean that children growing up in the constituency of the hon. Member for Stockton North (Alex Cunningham) would not have such a burden of borrowing in the future.

Alex Cunningham: I think that the point that the hon. Member for North East Somerset (Jacob Rees-Mogg) made was that perhaps families such as his do not need that sort of income. If he wants to forgo it, that is all well and good, but there are hard-working families in my community that need that money.

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Let us add to all that the impact of the 27% cuts on local authorities and the effect that will have on services, including initiatives such as breakfast clubs, and again we see the family under attack. In the north-east, we already know that family dependency on benefits will grow, with some 43,000 public and private sector jobs lost over the next few years. People will see few jobs for them to chase as unemployment undoubtedly soars.

Today, the Government attack again. I object to the scrapping of both the child trust fund and the saving gateway and I believe the Government are making a big mistake by getting rid of them.

Gavin Williamson: The hon. Gentleman strikes me as a very enlightened individual, and I am sure that he is very aware that every Government have to make difficult choices. If he were to keep these areas of expenditure going to fund the benefit, what areas of Government expenditure would he cut?

Alex Cunningham: Personally, I would raise taxes in order to ensure that we could maintain this provision, and the bankers are a good place for us to start.

Gavin Williamson: Will the hon. Gentleman give way?

Alex Cunningham: No, I will not.

Both the child trust fund and the saving gateway were Labour initiatives, put in place by a party that understands the importance of fostering a culture of saving. Asset-based welfare can make a huge difference to the opportunities of the least well off in this country who often do not have access to the resources that many others are lucky enough to have, whether through inheritance or the generosity of family or because they recognise the importance of saving a little of their salary each and every month for a rainy day. The saving gateway aimed to encourage those from low-income households who do not save, for whatever reason, by promising the incentive of a Government contribution of 50p for every pound saved over the two-year life of the account. It had been trialled, and was due to be rolled out across the country in July.

We will not see the difference that the saving gateway would have made to thousands of low-income families at the relatively tiny cost to the Government of £100 million a year. The response to the trials was largely positive-one pilot saw the number of people saving rise from 16% to nearly 80%. In total, more than 22,000 people took part in two successful pilots, achieving more than £15 million in savings. Those people demonstrated that the scheme could generate both new savers and new saving, because individuals continued to save beyond the end of their gateway accounts.

Encouraging people to save promotes self-reliance and stability, allows long-term planning and provides security from sudden financial shocks. Saving just a few pounds a month makes a person feel in greater control of their life, and it can be transformative and provide a psychological boost. The difference that that can make to families and their quality of life should not be underestimated.

Sarah Newton: You are making a very powerful speech for us this evening, and I completely agree with you about the importance of savings and of encouraging a
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savings culture. However, I am rather disappointed by the glib response to my hon. Friend the Member for South Staffordshire (Gavin Williamson), who asked how Labour Members would pay for those benefits. Every time that question is raised, Labour Members say that we should tax the rich. What calculation has the hon. Gentleman made of the effect of increasing taxes to 70%, 80% or 90%? Is that where you would like to go? And what estimation-

Mr Speaker: Order. I gently say to the hon. Lady, first, that I am not going anywhere-the debate goes through the Chair-and, secondly, that interventions from now on must be short, because there is a lot of pressure on time and several hon. Members want to contribute.

Alex Cunningham: I have never had a problem with taxing the rich a little bit more. If that means a penny on income tax, I would be fine with it, although I do not know what encouragement I would get from my Front Benchers.

Gavin Williamson: Will the hon. Gentleman give way?

Alex Cunningham: No, I will not. We need to raise taxes and target the results at the poorest people.

I hoped that the saving gateway would squeeze some of the doorstep lenders out of low-income communities, which is an issue close to my heart. Those companies charge outrageous interest rates, and if people had some money saved for a rainy day, such monsters would see their customer base shrink.

I also want to speak out in defence of the child trust fund, which acts as an incentive to save by adding to a Government contribution of either £250 or £500 at birth depending on a family's income. The child trust fund was well established, having been introduced for all children born since September 2002. At a cost of around £500 million a year, including additional contributions when a child reaches the age of seven, this universal yet progressive fund ensures that all children, regardless of their family income, have a pot of money that they can access at the age of 18.

According to the Save Child Savings alliance, some industry data suggest that the child trust fund has seen the number of people saving for their children's futures almost treble. More than £2 billion is currently being held in child trust funds. That form of asset welfare opens doors to young adults, particularly those from low-income families. No young person has yet benefited from this fund-the first recipients are just eight years old today-but I would have hoped that when they can start accessing it in 10 years' time, that money would go some way to improving social mobility, which is an issue that some hon. Members highlighted earlier.

A policy that spreads wealth to the asset poor should be backed by anyone who is dismayed by the lack of social mobility in the UK today. Yes, education plays a major role in tackling that problem, but so do assets, which is something that the Liberal Democrats have failed to address in recent years. The Deputy Prime Minister spent some of the summer discussing the Government's programme for social mobility, but this measure goes against it. The child trust fund was one
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way in which the previous Labour Government hoped to tackle this issue, and scrapping it will be a step backwards.

At a time when the coalition proposes to increase university tuition fees, I would have thought it wise to defend child trust funds as one way in which young people could choose to shoulder at least a tiny bit of the burden of those costs. Even if they do not go to university, any funds available to 18-year-olds must give them a better start in life, which the better-off take entirely for granted. It may only help to fund their driving lessons, but that will give them the mobility and employability which would otherwise be denied.

Instead, having promised huge and unnecessary cuts over the next four years, the Government must cancel valuable programmes that are relatively inexpensive. Scrapping the child trust fund is a decision made with an eye on the short-term political goal of cutting the deficit, not the long-term responsible goal of encouraging families to save for their children's future. The age group facing the most debt is 16 to 34-year-olds. Surely a responsible Government should be seriously considering measures to help the next generation of young people, particularly given that university fees are set to rise to eye-wateringly high levels.

The Government are intent on pressing ahead with these family cuts, but when will the Minister tell us how the plans to fund and retain the infrastructure of the fund, to enable contributions to be restarted when the economic position improves, will work? I am told by the Save Child Savings alliance that it would cost £2 million a year to do so-a very small fraction of the total overall cost. There is an alternative to these draconian cuts, despite what the coalition says. Labour would deal with the deficit by halving it over four years. Yes, there would still be cuts, but we could cut carefully and always with an eye on the human impact. I am not confident that I can say the same about the coalition.

Several hon. Members rose -

Mr Speaker: There is no formal time limit on Back-Bench speeches in this debate, but it might help the House if I mention that no fewer than nine hon. Members-all, as it happens, on the Opposition side of the House-are seeking to catch my eye. The Front-Bench winding-up speeches will begin no later than 9.40 pm. I know that hon. Members can do the arithmetic for themselves and I am sure that they will want to help each other.

8.36 pm

Diana R. Johnson (Kingston upon Hull North) (Lab): Let me start by addressing a point that the hon. Member for Mid Norfolk (George Freeman) made. He implied that there was no glee on the Government Benches last Wednesday at the comprehensive spending review announcement, but I was in the Chamber and I clearly remember the cheering and waving of Order Papers when those vicious cuts were announced.

Ben Gummer (Ipswich) (Con) rose-

Diana R. Johnson: I am not going to give way.

I also take issue with the hon. Member for North East Somerset (Jacob Rees-Mogg), who reminded me very clearly why I am on the Opposition side of the Chamber and of my commitment to a modern, enabling
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welfare state that not only meets needs but opens opportunities to the poorest and extends people's life chances and opportunities. Those were key objectives of the progressive politics behind the child trust funds, the saving gateway and the health in pregnancy grant. I want to tell hon. Members why, for my constituents, the decision of the Liberal Democrats and the Tories to scrap these three policies is short-sighted and fundamentally wrong.

I have heard Ministers and Government Members talk at length about the economic environment and about cuts being inevitable, but the cuts disproportionately affect children and families, and that is not fair. All the decisions that the Government side is making are choices of the coalition Government. The cuts are not inevitable: the Government are taking those decisions. They decide where to allocate funding and what their priorities are-and their priorities clearly are not women and children.

We have also heard a lot from Government Members about wanting to target benefits more, but that is not what the Bill is about. It is about the wholesale scrapping of three important policies. As an MP in Hull, I know only too well that people often struggle to provide for their families on a day-to-day basis. They often live week to week, juggling as best they can paying bills and meeting their commitments. In Hull, the average household income is just £21,623 compared with the English average of £35,544 and the Yorkshire and Humber average of £29,902. Since 1997, there has been a 5% increase in average household income, but it is still a low-income area. The opportunity provided by child trust funds of a savings vehicle for Hull children and a nest egg for young adults is something that many families have never been able to provide no matter how much they wished to do so.

A few years ago I held a child trust fund surgery at a children's centre in my constituency-it is worth reminding Government Members that there is no ring-fenced funding for Sure Start, so we will wait to see whether those centres continue-and there was clearly a lack of financial literacy among many of the parents to whom I spoke. The child trust fund provided a real opportunity for families to think about finances and about having some capital set aside for their children when they reached the age of 18. Many families are able to save regularly for their children so that there is a capital asset that their children can use when they reach 18 to pay for driving lessons, buy a car or pay for higher education. Having assets and savings is something that more privileged people, such as the 20 millionaires in the Cabinet, take for granted, but in my constituency that is not the case. That is why the child trust fund was such a good idea: it was universally progressive-I am glad that we have been able to teach Government Members what that means-as poorer children received more.

Cutting the child trust fund and cutting the saving gateway are just two examples of how the coalition's spending review attacks families, and attacks women and children from poorer backgrounds with special venom. They have already seen child benefit frozen and cuts to the child tax credit, and in the comprehensive spending review the education maintenance allowance is going, there are higher tuition fees for universities and
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now there will be tuition fees in further education colleges. The pupil premium, the Deputy Prime Minister's fairness fig leaf, turns out not to be new money within the schools budget, and will do little to mitigate cuts in schools, including the switch of funds to free schools. There will also be cuts to local authority budgets, particularly in children's services. We have heard lots of warm words on the coalition Benches about looked-after children, but looked-after children are paid for out of local authority budgets for children's services, so let us see what the outcomes are for those looked-after children after the 30% cuts to local government finance.

To be fair, before the general election, as my hon. Friend the Member for Rochdale (Simon Danczuk) pointed out, the Lib Dems made it clear that they wanted to abandon and abolish the child trust fund. Even though the Conservatives had indicated that they wished to make the fund more targeted, the Bill would scrap the whole lot.

The coalition of those who now say that a child trust fund, or something very similar, should be reinstated includes the Daycare Trust, the Family and Parenting Institute, the National Childbirth Trust and think-tanks such as ResPublica, whose director Phillip Blond is often in the media as the red Tory mentor of the Conservatism of the right hon. Member for Witney (Mr Cameron). Abolishing the child trust fund will be a regressive measure, and will not promote social mobility and equality of opportunity-something that Conservative Members go on and on about. This measure will not deliver that for them. It will also be a backward move.

Many of those groups argue that we should promote a savings culture. It is ironic that when the Secretary of State for Business, Innovation and Skills, the right hon. Member for Twickenham (Vince Cable), was on the Opposition Benches he used to speak at length about the need to promote a savings culture in this country, and yet he is part of a Government doing exactly the opposite. That links in with the saving gateway policy-a scheme that was successfully piloted in Hull. It was designed to promote a savings habit among people on lower incomes, with the Government incentive that every pound saved by an individual would be matched, and to encourage people to engage with mainstream financial services. That latter point was very important, as loan sharks and doorstep lenders are a real problem in parts of Hull, and it is vital to promote the excellent work of credit unions, such as the Hull and East Yorkshire credit union, managed by John Smith in Hull. Individuals would be passported in to the saving gateway if they were in receipt of certain benefits and tax credits. All that has fallen by the wayside, and it is such a shame for constituents who could have benefited from that excellent scheme.

The health in pregnancy grant was a clear example of an enlightened potential spend-to-save policy, paid to expectant mothers from the 25th week of pregnancy on condition that they had received maternal health advice from a health professional, and paid for the first time from April 2009. I have always been concerned about health inequalities in Hull compared with other areas of this country, and we need to focus generally on maternal health and the early years of life. It has been very important to focus on good nutrition, for example. In July 2010, 86% of pregnant women and mothers of young children in my constituency were eligible for the
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healthy start programme, which is a targeted programme, compared with a Yorkshire and Humber average of 82%. In the light of that statistic, if the Government are willing to listen and think about targeting the health in pregnancy grant, it seems to me that a vast number of my constituents would be eligible.

I asked Ministers how many people in my constituency were receiving the health in pregnancy grant, but I was told that information was not available. It is ironic that a Government who are requiring councils to list all spending over £500 are not keeping that kind of information, which would help us in our decision making. The grant is also important in helping with the additional costs incurred by families when a new baby is on the way, and it is the link with the health advice that is so important. We heard the quote from the Royal College of Midwives, which was quite clear about the importance of that health advice.

The Government are making the wrong choices. There are alternatives. There are different ways to deal with the deficit. It is unfortunate that the Government will not listen and are taking an ideological view of where the cuts fall, and it is unfair that women, children and babies are being penalised.

8.45 pm

Stella Creasy (Walthamstow) (Lab/Co-op): I wish to speak in the debate tonight because of my deep concern that these proposals will ensure a bleaker future for many young people and their families in our country. In particular, I am deeply concerned that cutting the measures that promote savings and financial stability for many of the poorest families in our society saves comparatively little for the public purse but will have a massive long-term impact on social mobility. I want to make my remarks in three stages: first, my concern that we need to do more to help families to manage their finances and plan for the future, which measures such as the saving gateway and the child trust fund help support; secondly, the evidence that those products were achieving the aims that they set out to achieve; and, finally, the wider social consequences of failing to support action on social mobility.

Members may know of my concerns about affordable credit and the financial hardships of many of the families in my local community. My concern that the Government should act to support measures that will help to tackle the causes of debt and improve access to affordable credit are expressed in the ten-minute Bill that I will table in the House next week. I fear that the forthcoming cuts to public services, which have already impacted on the incomes of families in Walthamstow, will make such problems worse, given the high number of local residents who work in the public sector.

To give some flavour of the financial planning problems that families in areas such as mine are facing, I want to refer to a survey recently undertaken by the Children's Mutual society on the impact of the credit crunch on family finances. It found that one in four families in this country claim their household income is not enough to pay their bills each month. Given many people's fears about redundancy and the impact of the cuts that the Government plan to their livelihoods, it will not surprise many Opposition Members to learn that one in 10 families fear that the main breadwinner will be made redundant
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in the next six months. Three quarters of them have debts in the shape of credit cards, loans and overdrafts, and a quarter of them have borrowed money from their parents in the past year. Without intervention, those cycles of debt will continue and deepen as these cuts bite.

Helping parents to plan for the financial future of their families is about not just a stable economic platform in Britain, but the quality of life itself. Some 29% of British families admit that they are already arguing over their family's finances. A third of parents are suffering from sleepless nights because they are worried about money.

There is therefore a deep irony that the Chancellor makes comparisons between household debt and national debt, and then scraps the measures that help to address the former in the name of addressing the latter. Thinking of the future when the present is so fragile is tough at the best of times for such families. Taking away the mechanisms by which the Government can help them indeed makes the worst of times, but that is exactly what the Government are doing in this Bill to families such as those in Walthamstow whom I represent.

Abolishing the child trust fund and the saving gateway will do nothing to secure the culture that the Chancellor said just 18 months ago he wished to see in this country in a speech to Reform about a nation that supports savers. He is not the only member of the Government who wanted to support a savings culture in the UK; even after the election, when we know that many pledges have been broken, the Financial Secretary to the Treasury argued that the Government

Those are laudable aims. They are aims that I share and that also motivate my ten-minute Bill, but that is why I find this legislation all the more heartbreaking: it stops in their track programmes that we know have a proven track record in improving savings for some of the poorest families in our nation, including many in my own constituency of Walthamstow.

Sarah Newton: I wonder what analysis the hon. Lady has done to demonstrate that the programmes help in the way she suggests, to enable people in low-income households to save for the future, because I understand that very few families have made any additional contribution to the child trust funds.

Stella Creasy: I am glad that the hon. Lady asks about an Opposition Member looking for evidence. If she listens to me, she will find that I can refer to many different research points that can bring out exactly that. It would be useful in these debates to move from the examples given to what the independent academic research tells us the child trust fund has done in increasing savings in this country. I direct her to the work being done by the university of Bristol on this matter in particular.

As an MP in Walthamstow, I cannot help but see the impact of the Government's decision. The latest figures tell me that more than 10,000 families in Walthamstow have a child trust fund voucher-well above the national average for a constituency. Nationally, we know that 70,000 are issued each month, including the top-ups, at a cost of just £500 million to the taxpayer. It is a
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relatively small investment compared to some of the other mechanisms that we have, but we know that it is money well spent, because until they were stopped, child trust funds were the most successful Government savings scheme ever.

My hon. Friend the Member for Stretford and Urmston (Kate Green) admirably set out the evidence that we have. It is worth repeating because of the questions being asked by Members on the Government Benches. Two million people were contributing to 4.5 million open accounts, resulting in more than £2 billion in assets, with £22 million in regular contributions. Critically, those are from families on less than £50,000 a year. In London that is not a high target rate to meet.

To get the full sense of what abolishing the scheme will mean, it is worth looking at the sums involved. Thanks to the Revenue's child trust fund calculator, I was able to do just that. It tells me that a child born on my birthday this year eligible for just that basic payment of £250 from the Government and whose family saves just £100 a year, which is not even a tenner a month, could get about £3,000 in 2028. If the family started saving £20 a month, the figure could rise to £8,000. At £4 a week, it would be nearly £10,000.

Harriett Baldwin: Will the hon. Lady give way?

Stella Creasy: With respect, I have given way once.

We do not need to wait until 2028 to see the impact that such funding will have on the choices that young people could make. We know that in 2020 the first generation of child trust funds will mature. That means there will be 18-year-olds with access to £3 billion of investment for our nation. That may not be the riches of Croesus that some on the Government Benches will be able to bequeath to their children, but for the families that I work with in Walthamstow those first funds maturing in 10 years will transform the choices that their children are able to make.

In the context of the other debates that we have had in the House recently-on tuition fees, home ownership and entrepreneurship-we all know the difference that that kind of money will make. Putting that £3,000, the lowest sum, into context, it is worth reflecting that evidence shows us that parents are spending on average £4,000 on financing their children through university. We know, too, that more than half of 25 to 34-year-olds still rely on their parents for financial help. With tuition fees set to rocket under the present Government, that debt, that dependency and that distress for the parents concerned are only set to rocket.

Countless research studies show us that low income families aspire to saving for the long term, and that they want a nest egg for their children. The child trust fund is helping to make that ambition a reality, with almost 30% of the children who get the child trust fund also getting the top-up endowment of £500, meaning that their nest egg will be even bigger.

Bill Esterson (Sefton Central) (Lab): My hon. Friend makes a good case for the evidence for saving, particularly in low-income families. Is she aware of the House of Commons Library research that predicts a £4 million saving from the abolition of the three schemes, which
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compares rather unfavourably with the amount to be saved by the levy on the banks? Will she comment on that?

Stella Creasy: I thank my hon. Friend for that question. He precisely answers the point that many on the Government Benches wish to raise about where else money could be raised. There are ample other ways that we could raise money to reduce the deficit, such as the bankers levy.

Harriett Baldwin: Will the hon. Lady give way?

Stella Creasy: I shall make progress, as Mr Speaker has pointed out how many Members want to contribute.

I want to put on record my concern that children who will have the child trust fund removed-those 30% who are getting the extra payment-are kids from the families most likely to be hit by the cuts in public spending, as the housing benefit, tax credits, jobs and services that their parents rely on are also slashed by the Government. These are the kids of families who already struggle to make ends meet and for whom the scheme represents a lifeline of opportunity for their children in later life.

Members need not take my word for it. Let them look at the reports from the Treasury and the Institute for Fiscal Studies. They make it clear that the poorest will bear the brunt of the cuts. The Bill ensures that the burden will carry on to their children as well. This is not fantasy or wishful thinking, as some on the Government Benches may wish to claim. Since the scheme has been running, there has been clear evidence that it works in encouraging saving and supporting aspiration.

It is not fantasy to think that that money would be spent on the future of those young people. The research commissioned by the Treasury shows that families of all incomes see the money as the key to their kids getting on in life, whether it is used for higher education, setting up home or even having driving lessons. The research reflects the ample evidence and common-sense proposition that possession of even a small pot of money in early adulthood improves one's life chances later on. It shows the strength of the economic argument for retaining the child trust fund, and that a savings culture can be ingrained in people from the early years of their lives. It shows also how counter-productive it is to cut the fund now, because the funding that would have been available to our economy in later years will also be absent from the choices that children are able to make.

The strength of the scheme, and what I want to concentrate my final remarks on, is the evidence that a small amount of capital at the beginning of life had a significant advantage for children 10 years on in life, even when accounting for employment, higher earnings and better health. At the heart of the scheme, and the reason why the previous Government introduced it, is a concern for social mobility, something that Government Members say that they too care about. If they do care about it, however, they will understand that assets are the key to social mobility.

Labour Members understand that if a child is born with a silver spoon in their mouth, it means not just nice baby clothes or a wonderful pram but the money, resources, confidence and networks that help to turn potential into reality. If a child does not have those assets, at every stage in their life their choices will be
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limited, and the decisions they make will be that much harder, whether they are about where to live or the lifestyle their family can afford, or whether they can even take the chance to go on to further and higher education. That is why Labour Members fought for the scheme and had planned to extend it if Labour won the election. It encourages not just savings, but aspiration.

We might look at our debates, and those that the UK Youth Parliament will have on Friday, about the right to vote and citizenship, but surely a truly progressive society is one in which we ensure that people have access to the capital endowment that gives them the same social power and responsibility of all their peers. I know that some Government Members agree. Only one day has been allotted to this debate, and attendance is low, but I hope that the country takes note of the fact that this Bill reflects the real impact of the Liberal Democrats on the coalition.

I urge those Government Members who consider themselves to be compassionate Conservatives to hold true to their own manifesto and to protect against this onslaught of Liberal callousness. The Conservatives' manifesto at least pledged to protect the child trust fund for some children, so I urge them not to listen to the siren voices of the Liberal Democrats who, by abolishing the child trust fund, want to see the poorest families decimated.

The Liberals cannot even decide why they do not want the fund. Their claims run from "We can't afford it," to "It's not the best way to secure asset-based mobility." But as the former Chief Secretary to the Treasury said-

The Economic Secretary to the Treasury (Justine Greening): "There's no money left".

Stella Creasy: I accept that the hon. Lady may be confused, but let me be clear that I am talking about the former Chief Secretary to the Treasury who claimed that the Government could not afford to continue with the child trust fund because it would burden future generations with a bigger debt. Some Opposition Members think that burdening future generations with no opportunity in life at all is not a price worth paying.

If we are to continue looking at what Chief Secretaries to the Treasury have said, we will find it worth considering what the current one said back in 2008, when he agreed that asset-based welfare was the true path to social mobility. He argued that there needed to be an alternative to the child trust fund, but tonight we have not heard about any measures to replace the asset that people would have had. We have heard nothing from Government Members; the silence has been deafening. Opposition Members have clearly explained why an ISA is not the same as a child trust fund.

My private Member's Bill next week will call for a levy on financial institutions to help to support debt counselling and advice services. That is why I welcome the Financial Secretary's remarks that the Government would back a consumer financial education body to begin that process of supporting financial advice services. However, it is no good on the one hand offering help and support for families who get themselves into debt, and on the other taking away the savings vehicles that keep such families going.

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Given my proposal, I hope that the Minister will agree to meet me and other campaigners to discuss what more can be done to address the causes of poverty and ensure that families have access to affordable credit. Whether we are talking about the child trust fund, the health in pregnancy grant or the saving gateway account, I urge the Government to rethink the Bill and recognise that it is not in the long-term interests of families throughout Britain to support such measures.

A nation which ensures that every young person and their family has financial assets at key stages in their lifetimes is one in which potential stands a much greater chance of being realised. If the Bill is overturned and the scheme kept, a world of possibility will open up to many of our young constituents. I urge the House to reject the Bill and to sustain these vital instruments of social progress.

Several hon. Members rose -

Mr Speaker: Order. We have just over 40 minutes, and I still have seven names on my list.

8.59 pm

Nic Dakin (Scunthorpe) (Lab): To take a gamble with your own money, especially if you are a millionaire, is a reasonable choice to make, but to take a gamble with other people's money-or, worse still, other people's livelihoods and futures-is reckless in the extreme. But that is what the Government are doing. It is not Labour MPs who are saying that, but respected commentators such as Andrew Rawnsley of The Observer. On Thursday, the Financial Times described the Government's plan as "an audacious gamble". With economics Nobel prize winners queuing up to say that the policy of this naive Tory-Liberal coalition Government will have us floundering on the rocks of high unemployment and economic stagnation, we are in very difficult times.

Paul Krugman, the 2008 Nobel prize winner, said:

It is hardly surprising therefore that the Chancellor of the Exchequer most evoked by the policies being pursued is Philip Snowden, whose policies plunged the country into recession in the 1930s. At least the hon. Member for North East Somerset (Jacob Rees-Mogg) was frank when he said that the Government are following the policies of the 1930s. The Bill is part of an overall picture that shows that this Government are targeting their cuts at families and children, making them pay more than the banks whose proclivities got us into these difficulties.

The Bill will remove child trust funds, abandon the saving gateway and abolish the health in pregnancy grant. The Institute for Fiscal Studies clearly demonstrated in its analysis that the Government's plan will have a more severe impact on the lowest-income households. These proposals are further proof of this Government's desire to penalise children and jeopardise the nation's future.

The child trust fund is a savings account for children born in or after September 2002. The Bill will end new child trust funds-worth £1,000 in their lifetime for the poorest children-from January 2011. The poorest children who were due to receive a £500 top-up on their seventh birthday will now not do so. Child trust funds have not
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only given children, especially the poorest children, a financial start in life, but shown the state encouraging saving and investment by example. These are habits that we need to establish in as many people as possible. If such habits are formed and nurtured, they will help us to address many of the great challenges of our age.

The saving gateway was designed to build on the child trust fund by promoting a savings habit among those of working age on lower incomes by providing an incentive to save. There would be a Government contribution of 50p for each £1 saved. That would promote financial inclusion by encouraging those most at risk to get involved with mainstream financial services. More than 22,000 people took part in the two very successful pilots, achieving more than £15 million in savings. A letter from the Save Child Savings alliance to The Sunday Times said:

The investment in the UK's savings culture is under threat from these measures. Supporting and creating a national environment in which people are encouraged to save for their future should be a fundamental goal of any responsible Government. However, with overall savings ratios close to their 2009 all-time low and, according to the Office for Budget Responsibility, set to fall to 5.5% by 2015, the UK under this Government is sleepwalking into a situation in which the culture that we are encouraging on savings is exactly the opposite of the one that we need. Whatever their politics, all hon. Members surely agree that the fostering of a long-term savings culture is something that the UK badly needs. The process of achieving that must start with the initiatives that this Bill seeks to remove.

Even if one accepts the repealing of those positive initiatives, there can surely be no financial or policy logic in scrapping the core infrastructure of the child trust fund scheme, given that it demonstrably works. It would surely be far more sensible to leave that infrastructure in place to support future schemes that might be introduced. When introducing the Bill this afternoon, the Minister said that future initiatives would be coming forward. I ask him and the Government to consider leaving this infrastructure in place, because it is proven to support initiatives and, as mentioned earlier, would enable the state to show its corporate parenthood, via child trust funds, at least for looked-after children.

The other casualty of the Bill, if Liberal Democrats and Conservative Members, who tell us they care about children, troop into the Lobby and vote for it, will be the health in pregnancy grant, which is a one-off, tax-free payment for mothers who are 25 weeks into their pregnancy. My hon. Friend the Member for Stretford and Urmston (Kate Green) gave a full and cogent explanation of why the grant is effective and makes a difference, and if we cannot invest to ensure that our babies and children get the best start possible in life, what on earth are we about? Belinda Phipps, chief executive of the National Childbirth Trust, whom my hon. Friend quoted, said recently:

The Bill is part of a pattern of penalising families and children for the economic problems caused by the meltdown of the global economy. [Hon. Members: "It was caused by Labour."] No, it was caused by the meltdown of the global economy. Conservative Members cannot rewrite history and pretend that there was no global financial crisis and that their party in opposition did not support every spending plan up to the end of 2008. It was only when the global meltdown came that they did not want to spend the money to save this country from recession. That is the sort of party we are up against.

Withdrawing the child trust fund, ending the saving gateway and abolishing the health in pregnancy grant is bad enough, but add to that reducing tax credits, the withdrawal of the future jobs fund, the destruction of the education maintenance allowance and the hike in tuition fees, not to mention the significant cuts in funding to schools and colleges currently camouflaged by the smoke and mirrors of Government chicanery, and this represents a devastating programme. The Government are making families with children pay more than double what the banks are to pay to bring down the deficit-hardly fair, Mr Speaker, hardly fair at all.

9.7 pm

Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): We have heard tonight two main arguments from Government Members. The first, which may be familiar to Members on both sides of the House, is that there is no alternative, but the absurdity of that position should be clear to everyone. Budgets are inherently political acts, and the notion that the Government have no choice is ridiculous. It is nonsense. The House of Commons came into being over the issue of supply. The modern House of Commons emerged because there were debates about how money should be appropriated. So let us nail that myth.

Listening to Government Members, we realise that this argument is only a front for their real argument. We have heard an attack on universal benefits that has been repeated throughout this debate, to which I have listened closely. These attacks have continued despite the fact what we have heard continually from my hon. Friend the Member for Stretford and Urmston (Kate Green), who has forgotten more about these issues than anyone on the Government Benches even knows.

I turn quickly to something that the hon. Member for North East Somerset (Jacob Rees-Mogg) mentioned. I am sorry to see that he is not in his place. He might be an historian-I personally will reserve judgment on that-but he certainly is not an expert on asset-based policies, because he suggested that the child trust fund and the saving gateway in particular are examples of nanny-state socialism. I have a message for those on the Government Benches: they are not examples of nanny-state socialism; they are examples of liberalism.

The child trust fund is a policy whose objective is to promote social mobility. It is a starting point-a symbol and a recognition of the fact that massive inequalities of wealth exist in our society, and that these inequalities exist in addition to the massive inequalities of income. The child trust fund is also a policy with a long history.
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Thomas Paine first proposed the idea of state-backed assets for all individuals reaching adulthood at the turn of the 19th century. No nanny-state socialist he. Thomas Paine suggested such payments because he understood that inherited wealth unfairly tipped the scales of life in favour of those who were born lucky, rather than those who worked hard-something that I am sure Members on both sides of the House agree with.

The child trust fund operates on that principle, by hopefully making it possible for young people from ordinary backgrounds to go out into the world in future with savings to their name. I say "in the future", because nobody is suggesting that the child trust fund was a perfect policy or that it had achieved everything that we hoped it would achieve, but it has hardly bedded down and now it is being abolished. The child trust fund allows ordinary kids going out into the world to ask themselves a basic question that we have all asked ourselves, as we went forward in our lives: what do I want to do with my life?

As such, I am afraid to say that abolishing the child trust fund represents another nail in the coffin of a once great tradition of social liberalism. Social liberals used to recognise-indeed, social liberals still do-that in the absence of a fair distribution of income and wealth, real freedom is impossible for most individuals. "Assets for all" is an inspiring cry that we used to hear from those on the Liberal Benches. No longer do we hear it.

Mr David Anderson (Blaydon) (Lab): "Limousines for all"!

Gregg McClymont: That may well be the case; I could not possibly comment.

I know that a number of people are waiting to speak, so I shall be brief. However, I want to reiterate the point that the child trust fund is about freedom and opportunity. It is not about nanny-state socialism; it is about trying to enable young men and women who are not from privileged backgrounds to go out into the world when they turn 18 and have a chance to make something of themselves. I would have thought that that was something that everyone, in all parts of this House, would support. And please, let us not hear again from those on the Government Benches that there is no alternative. The Government are spending, on behalf of us all, £697 billion this year. Abolishing the programmes that we are debating this evening will save around £4 billion. Are the Government really telling us that there is no alternative? I for one do not believe a word of it.

9.13 pm

Yasmin Qureshi (Bolton South East) (Lab): I know that time is short, so I intend to be quite brief, although I apologise in advance for not allowing any interventions, as a number of colleagues still wish to speak.

I endorse and echo the sentiments expressed by my right hon. and hon. Friends, who have explained in detail why the child trust fund and the health in pregnancy grant are important and why we need to retain them. I want to deal with the three reasons given by the Government for why they have brought forward this piece of legislation. The first reason is that they have to make these cuts and that the Bill is the only way to do so, because of financial difficulties. Paul Krugman, who was mentioned by my hon. Friend the Member for Scunthorpe (Nic Dakin), recently said that the Government's cuts are ideologically
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driven, not driven by economic necessity. Therefore, economics has nothing to do with the reason for making the cuts in this Bill.

Secondly, we are told that the schemes are being cut because they are universal benefits, benefitting the rich and poor alike. However, if that is the argument, why should the Bill not be amended to say that such benefits should be means-tested, so that those who need them can keep them? That would make the Government's case more logical. I suggest that the Government are using the argument about this being a universal benefit, even though they do not do so in regard to the winter fuel allowance-I want to put on record that I am not against the winter fuel allowance being universally available-because it is well known that people of pension age are the most likely to vote, while those who receive income support have the lowest tendency to vote. Perhaps there is an element of self-interest there. That would explain why the Government think it is fine to abolish one universal benefit, the child trust fund, but wrong to abolish the winter fuel allowance.

It has been said that the child trust fund has not led to an increase in the savings culture in our society, and that it was intended for children to use when they reached 18 and were grown up. We know that the savings culture has gone from our society over the past 20 or 30 years and that people are saving less and less. However, many people in their early 20s to mid-30s find that having children is an encouragement to save, and that is bringing saving back into our society. To suggest that the argument about the savings culture does not apply because a child does not benefit from the trust fund until they are 18 is also wrong.

The child trust fund continues to be among the most successful Government savings schemes ever. Two million people are now contributing to 4.5 million accounts, resulting in more than £2 billion of assets under management and attracting more than £22 million a month in regular contributions. As my hon. Friend the Member for Walthamstow (Stella Creasy) pointed out, the majority of this activity is undertaken by families with an income of less than £50,000. We have seen that the number of people saving has increased, and the Government should be thinking about how to make that very successful programme even better. We should be trying to find ways of extending and improving the system, not abolishing it.

I shall turn now to the health in pregnancy grant. If someone is well-off, so be it: becoming pregnant probably causes no inconvenience or difficulty for them. Having a child results in many extra expenditures, however, and the Government should surely be able to afford giving even a little extra money to those on very low incomes. They have told us that they have introduced a levy on bankers' bonuses, but if this is all about finance, why can they not increase the levy just a little more? I am part of a group called the Robin Hood tax alliance, which contends that if we were to tax the bankers a bit more, we could easily get £45 billion. That would be more than enough to pay for the child trust fund and the health in pregnancy grant. The money is there in the system; it is just a question of whether there is any will on the part of the Government to use it in the right way.

The argument that we have to make these cuts just does not wash. This is really sad, and I am surprised at Members on the Government Benches. I thought that
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there were more compassionate Conservatives out there who would think that these benefits could be retained. If they really do not want to provide them on a universal basis, they could at least target them at people on lower incomes.

9.18 pm

Sheila Gilmore (Edinburgh East) (Lab): Early in the Minister's introduction to the debate, one of the reasons he gave for not going ahead with the saving gateway account was that there had not been enough take-up by banks. He also argued that credit unions did not exist in every deprived community, and that they would therefore be unable to operate the saving gateway accounts adequately. I think that he was putting the cart before the horse. The saving gateway would have given the credit unions a huge boost and allowed them to develop.

The credit union in my constituency is fragile, because it serves an area in which people have difficulty saving. They might wish to borrow, however, and to do so through a credit union is much better than using some of the other methods on offer in the area. It is difficult for credit unions to balance their savings and their borrowings, even without taking into account their administration costs and all the other expenses that they incur, and they need to get volunteers to do the work. So, if we want the credit unions to grow, we need to assist them, and retaining the saving gateway account would have been one way of putting credit unions such as the one in my constituency on to a firmer footing.

If a credit union is not an example of "the big society", I would like to know what is. I believe this illustrates a fundamental incoherence, which we can see in many of the policies presented by the coalition Government. They have a lot of the words and a lot of the language-in fact, I sometimes think that Government Members are stealing our language-but if we look at what is being done as opposed to what is being said, we see the truth. Here is an example of something that should be encouraged as part of the big society, which we are all supposed to be supporting, but some of its lifeblood is being cut off through this policy.

Another incoherence is seen in considering what types of benefits we should have. As I said before I was elected, we all need to discuss that-I am not suggesting that my party has no need of further discussions-and I shall carry on saying it. Do we want universal benefits or not? If we have them, yes, there are costs. Personally, I would have been happy to see child benefit made part of taxable income in a more coherent way. If we want universal benefits, yes, there are tax implications.

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