Session 2010-11
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Savings Accounts and Health in Pregnancy Grant Bill

Savings Accounts and Health in Pregnancy Grant Bill

The Committee consisted of the following Members:

Chairs: Mr George Howarth  , †Mr Gary Streeter 

Baldwin, Harriett (West Worcestershire) (Con) 

Brown, Lyn (West Ham) (Lab) 

Bruce, Fiona (Congleton) (Con) 

Fovargue, Yvonne (Makerfield) (Lab) 

Gilmore, Sheila (Edinburgh East) (Lab) 

Goodwill, Mr Robert (Scarborough and Whitby) (Con) 

Green, Kate (Stretford and Urmston) (Lab) 

Hanson, Mr David (Delyn) (Lab) 

Hemming, John (Birmingham, Yardley) (LD) 

Hoban, Mr Mark (Financial Secretary to the Treasury)  

McCarthy, Kerry (Bristol East) (Lab) 

McGovern, Alison (Wirral South) (Lab) 

Maynard, Paul (Blackpool North and Cleveleys) (Con) 

Newton, Sarah (Truro and Falmouth) (Con) 

Perry, Claire (Devizes) (Con) 

Ritchie, Ms Margaret (South Down) (SDLP) 

Sharma, Alok (Reading West) (Con) 

Williams, Stephen (Bristol West) (LD) 

Sarah Davies, Sarah Thatcher, Committee Clerks

† attended the Committee

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Public Bill Committee 

Tuesday 9 November 2010  


[Mr Gary Streeter in the Chair] 

Savings Accounts and Health in Pregnancy Grant Bill

Written evidence to be reported to the House 

SA 03 Runnymede Trust 

Clause 1 

Removal of eligibility for child trust fund 

10.30 am 

Mr David Hanson (Delyn) (Lab):  I beg to move amendment 20, page 1, line 6, at end insert— 

‘(2A) After subsection (1) insert—(1A) A child born on or after 3rd January 2011 in the care of a local authority or similar body is an eligible child, notwithstanding the provisions of section 2(1) and subsections (5A), (5B) and (5C).”’.

The Chair:  With this it will be convenient to discuss the following: amendment 21, page 1, line 6, at end insert— 

‘(2A) After subsection (1) insert—(1A) A child born on or after 3rd January 2011 in receipt of Disability Living Allowance is an eligible child, notwithstanding the provisions of section 2(1) and subsections (5A), (5B) and (5C).”’.

Amendment 22, page 1, line 6, at end insert— 

‘(2A) After subsection (1) insert—(1A) A child born on or after 3rd January 2011 living in a household which is in the poorest third of households is an eligible child, notwithstanding the provisions of section 2(1) and subsections (5A), (5B) and (5C).(1B) The assessment of the threshold for qualification under subsection (1A) must be made by the Chancellor of the Exchequer, taking advice from the Office for National Statistics.”’.

Mr Hanson:  Welcome back to the Chair, Mr Streeter. I hope you had a pleasant weekend. For a brief moment, we had a Labour majority in Committee, but I am pleased to see that the Conservative Whip has done a fine job. For the record, he was outside the room, but I was briefly reminded of the good old days when we had a Labour majority. C’est la vie. 

The amendments are important. I hope the Committee will fully debate their substance and reflect the views of both the Opposition and the Government. For the avoidance of doubt, I will commence with the points that I made on Thursday. We believe that clause 1 is damaging and we oppose it. We tabled the amendments to try to mitigate the effects of the clause. If the

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Committee accepts them, we will reflect on that. If not, we will continue to oppose the clause. We are simply considering how we can try to salvage something from the abolition of the child trust fund. The key areas are looked-after children, children with disabilities and children who form the poorest third of our society. If we can salvage those areas, we will support an amended version of the Bill. I am moving a long way from what the Labour Government did in office and what Labour Members wish to see in practice. I do that for pragmatic reasons, because we want to try to salvage something from the Bill to ensure that we can help the groups of individuals that the amendments cover. 

Amendment 20 revises the August amendment date to ensure that children born on or after 3 January 2011, who are in the care of a local authority or similar body, remain eligible for the child trust fund. Amendment 21 ensures that we do the same for children in receipt of disability living allowance. Amendment 22 ensures that children born on or after 3 January 2011, who live in the poorest third of households, remain eligible. I wish to speak about each amendment. 

Amendment 20 is important because it deals with a group of individuals who are potentially the most vulnerable in our society and who are currently in receipt of the child trust fund. They are in care, predominantly because they do not have parents who are responsible for them; because the state has deemed that their parents are incapable of managing and supporting them, or for a range of other associated reasons. Each year, about 6,000 children become part of the care population of the United Kingdom, which currently stands at around 86,000. For some, escaping abuse or neglect may be a relief, as I mentioned previously. Others will be split from their families because of illness, poverty or overwhelming problems that mean that the parents cannot look after their child. Life for such children is difficult, whether they are in an institutional setting or in the care of foster families. Thankfully, a minority are in institutions; about three quarters are in foster families. 

According to recent statistics from the Department for Education, the Scottish Parliament, the Welsh Assembly and the Northern Ireland Executive, we have 64,400 children in care in England and 15,288 in care in Scotland. In my home region of Wales, we have 5,162 and in Northern Ireland 1,653 children were in care as of 31 March 2010. 

The child trust fund was established by the Labour Government in 2002; in 2008, they introduced additional payments for those children looked after in care to help support the needs that they would meet at the age of 18, when they matriculated. If the Bill is enacted, children in care could still be looked after, even with the abolition of clause 1, on 3 January 2029—18 years after the enactment of the Bill. We are considering a long-term proposal for supporting children in care and looked-after children. Whatever the outcome of our debate on the amendment, the mechanism to support looked-after children from 2002 to 2011 will still be maintained for that time. 

Before the regulations of 20 July, which the Minister and I debated in depth on that date, a looked-after child would have received £500 as the initial payment and £100 for each continuous year the child is looked after in the care of a local authority, or a health trust in Northern Ireland. From 2008, the Labour Government

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provided £500 and an annual payment of £100 for children in care. For someone in care for the whole 18 years, that would have been a considerable lump sum to help support them whatever their objectives on leaving care. 

The Financial Secretary knows that children leaving care are often the most vulnerable children. They will still face challenges and have more chances of going to prison, of ending up in poverty and of experiencing drug abuse, despite the fact that the care system had invested so much time and energy in their life to date. The argument advanced by the Labour Government at the time was that the initial payment of £500 plus £100 a year was to compensate for the fact that those children in care did not have active parents who could support them. The payments were made to help the children build up a significant asset nest egg at the age of 18. It could assist with putting a deposit on a property, provide help in training and education or go towards the cost of university tuition fees, which will be extremely large now that the Liberal Democrats have broken the promise they made to the electorate last May. That level of funding would be available to help support an individual leaving care at the age of 18. 

The regulations that the Minister passed in July and which we opposed reduced the payments quite significantly. They wiped out the majority of the £500 so that, under clause 1, children leaving care up to 3 January 2011 will receive an initial contribution of £100, and £100 a year thereafter. The amendment would ensure that we keep in place the arrangements that were set up in July for looked-after children. That would be a major step. The amendment is not even trying to revert to the previous payment of £500, much as the Labour Government supported it. We are simply saying that the ability of the child trust fund to continue an initial payment of £100, and £100 payment a year when in care is sufficient for the moment to enable the Minister to meet his objectives for the next few years. We have moved a lot on that, and I hope that the hon. Gentleman can meet us halfway by maintaining some form of payment for children in care. 

John Hemming (Birmingham, Yardley) (LD):  I thank the shadow Minister for giving way, and I apologise for not being in Committee for the start of his speech. Given that charges and returns in the markets have not been so good recently, we heard no evidence from the providers that the sums available from the funds were greater than the sums put into them. What evidence does the right hon. Gentleman have that not paying people the money directly would give them more money? 

Mr Hanson:  Let me quote question 129, which I asked Graeme McAusland, chief executive of the Children’s Mutual. I asked him whether it would be possible, practical and workable for disabled children, looked-after children and those at the lower end of the scale to continue to have the funding. He answered: 

“It probably would. The systems are there to do that and from our perspective that would not be overly difficult.” 

Graeme McAusland also stated, in answer to Question 130, about maintaining the infrastructure of the child trust fund for looked-after children: 

“That fund is effectively provided by various interested parties in the market. There is something in that. In the absence of any Government money, that idea is worth looking at.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 45, Q129-130.] 

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John Hemming:  I thank the shadow Minister for that point, but it does not answer my question. We have heard no evidence that putting money into a child trust fund and their taking it out gives people more money than paying them directly. 

Mr Hanson:  We have had no evidence to the contrary either—that question was not discussed. 

John Hemming:  With the figure quoted for the average value of the funds of about £800, a rough calculation would indicate that very little, if any, money has been made. 

Mr Hanson:  I am trying to argue a principle, which is that we should continue to support looked-after children. I would wish to see maintained the figure that we previously had under the Labour Government, but for the moment I am attempting to secure a contribution for looked-after children from the Government. If that contribution is continued, it is open to the Financial Secretary or, indeed, to a future Government to increase that in due course. 

John Hemming:  The Institute for Fiscal Studies stated that if it is important to help looked-after children at 18, we should help them at that age, not in 18 years’ time. My question is: what evidence does the right hon. Gentleman have that helping people in that way is more effective, as it looks less effective than paying them directly? 

Mr Hanson:  I accept that the hon. Gentleman is making a strong debating point that we should reflect on and look at. One purpose of my tabling the amendments today is to get some information from the Government about what they intend to do about looked-after children. I am proposing an amendment to pay those children £100 and then £100 a year while they are in care, which is the current position. That is not what the Labour Government put in place, which I would prefer, but it is what we are proposing as a pragmatic amendment. The Financial Secretary will have to respond shortly— 

The Financial Secretary to the Treasury (Mr Mark Hoban):  Eventually. 

Mr Hanson:  The Financial Secretary must know that it is the Opposition’s democratic right to raise all these issues, and we will talk about them for as long as we feel that it is appropriate to do so. For the benefit of the hon. Member for Birmingham, Yardley, the Financial Secretary will have to determine what he will do about looked-after children. If the answer is nothing, or if it is to have a child ISA, that would not be satisfactory. Even if there were to be related charges, those issues can be examined in Government, the payments can be raised and the fund can be developed as the economy grows. Those matters need looking at—they are not nothing, which is what he is currently proposing. 

Kate Green (Stretford and Urmston) (Lab):  Does my right hon. Friend agree that one challenging area for children in care is the sense of not belonging, and of not having anyone who takes an interest in them and makes them feel part of the community? On the point made by the hon. Member for Birmingham, Yardley, savings

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through their lifetime engage children in care not only at 18, but through their childhood and their growing-up period, with the sense that people are interested in their future. Is that not also important? 

Mr Hanson:  My hon. Friend makes an important point. A key factor about the child trust fund generally is that it was a partnership between the Government and the individual—either the family or, in this case, the looked-after child—about an investment in their future after the age of 18. It said to looked-after children that they were not just put into care, but that a nest egg was put away to show them the benefit of saving, to let them see that the fund was about partnership and, ultimately, to allow them to matriculate at 18 with a lump sum to help them on leaving care. That is a vulnerable time for people in the community, and the fund ensured that they would have help and support at that particular time. As my hon. Friend has mentioned, it is extremely important that we have somebody who shows an interest in such children, in terms not only of the care they receive, but of their financial planning for the future. 

Alison McGovern (Wirral South) (Lab):  Does my right hon. Friend agree that, on pensions, the argument that if pensioners need more money now they should get it has never been considered as the only answer—we have always thought about how to encourage future pensioners to save and the Government have always tried to consider such matters? In this case, when we are thinking about children and their savings, does he agree that it seems inconsistent to think that the only solution to providing for looked-after children, for children with a disability and for the poorest third is to say, “Well, if they need more money now, they should get it”, rather than the savings culture that the Labour Government were trying to create? 

10.45 am 

Mr Hanson:  My hon. Friend makes an interesting point, because the general rationale for the child trust fund was to not only provide a capital asset at the age of 18 across the board, but to encourage a savings culture for them and their families. Very often, those who are poor or disabled or in a looked-after environment would not necessarily have been able to have that capital asset at 18. In this case, the vast majority of looked-after children do not have direct families who support them. They are in foster care, which is important and valuable and not to be decried, or they are in residential care, which is important and valuable and not to be decried. They do not have, however, somebody who will necessarily put their hand in their pocket to provide a trust fund ISA contribution for them. They do not have family members who will say, “For this individual in care, we will establish a tax-free ISA and put some money into it.” Either those individuals do not have those family members around—that is why they are in care in the first place—or their family members may be in prison, where they do not have a regular income with which they can top up a tax-free ISA, or they may have issues with drugs or alcohol or other problems, where, again, they will not be contributing to a tax-free ISA. 

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The purpose of the amendment is at least to provide a base, which the hon. Member for Birmingham, Yardley might not appreciate, of a minimum amount of payments for the moment—I accept that it is a lower level of payment than under the Labour Government—that could, in due course, if the economy picks up as the Financial Secretary says it will, be raised at some future point. Alternatively, if the Labour Government are returned in the future, we could revisit our existing scheme and determine whether that was a priority for our expenditure, as opposed to other issues. 

John Hemming:  I fully appreciate the need to support people as they leave care. The point that I am making is that there is no evidence that that provides more money. Indeed, there is an indication that it provides less money than is put in. 

Mr Hanson:  Will the hon. Gentleman table an amendment, potentially on Report, saying that there will be a lump sum for 18-year-olds when they leave care? Will he do that? 

John Hemming:  It is a good idea to do something about what happens when people leave care, but that would not be part of the terms of the Bill. 

Mr Hanson:  This is the key thing, and why I have tabled the amendment. We are being asked, either today or by 4 o’clock on Thursday afternoon, to vote to support clause 1 and withdraw these amendments. If the Committee supports clause 1, it will be part of the Bill. If clause 1 stands part of the Bill, on 3 January next year, there will be no financial support whatsoever for looked-after children. There is no scheme in place, apart from an untested, unthought-out tax-free ISA, which is not yet before the Committee in its detailed form. That untested, untried, undetailed tax-free ISA will be of no value to someone who is in care because their parents are not interested in them or cannot manage them, or because their parents are in a situation involving prison or drugs or alcohol, which mean that their priorities will not be a tax-free ISA contribution for a looked-after child. I ask the Financial Secretary and the hon. Member for Birmingham, Yardley, if that were the case, how does a tax-free ISA help those individuals downstream? Before we abolish this scheme, I want to know what will happen to looked-after children, in care, with the state supporting them, compared with what we have now. The answer, currently, is not very much. 

John Hemming:  Some 8,000 people will leave care this year who will not be helped in this way. Some 8,000 people will leave care next year who will not be helped. Some 8,000 people will leave care the year afterwards, who also will not be helped. There is plenty of time to sort out what happens in 18 years’ time. We need to sort out what is happening now, which is not in the preamble to the Bill—I just checked. 

Mr Hanson:  I am sorry, but I will stick to my guns on this. The Bill, in clause 1, abolishes the current contribution, which is at a lower level than it was under the Labour Government. In its place, there is nothing but a tax-free

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ISA, which is of no use to anybody in the circumstance of looked-after children. My opinion can be tested by the court of public opinion, but I think that that is ultimately right, unless the hon. Member for Birmingham, Yardley tells me otherwise. 

Research shows that having access to a modest level of savings at the age of 18 makes a difference to someone’s future. The key issue is that children in care do not have the family support network that many of us take for granted. Such children will not have those life chances at age 18 without that partnership with the state. 

The Conservative party manifesto commitment was to reduce payments except to “the poorest third” of children, and the Financial Secretary will find that the majority of looked-after children fall within that category. I am not asking him, therefore, to do anything that he did not commit to in May of this year, or that is outrageously expensive; I am asking him to consider a small group of vulnerable people, who in 12 or 13 years will reach the age of 18 and not have the financial support of the state. 

The Department for Education’s figures show that the cost of a £100 top-up for looked-after children in 2008-09 was £1,039,833. In 2009-10, it was £1,502,786. Will the deficit be damaged by a payment of approximately £1.5 million in future years? The Financial Secretary will have the might of the Treasury to work out the cost of the scheme for looked-after children. Even if the cost were more than that, will the deficit be damaged by a small amount of money that is not considerable in the grand scheme of things, but will make a real difference to looked-after children? 

In a recent debate with my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) in Westminster Hall, the Economic Secretary to the Treasury, the hon. Member for Putney (Justine Greening) said that the provision is an inefficient way of providing the money. The Financial Secretary may say the same, but I give him the opportunity to tell us what he will do in the absence of such a provision. At present, payments are made through Her Majesty’s Revenue and Customs each month to looked-after children as they find, each year, a contribution of £100. What would be the alternative in the absence of such a system? 

My right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) raised the matter on the Floor of the House: 

“Will the Prime Minister ask his Treasury colleagues to work with me and others to devise an affordable alternative that will give looked-after children the prospect of an asset they can rely on?” 

In response, the Prime Minister said: 

“I am very happy to ask my colleagues to work with the right hon. Gentleman because we all want to see saving encouraged…We are happy to work with the right hon. Gentleman.”—[Official Report, 27 October 2010; Vol. 517, c. 310-11.] 

Has the Financial Secretary made contact or had a meeting with my right hon. Friend the Member for Wythenshawe and Sale East? Is he developing alternative plans for looked-after children apart from the child ISA? Are there mechanisms in that ISA that he wishes to consider to help encourage people who do not have the potential for financial support? Does he have other proposals to help support looked-after children? Does he wish to take on the suggestions of the hon. Member

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for Birmingham, Yardley and consider a scheme that would be in place for when people matriculate at the age of 18? If the amendment is not accepted, we will have none of those measures—there will be no plans except for the child ISA. I defy the Financial Secretary to tell me how contributions will be made to the child ISAs of looked-after children, given their circumstances. If the most vulnerable in our society will have to pay the cost of the deficit, the Financial Secretary should say so and not hide behind the unworkable aspects of the current scheme. 

In response to my hon. Friend the Member for Kilmarnock and Loudoun, the Economic Secretary said: 

“We recognise that looked-after children need to have additional support”.—[Official Report, 19 October 2010; Vol. 516, c. 233WH.] 

Certainly, we will be looking at how we can ensure that that happens. Before we vote on the clause and abolish the scheme today, we need to know what recognition of that additional support means and what we need to do to ensure that that happens, as the Minister said to my hon. Friend in the debate. There is a real issue, and I think we need to reflect on it seriously. 

I again make an offer to the Minister: if he accepts the amendments today, I will put aside the fact that we are disappointed by the drop in finance of £250 and £500 that the regulations introduced in July, and recommend to my hon. Friends that they support the amended clause, and we will vote for it to maintain the scheme. I know it is difficult, but I will ask my hon. Friends to do that because we would have salvaged, for looked-after children, a scheme that the Minister can reflect on over the next two to three years. As the economy improves, he can up the payments, and if the Government change, we can revert to our scheme. However, at the moment, I am faced with either nothing on 3 January, or an amendment that says that we are interested in having a partnership on the issue. 

Let me read what a particular teenager from a Scottish campaign said. He said that 

“my name’s Liam and I am 19…My dad brought me up for the first few years of my life, but when I was six he got into trouble with the police and ended up going to jail” 


“a long sentence, which meant that I was put” 

in long-term care. How on earth, at the age of 18, in long-term care and with a father in prison, will Liam have money put into a child trust ISA without the partnership and support of the state? The Minister should remember and think about children and young people such as Liam before he makes the decision to reject the amendment and support the clause. 

Amendment 21 looks at supporting children with disability living allowance as an 

“eligible child, notwithstanding the provisions of section 2(1) and subsections (5A), (5B) and (5C).” 

Again, I make an offer to the Minister: if he accepts the amendment, I will gladly recommend that my hon. Friends vote for the clause, difficult though that will be. I know that my hon. Friend the Member for West Ham, the Whip, is very uncomfortable with that, but she is pragmatic and knows that something is better than nothing. We will try to save something from the shipwreck that the Minister is bringing before the Committee. 

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The amendment should not be too difficult for the Minister to support because, again, it was in his manifesto, as it was in the manifesto of every Conservative member of the Committee. If they thought it was important in May, presumably they think it is important now. I would like to start by asking the Minister not about what has changed since May, because we know what has changed since then—the Conservatives have made a coalition agreement with two Liberal Democrats and an assessment of the financial situation. It is not what has changed since May that I am interested in and concerned about, but what was important in May. If the measure was important then for looked-after and disabled children and children on disability living allowance, why is it not important now? If it is not important now, is it because the Minister has done a deal with the Liberals, or because he thinks the financial situation should be paid for by children who are in receipt of disability living allowance? If so, will he please say so? I would like to know why it was important in May but not now. 

I am sure that the hon. Gentleman will not like to be reminded of this fact, but when we debated the matter in February, when the Labour Government improved the offer to children on disability living allowance, he said: 

“Although we in the Conservative party intend some reforms for child trust funds, we recognise that additional support is required for children with disabilities, and we have no objections to this statutory instrument.”—[Official Report, Eighth Delegated Legislation Committee, 10 February 2010; c. 4.] 

This February, the Minister, the hon. Member for Fareham, standing in the place I am standing in now, said that 

“we have no objections to this statutory instrument,” 

which gave additional help to children with disabilities and disability living allowance. 

The Minister had no objections to the statutory instrument. If he had no objections in February, what are his objections now? Are they due to the two Liberals, who forced him to do it? I recall that there are 300 or so Conservative MPs and 57 Liberals, so if the two forced him to do it, why? If it is because of the economic situation, let him say to the Committee openly and honestly that he believes that disabled children should pay the heaviest price for that situation. If it is none of those things, please will he explain to the Committee why he is bringing these measures forward? 

Kate Green:  Does my right hon. Friend agree that it is much to be regretted that we do not have an impact assessment for the measures, because that would illustrate the points that are rightly being made about the reasons behind the neglect of disabled children’s needs? 

Mr Hanson:  My hon. Friend anticipates important amendments that we will discuss later, and which I hope the Government will consider. 

On 10 February, the Labour Government introduced new payments for children in receipt of disability living allowance as part of the trust fund. That measure passed without a vote and was supported by the hon. Member for Fareham as the shadow Minister. The Liberal Democrat spokesman, Colin Breed, the former Member for South East Cornwall, stated: 

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“I have no objection to this statutory instrument, although at some stage there will have to be a wider-ranging review of the value of expenditure on trust funds. On that basis, I am happy to support the regulations.”—[Official Report, Eighth Delegated Legislation Committee, 10 February 2010; c. 4.] 

About eight weeks before the general election, the Liberal Democrats therefore supported payments to child trust funds for children on disability living allowance. 

11 am 

The Minister went into the election supporting the payments; he came out of it ripping them up and saying that he was not interested in providing child trust funds for children on disability living allowance. If nothing else, the Minister now has the opportunity to explain why he changed his mind. I do not want to hear that it was because of the two Liberals or the economic situation. Why was that measure valid in February, but not now? Why must that asset be taken away from children with disabilities as part of the deficit reduction plan? 

The Child Trust Funds Act 2004 allowed the Treasury to make regulations to provide for further Government payments to the accounts of eligible children. A key tenet of the legislation was to recognise that children with disabilities may need extra support and to provide that support with an asset at the age of 18 to meet the costs of disability. In the 2009 Budget, the then Chancellor announced that the Government would contribute an additional £100 to the trust funds of disabled children every year. The most severely disabled children—those who at any point in the tax year were entitled to the highest weekly rate of care components—were to receive £200 into their child trust funds. 

Changes were made to that measure in July. Amendment 21 states simply that the situation that was to run from July 2010 to 3 January 2011 should be maintained. The contribution levels can be reviewed in due course, just as the Minister wants. He would also be able to meet his manifesto commitments until the next election. At the moment, he chooses not to do that. I am being pragmatic on these matters, although I am not happy about the situation. We are trying to salvage something that helps to support children with disabilities. 

Returning to the evidence session, I asked Mr McAusland, the chief executive of the Children’s Mutual, whether it would be viable for children receiving disability living allowance to receive continued support via the child trust fund. He replied: 

“It probably would. The systems are there to do that and from our perspective that would not be overly difficult.” 

To answer the hon. Member for Birmingham, Yardley, the major provider said that it would not be a problem to do that. Mr McAusland went on to say: 

“The one that I have seen which we are reasonably supportive of is the ResPublica idea. That is based on effectively maintaining the CTF infrastructure, but you create funds that can then be used to support looked-after children, maybe disabled children and maybe those at the lower end of the scale.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 45, Q129.] 

It is therefore not impractical for providers to do that. I accept that a lower amount of money is involved, but it can be done. The Minister has a duty to say whether he will consider doing it. 

In evidence to the Committee, Marc Bush of Scope stated that 

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“given the current financial climate, I think that there is merit in looking at some of the alternative proposals, such as ResPublica’s ABC account, which sets out asset building for children. Effectively, you would use means-testing to create some kind of fund that could be reinvested back into the most disadvantaged families.” 

He supported very much the idea of health and support for disabled children. Again, in evidence to the Committee, Marc Bush said: 

“I think that it is really essential that we have some form of asset-building mechanism that recognises the extra cost incurred by having a family with a disabled child. That is why the payments that came through the child trust fund were so important. The Government have said that they will redirect some of those payments to short break provision. Short break provision for families with disabled children is essential, but it is not mutually exclusive to building towards their future. .” 

There is evidence from Scope that such a policy is required. In answer to my hon. Friend the Member for Edinburgh East, Mr Bush made an important point, and said that 

“Many disabled children grow up thinking that they should not save and that they should not invest within state benefits, because if they save they will just have to spend it on a wheelchair, a piece of equipment or a housing adaption that they could not get funded. Seeing an asset grow with you is a great way of giving disabled children a positive attitude and confidence that they can build assets and can contribute towards their finances.” 

Not only is the measure an important aspect of the asset at the end of the age 18, it goes back to the initial point that the Bill is about the Government showing a partnership with a group of individuals to ensure that they understand the need for a savings culture and work on it in a positive way. 

Alison McGovern:  Does my right hon. Friend agree that we are also seeing a shift in the position of children with disabilities, especially their complex needs? Children whose conditions might have been highly difficult to manage previously have seen much more successful outcomes in respect of their condition at the Lyndale school, a specialist school in Eastham in my constituency. I have witnessed children and parents dealing with the challenge of success. The change taking place in looking after children is precisely what is required so that the children know that their better future is backed up by a financial asset. 

Mr Hanson:  My hon. Friend eloquently makes the case for the child trust fund and why the Labour Government focused particularly on children with disabilities. Two aspects of the child trust fund go across the board, one of which is a way of helping to encourage people to save, who did not save previously. That has been shown to have increased the savings ratio generally. It is particularly important to give people at the age of 18 an asset that they can use to start their lives and face whatever challenges there might be at that time. As my hon. Friend mentioned, there is a changing stream of challenges facing people and disabled children. Perhaps I should declare an interest in that I worked for Scope for six years and know some of the pressures that those individuals and parents face. Those pressures can be helped by an asset to meet the challenges that children face at the age of 18. 

Kate Green:  Does my right hon. Friend also agree that one of the real concerns of parents of disabled children is how the children will cope in adulthood? As those children make the transition into adulthood, a

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time when often the gap between child and adult social services badly lets those families down, the knowledge that they have an asset to carry them through the transition period offers great reassurance not only to the young person, but the parents who are already stressed by the experience of raising a disabled child. 

Mr Hanson:  My hon. Friend makes a valuable point, which I had not considered. When I worked for Scope in the mid-1980s as a national and a regional manager, one of the key things that parents of disabled children always worried about was what would happen to the child when they had died. Parents who are giving birth at perhaps an older age now are aware the child trust fund will provide a cash asset sum to help their children face some real challenges. 

In answer to a further question, Mr Bush said that, ultimately, 

“the Bill will increase inequality, particularly for families with disabled children.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 57-67, Q160, 174, 185.] 

Will the Minister think about that statement for a moment? Let us consider the abolition of the child trust fund. The acceptance of clause 1 will, according to Scope—an independent, national charity dealing with disabled people—increase inequality, particularly for families with disabled children. Does the Minister want to have his political record marked on that? Does he want to go through life as the Minister who increased inequality, particularly for families with disabled children? I appeal to his better nature. I think the Minister is a decent man who would not want that on his record and he would want to stand up for his manifesto commitment, what he said in February and for children with disability living allowance. Again, I make him the offer that if he accepts the amendment, we will vote in support of the clause. I will explain to the Labour party why we have sold out on our £250 promise and I will vote in support of the clause. I will give him that opportunity. I have moved some way—let him move some way as well. If he does not vote for the amendment, he will abolish the disability living allowance component that he supported in February, to which he committed in May, and which, according to Scope, will increase inequality, particularly for families with disabled children. I think Government Members will find such a situation uncomfortable. 

Finally, in response to question 250, which was asked by my hon. Friend the Member for Stretford and Urmston, Katherine Rake of the Family and Parenting Institute said: 

“If it is working, let us keep it in principle…As you say, choices could be made within that about looked-after children, where the state is the parent and wants to make some contribution for children with disabilities. That contribution could be continued during the interim period, and the universal elements could be brought back in later down the line once the economy has picked up.” ––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 4 November 2010; c. 98, Q250.] 

Again, I ask the Minister to bear in mind disabled children; looked-after children; lower contributions; massive savings to the Treasury, the pocketing of lots of money, which was going to those children, to pay off the deficit, but maintaining that small amount of money to help retain the scheme. If the economy picks up, let us put that back in place and ensure help and support for those people. If we do not, I have to presume that the

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abolition is not about the deficit or disabled or looked-after children but about the dogma of not wanting the scheme in place and not believing that the state should be working in partnership with people on child trust funds. 

Finally, I turn to amendment 22, which deals with providing support to— 

Mr Hoban:  The poorest third. 

Mr Hanson:  The Financial Secretary knows. I will read it to him so that he gets the full benefit. He sounded a tad impatient. He should recognise that the duty of the Opposition is to talk about the issues and expose the arguments. Under the order of the House, we have until 4 o’clock on Thursday to debate the matters. If need be, we will do so, because we regard them as extremely important. If the hon. Gentleman is impatient or upset that we are discussing these matters, that is tough. These are important issues, which people outside this House expect us to raise on their behalf. The Financial Secretary should find comfort in amendment 22, because it simply does what he said he would do in the general election campaign. That is all it does. We look for the poorest third and we let the Treasury make the assessment of what that poorest third might be. 

The Conservative party manifesto, which I confess I and the Liberal Democrats did not stand on, but which eight members of the Committee stood on, said: 

“We will…cut government contributions to Child trust funds for all but the poorest third of families and families with disabled children”. 

Amendment 22 gives the Minister an opportunity to uphold what he said he would do in the general election manifesto that was agreed at that stage. I will be fair to the Minister. I recognise that he will say that things have changed since the election. Well, two things have changed since then. First, his party did not win a majority and he is dependent on the hon. Members for Birmingham, Yardley and for Bristol West for votes in Committee. Secondly, he will have made an assessment of the economic situation. 

It is important that the Financial Secretary tells us why he felt in May that it was important that the poorest third of families had the child trust fund. Whatever was important in May, I would like to hear from him why he felt it was important then that children from the poorest third of families receive the child trust fund. We know why the situation has changed. What I do not know is his motivation in May to say that that was an important thing to maintain. 

11.15 am 

Presumably it was because the Minister recognised that the children from the poorest third of families have difficulty in establishing a nest egg to meet some of the challenges at the age of 18. Presumably he recognised that for the poorest third of families, the savings culture generated by the child trust fund helped them to contribute to the savings of their own children. Presumably he felt that it was about supporting challenges to deal with inequalities at the age of 18. Presumably he felt that the partnership between the state and the poorest third of families was important at that particular time. 

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I would like the Financial Secretary to set out clearly, not what has changed in relation to the economy or in terms of the partnership with the Liberals, but why he believed it was the right thing to do in May, why he felt that they could go to the electorate to do that and why he feels that, if all things have changed, of all the choices he could have made to save money for the deficit, he chose to hit the poorest third of families and to abolish the child trust fund, against his own manifesto commitment. He could have chosen a range of other measures to make and found a whole range of schemes to raise the relatively small amount of money that is being made by the change. 

I am moving rather a long way. I am not asking to return to our position in July with the amendment, but asking him to maintain the lower levels of payments from August through to 3 January, and through to the future, so that we could at least make some contribution to the poorest third of families. He has the ability then to fulfil his manifesto commitments by looking at those issues again as the economy picks up to see if he can increase the contributions to help those inequalities, which he must have recognised when he drew up the policy before the election. Or else, why did he draw it up then? 

Kate Green:  Does my right hon. Friend agree that it is inconsistent for the Minister and the Government to proclaim that the effects of the Budget and the comprehensive spending review announcements will make no difference to child poverty, but then very deliberately to make a significant difference when poor children reach the age of 18 and move into adulthood? 

Mr Hanson:  Indeed. I do not want to test your patience, Mr Streeter, by straying across a whole range of other measures that will hit the poorest third of families, but there are several. I will concentrate today on the child trust fund. The Minister indicated in May that he felt it was important. Why is it not important now? That is the key question. 

During the evidence session on 4 November, Sian Williams, the head of financial inclusion at Toynbee Hall, which deals with poverty in the east end of London and knows very well the challenges that poverty brings. She said, pragmatically I may add: 

“At this stage, given the economic climate, I would not advocate keeping the child trust fund for the entire population. However, for the really disadvantaged—I would include among them the groups that you described and families with extremely low incomes such as those with parents in long-term unemployment and very little hope of employment—I have a real concern that we are pushing towards policies that will increase inequalities. 

We work with a lot with young people aged 14 to 25 across London. We help them look at their financial future in terms of training, education and employment opportunities, and”— 

this is the key point— 

“we know that, for many of them, not having any assets to fall back on reduces their options.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 4 November 2010; c. 103, Q255.] 

I will again give the Financial Secretary the benefit of the doubt. He has the opportunity today to reflect on the impact of his actions in abolishing the child trust fund under clause 1. He has the opportunity, with the amendment, to look at how he can help the young

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people who will leave school or employment at the age of 18, and who are from the poorest third of families, to have that fund, and also look at the ability of that poorest third of families to save for those children’s futures. I hope, on reflection, that he recognises that his initial judgments in May were right, and that he can keep the manifesto commitments that he gave as a whole. 

In summary, I hope that the three amendments before the Committee are ones that the Financial Secretary can accept. I say that for three succinct reasons. First, the relative costs of those three amendments are low, in terms of the savings that they make and the financial contribution that they provide. Secondly, the child trust fund mechanism is in place and could remain in place to deal with those issues. Thirdly, he has given manifesto commitments on those key issues. The evidence before the Committee, from all the independent bodies that gave evidence to us, is that not progressing looked-after children, children with disabilities or the poorest third will increase inequality at the age of 18. I contend that the Financial Secretary would not want to do any of those things and that he would want to maintain some element of the child trust fund to help those particular three groups. 

I will make my final offer to him. As I have said, if he accepts all those amendments, or even if he only accepts some of them, we will put aside some of our principles and vote with him to ensure that the clause stands. When we have an opportunity, we will return to the scheme, which the Labour Government put in place. If he rejects those amendments, we will oppose the clause and we will expose that rejection to the people outside the room who take an interest in these matters. They will note that he has broken his election promises, he is increasing inequality and that he is making the most poor and the disabled children in the country pay for the deficit. 

Yvonne Fovargue (Makerfield) (Lab):  Does my right hon. Friend agree that it not only increases inequality, but that it also reduces social mobility? In answer to question 185, Anne Longfield stated: 

“This could be an opportunity to give a really important boost to social mobility and to life chances at a key time, but I think that opportunity has been lost.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 67, Q185.] 

Mr Hanson:  One of the key things that we should try to do, and one of the things that the Labour Government tried to do—sometimes not as well as they could have done—is to increase and improve social mobility. I want to see people having an equal opportunity in life to reach the full potential of their talents. One of the things that the child trust fund did was ensure that we had a partnership between the state and a range of people, not least of which were the poorest, the disabled and the looked after. They had life chances which would be enhanced at the age of 18, because through that trust fund they could afford a deposit on a property, help with education, employment and training or help with bringing up a family themselves. Those are real pressures. The Government were saving with them and encouraging saving. Sadly, if the Bill stands as it is, all that will be lost. I commend the three amendments to the Committee and I look forward to hon. Members contributing to the debate on those issues. 

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Kate Green:  Let me begin by saying that my right hon. Friend the Member for Delyn has given a comprehensive explanation of why he is proposing, along with our hon. Friend the Member for Bristol East, the amendments, which I support. I do not need or intend to repeat all the points that have been made this morning. I want to highlight some of the key issues in relation to each of the amendments. I hope that the Financial Secretary will address them in his response. 

Amendment 20 is in relation to looked-after children. I know that hon. Members across all parties share deep concerns about the poor outcomes that we continue to see for looked-after children as they grow up and progress into adulthood. That is a considerable concern for us all. Clearly, no one answer will be sufficient to address the significant disadvantage that those young people have experienced in terms of the reasons why they arrive in care and, regrettably, the fact that even being in care does not sufficiently improve their outcomes. There is work to do there. I am not suggesting for one moment that, by simply providing an asset at age 18, we have resolved all the deficiencies in the experience of being brought up in care. It is absolutely right that hon. Members of all parties continue to demand of all Governments that more action be taken to improve the outcomes for those kids. 

I want to highlight two issues on looked-after children. First, on arriving at adulthood, they have none of the support mechanisms that the rest of us have in making the transition out of the family and into independent living as an adult. Even the poorest families are able to support their children as they set up their homes with, at the very least, a few basics to put in the kitchen cupboard, and bedding, sheets and blankets. Looked-after children leave with none of those basic material supports—it is to the shame of us all that we continue to cast them out into adult life with absolutely nothing to support them. 

I welcome the comments made by the hon. Member for Birmingham, Yardley. I agree that we should look at how we can provide young people reaching 18 now and those reaching 18 between now and 2019 with an asset as they move into adult life. That does not preclude us from planning ahead for young people in care who are under 18. My second point is that how we do that is important. I alluded to that in my intervention on my right hon. Friend about those young people’s sense that nobody cares about them, that they have no connection to the future and that nobody aspires for them. 

Stephen Williams (Bristol West) (LD):  Does the hon. Lady agree that one of the greatest scandals about looked-after children, who are in the care of the state for much of the time, is their educational outcomes? Their GCSE pass rates are among the lowest of any group at age 16. To give such children a flying start in their adult lives, the Government and the Opposition should be paying attention to that matter. 

Kate Green:  Of course, it is right that we should do more to improve the educational outcomes and experience of looked-after children. That reinforces my point that one difficulty in engaging with and supporting them adequately is their sense that nobody cares about their future and that they are too often seen simply as a problem to be dealt with here and now. 

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One real advantage of creating a mechanism and an asset that grows with looked-after children through their childhood and presents them with a vision of the future is that it shows them that people are not only interested in them because of where they now are—the challenges that they present and live with today—but see them as valued future members of society. As well as providing them with support that is better than what is currently available, this mechanism of saving for their future would give those young people the important message that they are precious and cared about. It would show that the fact that they are not cared for within their own family does not mean that nobody has an interest in them beyond seeing them as short-term problems to be got through their childhood, which is what so many of them feel. 

I want to make some additional points about maintaining a mechanism to support children on disability living allowance with a payment on their reaching 18. In his evidence to the Committee, Mr Marc Bush—I apologise that I have lost the reference—highlighted the challenge presented to families with a disabled child, in that they not only have to meet additional costs in raising their child as they grow up, which diminishes the parents’ ability to set aside money for their kids, but have more costs kicking in as the child reaches 18 and moves into adulthood. Parents are very concerned about that transition period, because all too often they find that the server support previously provided by children’s social services falls apart at that moment. At least for a short time, money is incredibly useful to plug that gap, although it should not be like that. We should be planning better joined-upness between children’s and adult social services to smooth that transition, but such transitions are always awkward and money provides an extra ability to ensure that they go as smoothly as possible. 

Paul Maynard (Blackpool North and Cleveleys) (Con):  I am delighted to hear the hon. Lady recognise the transition problems for families with disabled children, but does she not agree that, for many such families, particularly those with children with mental health conditions, the transition period starts at the ages of 15 and 16? To impose an arbitrary cut-off age of 18 is to try to fit all families with disabled children into a single box. Sadly, the world is not like that. 

Kate Green:  The hon. Gentleman makes a valuable point. It is reinforced by Mr Bush’s evidence, which stated that parents of disabled children saw the transition period as being at any point between the ages of 14 and 24. Perhaps we should have designed, and should think about designing, a child trust fund savings mechanism for disabled children with more flexibility, especially in the withdrawal points. The hon. Gentleman has started an interesting line of thought. If we are to go down that imaginative line of thinking, we must first ensure that we do not abandon the product altogether. If we do, we will be unable to make it more flexible so that it meets the particular needs of disabled young people and their families as they face the transition to adult life. 

11.30 am 

It is well understood that disabled children and young people face additional costs, many of which kick in as they make the transition into adulthood. They might

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move out of the family home to study at university or college, which many disabled young people rightly aspire to do. They might face exceptional additional costs to meet their mobility needs when they move to student accommodation, to meet extra care needs or to fund their travel and transport. People often face those additional costs at the moment when they are establishing themselves as independent young adults. That is when the lump sum might help. 

Alison McGovern:  Does my hon. Friend agree that there can also be additional educational requirements? The support and provision for young people with disabilities at university or in post-18 education is quite different from at school. That is the time when an asset might be useful to boost people’s potential. 

Kate Green:  My hon. Friend makes an important point about the different nature of the educational experience in further and higher education, which means that the young person will incur additional costs. There is also a richer range of experiences in which they might wish to participate. The lump sum is important in ensuring that they can make such choices. 

Young people with disabilities are already at a higher risk of poverty in adult life, with disability an indicator of vulnerability to poverty. I am concerned that they will lose a useful asset—admittedly a modest one—that might help to compensate for that lifelong higher risk of poverty by giving them a good start in adult life. I hope that the Minister will think again. I am confident that Members on both sides of the House and across the Committee are concerned about the future of disabled young people. This mechanism gives us a chance to address the needs of those people. 

Amendment 22 is aimed at the poorest third of children, which is the third group that my right hon. Friend the Member for Delyn has targeted with this group of amendments. The poorest third of children relates to the definition of poor children in the Child Poverty Act 2010, which is those who are growing up in households that receive below 60% of median income. Currently, that is about 30 to 32% of children. Like the Conservative election manifesto, the amendment commits to give all children defined as “in poverty” the boost of maintaining their child trust fund. That was a welcome commitment by the Conservative party. I would have liked it to continue its commitment to a universal payment, but I welcome its recognition of the importance of the definition of income poverty. It was good to see that reinforced in the Conservative manifesto. I am disappointed that the Conservative party is moving away from that commitment. The intentions and the definitions in the 2010 Act were strengthened by the cross-party support that the legislation enjoyed. This is an opportunity to reinforce that point. 

I hope that in the measures that the Government introduces, extra attention will be paid to the needs of the poorest children—those who are growing up in households that receive below 60% of median income. I cannot understand how the junior ISA will achieve that because it appears to have an in-built inequality. Better-off families will benefit more, because of the tax break, than the poorest families, who are highly unlikely to be taxpayers. Whatever the merits of the junior ISA, as a vehicle to create a savings habit, or in its delivering a

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lump sum at a particular age, it has a fundamental difficulty of being a more unequal model than that of the child trust fund. I hope that the Financial Secretary will respond specifically to that point, because I am genuinely concerned that a Government who proclaim their wish to narrow inequality gaps, which I applaud, should introduce a measure that looks likely to make things worse. Perhaps he can reassure me that that is not the case. 

There are two other points that relate to the three amendments that are under discussion. The first, important one was made by the hon. Member for Birmingham, Yardley—why wait another 11, 12 or 18 years to deliver the payments? Why not make them now? I could not agree with him more. I should like to see the Government take further steps to narrow the gaps between the poorest adults and the better off in society Those who are on low incomes because of disabilities are at greater risk of poverty, as are those who have left care, who are also at much greater risk of worklessness and poverty. 

Regrettably, virtually every measure that the Government have announced in either the emergency Budget or the comprehensive spending review seems to take things the other way for the poorest adults. I hope, therefore, that the comments of the hon. Member for Birmingham, Yardley will relate not only to the legislation, but to the spending plans as a whole. 

Finally, I come to social mobility, about which there is considerable misconception and misunderstanding, as much in my own party as elsewhere in the House. We do not know that social mobility stalled under Labour, because we have not been able to measure the group of children who have benefitted from Labour’s spending plans—its investment in tax credits, its increase in child benefit, its improvements in lone parent employment, and so on. We have not been able to measure the effects of such measures on those children when they become adults, so we do not know whether they are in a stronger position than their parents. 

The Chair:  Order. I remind the Committee that we must not stray too much on to general social policy, but confine ourselves to the amendments. 

Alison McGovern:  My hon. Friend is making a compelling case for a halt on the argument that we cannot have this because there is no measurable effect. Some of the best policies take effect over many years, and that relates to the child trust fund. I do not know whether she would agree that the educational impacts of the past 13 years of Government policy are also yet to be measured. The rushed nature of the legislation is therefore one of its most concerning aspects. 

Kate Green:  I am grateful to my hon. Friend, who helps me to draw back to the point of the Bill. That point is precisely that, to a certain degree, we must have some faith that long-term measures will improve social mobility before we are able—inevitably able by definition—to measure their effects. 

We know from extensive evidence, including that which we heard in the witness sessions last week, about the importance for people of having money and assets behind them at the age of 18. That is one of the components that improve opportunities and, as a result,

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outcomes, particularly for the poorest young people. It is not true that money does not matter and that other mechanisms can replace it. Many other mechanisms are important, such as education, financial expertise, good health, and so on, but money is an important factor in delivering good outcomes for children, young people and adults. This asset would have helped to provide that additional resource to improve the outcomes for our most vulnerable people. I hope, therefore, that the Minister and the Government will think again and accept the amendment. As my right hon. Friend the Member for Delyn has said, if that is the case, with some reservations and regrets we will vote for the clause. 

John Hemming:  The inter-relationship between the measure and the care system is important. I am well known to be critical of the care system—a lot of children are in care who should not be, and there are those who should be and are not. To cite an example from my constituency, some children smashed up a children’s home to get moved home, and they were. A study by Southampton university that looked at 473 people who had left care showed that 70% of people went back to their parents. 

It is important to remember that every child is different and every child’s circumstances are different. Some maintain links with their families, whereas some do not, and the families of some will have died. We had a meeting with children in care just a couple of doors down a couple of weeks ago. There is no question but that we do not look after children after they leave the care of the state. The process for assisting them through that is not good. 

The question today is whether it is worthwhile to pay £50 million a year to maintain infrastructure that delivers £1 million that is not necessarily well invested, and that at the end of the process delivers a couple of thousand pounds to a child in care, or whether the £50 million would be better spent if it was sent straight to people on leaving care. 

Kate Green:  I agree with the hon. Gentleman that children in care have varying needs, different connections with their birth families and different trajectories of maturity. I invite him to work with me on this issue that concerns us both and to consider how the Bill can be improved to ensure that we have a savings model that delivers flexibility, while ensuring that we have the benefit of the child trust fund model, which recognises the particular costs that children face when they transition into adulthood at the age of 18. 

John Hemming:  I thank the hon. Lady for her intervention, but the Bill cannot be improved in that way because there is a cost in maintaining the infrastructure. It is important in public policy to get value for money. There is no sense in spending £50 million to give looked-after children £1 million in a few years’ time. That is ludicrous. It is impossible to modify the Bill to achieve that—it is just insanity. 

Kate Green:  Obviously we are well aware of the significance that the Government attach to reducing the deficit, but the cost of child trust fund payments for children and carers is a modest £2.5 million. Does the

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hon. Gentleman agree that, even in the straitened circumstances in which the Government say that they find themselves, that is affordable? 

John Hemming:  I agree that that is entirely affordable, but the infrastructure must be maintained to pay that. 

Mr Hanson:  The infrastructure would cost about £2.6 million a year to run. 

John Hemming:  That demonstrates the ignorance of the Opposition. There are two aspects to this. The first is a process by which a computer goes clunky-clunk and sends out post, allocates numbers and maintains links to various providers. The figure that will be saved by putting that on hold is £50 million. The Minister will probably give more details on that later. That infrastructure must be in place to pay the additional cash, which I accept is relatively small at £1 million or £2 million. 

Alison McGovern:  By way of comparison, will the hon. Gentleman clarify what the total project cost will be of setting up the junior ISA scheme? 

John Hemming:  The point is that we are working on various ways to deliver this. The conclusion may be that we should use a model similar to the child trust fund. The difficulty is that there is a cost to opening and maintaining lots of empty accounts, even if computer systems are used. It would involve sending all children born in this country a note, every birthday for 18 years, that for most people will say, “You’ve got no money.” As well as being a rather futile exercise, that would cost at least the postage and the running costs, which must add up to at least 70p. The problem is that there is an infrastructural cost in keeping the scheme running. That cost must be dealt with. There is no sense in spending £52 million to pay people £2 million. 

11.45 am 

Sheila Gilmore (Edinburgh East) (Lab):  One of the problems that we face with the Bill is the same one that I raised with the Minister yesterday in the Chamber: all too often we rush in to make changes without having thought through the implications or without knowing the alternatives. 

It is all very well for Members supporting the Government to say constantly, “This would be better”, “That would be better”, “Perhaps we could do this” or “Perhaps we could do that”. Regrettably, the amendments proposed last week, which would have given us a breathing space to look at some things again, were refused by the Government. 

From what is being said, clearly a lot of things have not been given proper consideration. There may be aspects of the child trust fund that could be looked at again or that might not be ideal; or, as has been suggested, universality might be difficult to afford—that is not necessarily a view I share, but I can understand where people are coming from. On that basis, it is not beyond us to look at the possibilities of, for example, reducing overheads. 

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I would like to see the detail on the figures that we have just heard, but if they are correct, I do not see why keeping the child trust fund available for the three categories covered by the amendments—children in care, children with disabilities and the poorest children—necessarily requires us, as the hon. Member for Birmingham, Yardley suggested a few minutes ago, for example, to send out in effect blank birthday cards to every child in the community. 

Just because all children covered by the child trust fund—those born since 2002—are currently getting an annual communication does not mean that if we limited the child trust fund to the defined categories, all other children would have to be sent a letter saying, “You’ve got nothing.” That is absurd and, surely, only a regulatory or small change would be needed to stop it happening. Putting up such an objection to a proposal of this nature is putting up a straw man, rather than addressing the issues involved. 

It is important to address some of the misrepresentations, or misinterpretations, of the evidence we heard from Marc Bush. He spoke about the difficulties that some families had encountered with the authorities; some officials, apparently, argued that the asset involved in a child trust fund might affect benefit. However, he was illustrating a practical problem that some of the people his organisation dealt with had encountered. As far as I am aware, for that to happen is not the policy of the previous Government or of this Government, but anything in the rules that causes that to happen can be changed. That small glitch could be changed. 

What sounds far more likely is that some officials were themselves misinterpreting the regulations. What Marc Bush said—clearly—was that other forms of saving were particularly difficult for families with disabled children, and that the child trust fund was one of the best because it did not involve such difficulties. Other forms of saving would have that effect on the receipt of benefit. 

As I heard Marc Bush—it is written down clearly—he was saying that of the savings choices for families of disabled children, this particular one was the best articulated and the best integrated with the benefit system, so he supported it and felt it important that it should continue. Rather than being evidence against continuing it, I submit that his evidence was strongly in favour of continuing it. 

I appreciate that we are not meant to stray into too many of the wider issues about benefits and the other changes that are being made, but we should not ignore them entirely, or suggest that taking benefits away does not matter because disabled children may receive moneys in other ways. Families in my constituency have been told in recent months that their disabled children coming up to adulthood would no longer qualify for the independent living fund, for example, because it is only available for people who are definitely in employment for 16 hours or more a week. I now understand that the independent living fund is to disappear altogether, and that alternatives to such benefits will not necessarily be available. 

In social policy terms, one big criticism constantly made of Governments is that they do not look enough into the long term. Things are constantly introduced, after which there are changes of Government and policies

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are interfered with. The child trust fund was a genuine attempt to look to the long term and work towards giving people a degree of independence. 

Alison McGovern:  Does my hon. Friend agree that at least some level of cross-party agreement was apparent on the amendments? People in my constituency and more widely often look for a long-term approach in the form of politicians coming together to reach cross-party agreement. Before the election, a neutral observer would have assumed that there was such an agreement on this matter. 

Sheila Gilmore:  Indeed. At the moment, we are faced with the assertion that the overall priority is to reduce the deficit very fast, which is highly dangerous in economic terms. Even if that is the priority, looking at longer-term social policy measures to deal with it seems perverse. If the Government are right and the deficit is reduced within five years, with the economy thereafter flourishing as a result—that appears to be their position—it is all the more important that long-term social policy measures are not interrupted now. They are the very measures that should be kept in place as, if that happens—the Government are confident that it will—it seems particularly perverse to cease such measures and not to be sufficiently optimistic to say, “We will restrict payments to these particular groups at the moment, if necessary, but we can reinstate the fund in future without any great difficulty and without having to reinvent the wheel by coming up with a new policy.” The families of disabled children are such a disadvantaged group, and disabled young people, as they move into adulthood, face such a huge number of problems that they need anything that can assist them. 

Finally, it has been suggested that the last Government thought that the measures, including the child trust fund, that are marked out in the Bill, would somehow resolve poverty and deprivation. That is not the case, as each of the measures was a small part of a much wider programme. We are not suggesting that because a young disabled adult or a young person leaving care would receive the money, it would overcome all the other disadvantages they may have, or that in itself it would be enough totally to transform their life. Of course, other factors have to be taken into account as well. 

The child trust fund was a measure designed to enhance the life chances of such young people. It is important to keep it in operation, particularly for such groups, at what is a relatively modest cost, to enable us to move forward in the future. I hope that that would be the case with various measures that I hear Government Members espousing and encouraging, and which I hope will work. But that should not be to the exclusion of our proposal, so I urge Government Members to support the amendments. 

Yvonne Fovargue:  I want to turn to an area that has not been examined enough, which is the long-term savings habit that is engendered by the child trust fund. From my work in financial capability and in schools, I believe that all the studies suggest that children learn from their parents. Where are looked-after children to learn from? We are the parents in that case and we have to give that example. The child trust fund has given a practical example to a group of children who quite often—not in all cases—have no practical examples of saving. It is not the same simply to give those children a

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lump of money at 18, and say, “Here you are. Go out and do something with it.” It is about teaching the idea that savings bring prosperity and life chances. The child trust fund is doing that for looked-after children in particular. It is decreasing the divide between looked-after children and those who are in the care of their family. It is also giving them a lump sum, which gives them extra support at 18 years old, when they leave care, go into their own properties, have to fend for themselves and have to get financial products if they are at work or at university. It gives a practical example of a financial product and how it works, and that makes people engage. 

As my hon. Friend the Member for Edinburgh East has mentioned, Marc Bush said that there are no suitable products for disabled children. The problem is that often other products—not the product he mentioned—are taken into account for benefits. People want to save, but they cannot find the products. The value of the child trust fund is that the Government put the money into a product that is suitable. 

The stress on parents with a disabled child is particularly great. The phrase that Marc Bush used, which particularly affected me, was “a cliff edge”. He said that the cumulative effect of these changes, including the withdrawal of the child trust fund, is to push those people over “a cliff edge”. I want people to look at how expensive it will be to rescue those who have gone over a cliff edge, when some preventive work could have stopped it. 

On the poorest third, what affected me was the phrase “assets mean choices” and the increase in social mobility. I want to return to the examples of saving. We have had much debate about when is the right time to save. Is it when people are particularly stretched for money, or when they have a little to put aside? From my work experience in financial capability and debt work, children learn about saving from example. Practical examples are needed and that is what the child trust fund has given them. A junior ISA, which is not applicable to families who do not pay tax, is not an example to children. The child trust fund, which can be used as an example in schools and in financial capability lessons, gives encouragement for people to save. As Anne Longfield said, it is the simplicity of the product that counts. Can the Financial Secretary say whether that has been taken into account as well? 

12 noon 

Alison McGovern:  I have a few remarks on the amendments, which build on the points my hon. Friend the Member for Makerfield has just raised. The amendments are significant, because we have an incredibly important decision before us. We are looking after some of the people who have least in our society. I was struck by some of the answers that the Minister gave in evidence to the Committee last week. In respect of amendment 22 and the possibility of a junior ISA, in response to my hon. Friend the Member for Makerfield he said: 

“The important thing is that there is a vehicle designed to encourage people to save. Encouraging people to save is not just about tax incentives;”— 

an important point— 

“the money will be locked in. We want to make sure that it is accessible to low-income families”.––[Official Report, Savings Account and Health in Pregnancy Grant Public Bill Committee, 4 November 2010; c. 123, Q298.] 

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That aspiration is admirable. It is the reason behind the amendment. However, as for the possibility of an alternative, which lots of the argument has turned on today, will the Minister tell us the plan for making the vehicle accessible to low-income families? How will the junior ISA work in relation to that? In my experience, there would usually be a plan aligned to a policy such as junior ISAs and it would help the Committee if we could know more about making sure that junior ISAs are accessible to low-income families. With the advent of child trust funds, tax credits and pension credits, we know a lot as a country about how we ensure that financial products to assist those on the lowest incomes are taken up and used in ways that we would all like to see. I would be interested to know the Treasury’s assessment of how it will make it happen. 

In addition, if our amendment is not accepted, and one, two or three years down the line junior ISAs are not taken up by low-income families, what is the Minister’s plan? What will we do then? Colleagues have already commented on the sometimes rushed nature of legislation and it would be worth while if the hon. Gentleman can explain how we might engage families on low incomes in savings plans? I did not come from a particularly wealthy family, but I experienced the culture of putting away £1 here, £10 there and working towards a better future. I hope that we have some expertise in engaging low-income families in savings, and I shall be grateful if the hon. Gentleman will describe how best to protect such a policy in the time to come. 

Fiona Bruce (Congleton) (Con):  Has the child trust fund really succeeded in improving the savings culture and the financial capability of the poorest? In light of evidence given by Dr Samantha Callan, of the savings accounts opened by parents, only 1% had received the maximum funding available. In other words, only 1% of those opened were by people on the lowest incomes. 

Alison McGovern:  That is a funny argument for two reasons. First, it is a slightly odd statement to come from an hon. Lady who stood on a manifesto that sought to preserve the child trust fund. Secondly, it is a funny argument that, because everyone did not save the maximum, it was not worth while for some people to save something. 

Our argument for the retention of the child trust fund is that, in the grand scheme of things, it is a relatively new financial product. When we questioned the mutual financial services sector, we heard really strong evidence that it has made a success of it. For that reason, I certainly believe that some delay and the retention of the product is the right way in which to proceed. 

Yvonne Fovargue:  Does my hon. Friend agree with Anne Longfield’s evidence that a higher proportion of income was put into the savings by people on the lowest income? To me, that indicates a success. 

Alison McGovern:  I recall Anne Longfield’s evidence on that. Overall, when listening to the experts who came before us, I was struck by the evidence of the increase of

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saving and—with the caveat that we are still fairly newly into the culture of the child trust fund—that must be a good thing. We must secure the amendments to the Bill so that we can maintain the child trust fund and keep reflecting as a country on what more we can do to build up the savings culture. That will have the benefit not only of assisting those on the lowest incomes to save—where children are in care or have disabilities—but will also encourage a broader savings culture. The financial services sector in our country needs that culture of more savings and more deposits at this time. 

On amendment 20, I want to reflect on the importance of retaining the savings facility for children in care. It is especially important to know the estimation that the Minister and the Treasury have made of the likelihood that such children will have junior ISAs taken out for them. I would be interested to know whether an assessment has been made of that; if not, it ought to be. Before we dispose of a savings product for children in care and offer a different one in the years to come, should we not ask ourselves about the likelihood of such a product working for them? 

Mr Hanson:  Is it not even more important that the Minister outlines what the true nature of the junior ISA will be? He is asking us to support clause 1, which abolishes the child trust fund, but he has not yet provided clarity about what the junior ISA or the cap will be, how the mechanism will work, or how the scheme will operate generally. We are being asked to abolish a measure without having clarity on its replacement. 

Alison McGovern:  My right hon. Friend puts most succinctly the point that I want to make. It is bad policy, generally, to abolish a scheme that has had at least some success according to some of the people who gave evidence in Committee. I recall specifically the evidence from the mutual side of the financial services sector, which was that the product was successful and that it was going well. We have not heard enough detail about the junior ISA to make an assessment of that proposal, and that we are asked to abolish the child trust fund in total ignorance of what—if anything—might replace it, seems to be faulty policy making. 

John Hemming:  Does the hon. Lady not accept that the 18 years that exist between now and the time when the replacement has to function is sufficient time to get a good replacement? 

Alison McGovern:  The hon. Gentleman’s point rests on a false assumption. The misplaced premise of his argument is that the only benefit of the policy is that which will be received by the child in 18 years’ time. We have heard evidence in Committee that the economics that matter concern not only the transfer payment from the Government to the family now, but the culture and the habits that are formed along the way. Such habits have economic and financial benefits to families, which is why the child trust fund has been so successful as a product and as a policy. That is why I support the amendments, which would try to preserve that. 

John Hemming:  Although the extreme example is 18 years, would not even a year be enough time to put the replacement in place? Obviously the provision can be backdated to all the children who are born after 3 January. 

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Alison McGovern:  If the hon. Gentleman thinks that a year is enough time to get the junior ISA in place and introduce the further policy, why does he not table an amendment to the Bill to preserve the child trust fund for another year? 

John Hemming:  The point I am making is that whenever a new system is implemented it can be backdated so that nobody misses out. We have to ask whether it is not worth taking a little time to get the system right. 

Alison McGovern:  The hon. Gentleman says, “Oh, it’s fine because we’ll have the junior ISA and we can just backdate it for people who’ve missed out.” However, we are being asked to pass legislation in ignorance of the detail of the junior ISA. That is why I am on my feet asking these questions so that we can get some of the answers on the record. The hon. Gentleman thinks that all will be well because we will have a junior ISA in place in a year and can backdate it for people who have missed out, but why are we here debating legislation that removes the child trust fund in the absence of some of the details about the junior ISA that we might possibly get? That is what I am trying to find out about. 

John Hemming:  We are here removing the infrastructure because it costs a certain amount to keep it going, and there is no sense spending £50 million to achieve nothing. 

Alison McGovern:  I repeat the question that I asked him in an earlier intervention. It is all very well for him to assert that there is a cost to the child trust fund infrastructure, but in the absence of any detail about the cost of the junior ISA infrastructure or how effective the junior ISA will be in continuing the culture of saving that the child trust fund had built up, the hon. Gentleman is addressing only one side of the question. It is not good policy making to assume that because we can chop a bit off in one place, another cost will not arise somewhere else and that we would not have been better sticking with the original policy. 

I will make a bit of progress. In addition to some of the questions that my hon. Friends and I have already asked, I want to ask the Minister about amendment 21. Will he discuss further how the junior ISA might affect disabled children? Will it be an appropriate product? Would there be any interplay between the junior ISA and the benefits that exist for disabled people now? Obviously, the position is changing for those on disability benefits, but it is important, in abolishing what was described to me as one of the best financial products available for children with a disability, to know what might replace it. If the answer is, “We don’t know what might replace it,” and there is no proper option for children with a disability, it would be helpful to know that. 

On amendments 20, 21 and 22, the Minister made some comments, and evidence was provided to us, about the importance of lock-ins. We heard evidence from the expert witnesses about the child trust fund’s importance in assisting in locking parents into saving. That was seen as a real benefit, especially for parents on low incomes, who knew that they could not get out the money that they put away. That was a really helpful way to save. That is not the normal culture with the ISA

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family of savings products, but the Minister gave a distinct indication that the Government would seek to preserve the culture under the child trust fund in the junior ISA, and I would fully support that important point. 

We have heard about how flexibility might be developed. We have quite a certain picture of how the child trust fund works and quite a particular model, so it is important to hear how the lock-in might work, how it would relate to other ISAs and what work the Treasury has been doing to make sure that this financial product could be sustainable, because people want continuity of the culture of saving that we had started to build. 

12.15 pm 

Mr Hoban:  Let my try to focus on the points that were not discussed in last week’s scrutiny session and on the three amendments. We all recognise that there are vulnerable groups in our society who need more help than others. Is the child trust fund the most effective way of providing support to those groups? We do not believe that continuing with the child trust fund eligibility would be the best way of delivering such help. Furthermore, once eligibility for child trust funds ends for children born from January 2011, it will not be practical to retain the infrastructure and processes necessary to give specific groups of children a child trust fund. It refers back to the point made by my hon. Friend the Member for Birmingham, Yardley. I hesitate to correct him, but I will. 

The current child trust fund system costs the taxpayer about £5 million a year. If we move to a reduced scheme, there will still be costs incurred. Prior to discussions with child trust fund providers, it was apparent that it would not be economically viable for them to run child trust funds at the lower level, as set out in the statutory instrument that the House passed in July. The chief executive of the Children’s Mutual was an exception to that, but the meetings that I had with stakeholders back in July indicated very clearly to me that if we were to continue to run the regime that has been in place since July, it would not be viable and we would have the same problem that we see with saving gateway, with insufficient numbers of people providing that product for it to continue. 

Let me turn to amendment 20 and the proposal to continue the scheme for children in care born on or after 3 January 2011. I will not pick up the drafting problems of the right hon. Member for Delyn, but the amendments are significantly defective in the way in which they have been prepared. There are significant problems with continuing CTF eligibility. It would require local authorities to continue to retain the information systems that forward information to HMRC about children in care. They would need to keep staff to process that information or deal with any problems. As I said, it is unlikely that the providers would continue to offer the accounts. There are costs to local authorities of making top-up payments as well. It costs £22 on top of the amount to make those payments. Clearly, that is money that could be spent on improving the life chances of children who are in care. There are other ways of helping. We have talked about the pupil premium. 

Kate Green  rose—  

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Mr Hoban:  The consultation from the Department for Education specifically included looked-after children as a group that could benefit from that payment. There is clearly a trade-off. 

Mr Hanson  rose—  

Mr Hoban:  I want to make some progress. We have not made much progress this morning and I am conscious that we want to cover these and other amendments. 

Mr Hanson:  It is normal courtesy to give way. 

Mr Hoban:  I am grateful for lessons in etiquette from Labour Members. I spent enough time in Opposition to know exactly how these things work. 

There are different ways of trying to meet the needs of looked-after children. The pupil premium is one way to do that. 

Mr Hanson:  Will the hon. Gentleman give way? 

Mr Hoban:  People need to make a choice about how scarce resources are used and the most effective way of doing so. There was some discussion about whether the children’s ISA would cover looked-after children. We could encourage corporate parents to make contributions to a children’s ISA. 

Mr Hanson:  Will the hon. Gentleman give way on pupil premiums? 

The Chair:  Order. The Minister has made it clear that he will not give way at the moment. It is up to each individual Member to decide whether to give way. 

Mr Hoban:  There are ways in which corporate parents could contribute towards the junior ISA, to help provide a sum for children who are in care. It is worth bearing in mind that children remain in care for three years on average, so we are talking about a potential contribution of £300 for most children in care. I have mentioned the pupil premium and the possibility of local authorities acting as a corporate parent in connection with the junior ISA. Children who are in care at the age of 18 and who go on to higher education will be in receipt of a £2,000 bursary from their local authority. That is a statutory requirement. There is a danger of looking at the child trust fund in isolation and not thinking more broadly about other mechanisms of support. 

The right hon. Gentleman mentioned the intervention of his right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) on the Prime Minister. I have been in contact with the right hon. Gentleman, and we will be meeting next week to talk about the matter in more detail. The Prime Minister said that there are alternative ways of saving, such as the children’s ISA. I look forward to working with the right hon. Member for Wythenshawe and Sale East to see what ideas he has about how the children’s ISA could be used to encourage more support for children in care. 

Amendment 21 relates to disabled children. There are issues of practicality to looking after children who are in care. Disabled children are a relatively small group, and it would not be practical to retain the infrastructure and processes necessary to give them a child trust fund. It may be difficult to find institutions that are prepared to offer those accounts. Therefore, it is not right to

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continue CTF eligibility for those groups. However, the money that would have been spent on additional payments into CTFs for disabled children will be recycled to provide additional respite breaks. The money to support disabled children will be used in a more immediate and targeted way. 

The hon. Member for Edinburgh East raised the issue of people assuming or believing that money in child trust funds can be taken into account in the calculation of benefits. That is explicitly not the case as such matters fall outside the benefit system. Any money put into a child trust fund would be excluded from the calculation of benefits, and that is an important reassurance. We must ensure that the information provided by HMRC is clear that child trust funds are excluded from the calculation of benefits. 

Amendment 22 deals with the poorest third of children. It raises an issue that we must tease apart. One argument for child trust funds is about asset-based welfare, and another argument is that such funds encourage a savings habit. During the 2008-09 financial year, only 13% of the poorest families made contributions to a child trust fund. It is not clear that a savings habit has been encouraged as a consequence of child trust funds. 

Alison McGovern:  Does the Minister have figures for years other than the financial year 2008-09? 

Mr Hoban:  Those are the most recent figures available. Hon. Members will have argued that the child trust funds create a long-term habit, but if after six years the scheme has not demonstrated a significantly higher impact, I would question how effective it will be in the long term. 

Alison McGovern:  I asked that question because 2008-09 was a special year in our economy. We had seen a massive global financial crash and those on lowest incomes were likely to be feeling under extreme financial pressure. I find it difficult to accept the Minister’s argument that we have not got a savings culture because only 13% of people on low incomes contributed to the fund in a year when they were likely to have lost their job, perhaps with the possibility of losing their home, and to have been under extreme financial pressure. 

Mr Hoban:  The hon. Lady makes a point, but let us look at the facts. Just 13% of families from the lowest income groups made a contribution towards their children’s CTF. That does not suggest strong evidence that the CTF has provided for or created a savings culture in this country. I would cite that evidence. The big question is: how do we use the resources we have in the most effective way to improve the life chances of children in that income group? We believe that it is more important to provide that financial help now for those who need it, instead of locking away public expenditure on assets that cannot be touched for 18 years. 

Mr Hanson:  Why then did the hon. Gentleman commit in his manifesto in May to keep the child trust fund for the poorest third of children? Did he not consider those arguments before he put that in his manifesto? 

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Mr Hoban:  We went through that on Thursday afternoon. The right hon. Gentleman knows exactly what the situation was, but let me just remind him. We had an election, there was no clear outcome, we formed a coalition with the Liberal Democrats and the measure was reflected in the coalition agreement. That agreement is the programme for government that we are implementing, and which underpins the measures in the Bill. I do not apologise for implementing that agreement; it is an agreement that we reached. The decisions are not straightforward, and there might be others that we would prefer to make in different circumstances, but that is the measure that we are implementing and this is the structure of the Bill. 

Mr Hanson:  Will the Minister give way on that point? 

Mr Hoban:  No. We dealt with the issue at some length on Thursday afternoon and I do not want to bore the Committee by repeating the argument. [ Interruption. ]  

The Chair:  Order. Let the Minister continue, please. 

Mr Hoban:  There is a clear school of thought among Labour Members, which the hon. Member for Edinburgh East expressed well, as did her hon. Friend the Member for Wirral South. They would much rather preserve long-term programmes, at—I think the implication was—the expense of short-term programmes, or through higher taxes or more borrowing. They never quite articulated what would replace our spending reductions. Carl Emmerson of the Institute for Fiscal Studies, again pointing to the argument about trying to use money carefully and wisely now to improve children’s life chances, said: 

“I would look at spending money on improving education or on increasing the incomes of low-income families, rather than a lump-sum payment to them at birth that can be spent in 18 years’ time.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 8, Q6.] 

That is an important and powerful point. We should be taking steps now to improve children’s life chances, particularly at this point when we have to make tough decisions about how we utilise taxpayers’ money. 

We are scrapping the child trust fund, and there are other ways in which we will tackle some of the issues around life chances; I mentioned the pupil premium earlier. When we looked at the options for reducing the spending on the child trust fund earlier this year, we decided that it was right to end eligibility altogether, including for those on lower incomes. That maximises the savings that we can make on child trust funds, and the money will therefore be available for the other priorities. 

There are some practical problems with keeping the CTF in place for children in lower-income families, as in the amendments. How do we go about calculating who the poorest third of children are? The Opposition propose what sounds like a new system of means-testing, which suggests that decisions should be based on someone’s income at birth. That is a snapshot; it does not consider how a family’s income would— 

Mr Hanson:  Will the Minister give way on that point? Will he give way on that point? 

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Mr Hoban:  No. The right hon. Gentleman is getting terribly excited. Just because a family is on a low-income when a child is born does not mean that it will be in the same financial situation when the child reaches 18. So, the amendments are neither fair nor well targeted. It is not clear how determining the poorest third of households could operate in practice. The right hon. Gentleman suggests that the Office for National Statistics would advise the Chancellor, but ONS data are, of course, annonymised, so it would be hard to identify to which households Her Majesty’s Revenue and Customs would be required to make the payments. 

Mr Hanson:  I am interested in how the hon. Gentleman himself would have calculated who the poorest third were, given that according to his May manifesto, the scheme would have applied to the poorest third. Had he won a majority in May, presumably he would be introducing a scheme that included the poorest third. 

Mr Hoban:  Being a practical man, I would have simply linked the child trust fund to an existing benefit. We would have gone down the passporting route. There are plenty of examples of passported benefits that one could have used in constructing the amendments. 

In conclusion, the Opposition’s arguments do not take into account the practical problems attached to making the payments to these groups. Taxpayers’ money would have to be spent on keeping the scheme alive and CTF providers are reluctant to continue on the current low payment levels. The money involved will be spent more wisely by investing in the pupil premium and by reducing the deficit, which will in turn reduce the interest costs that we pay. I believe that the measures in the Bill are practical answers to the problems that we face. I ask the right hon. Gentleman to reflect carefully on his commitment to spend taxpayers’ money on unnecessary administration costs, and on whether there are better ways in which we might help these disadvantaged groups. 

12.30 pm 

Mr Hanson:  I am disappointed by that response. The Minister did not answer the key questions that we put to him about the replacement for the child trust fund and the impact on looked-after children, the poorest third of children and children in receipt of disability living allowance. 

To be frank and open, I accept that the amendments may not be perfectly drafted. That is the nature of Opposition proposals. We do not have the resources of the Treasury and parliamentary counsel. However, we have tried to raise issues. I would be happy not to press the amendments if the Minister said that he would put the might of the Treasury and parliamentary counsel into finding policy conclusions that secure his manifesto commitments and provide for the needs of the three groups that we are discussing. He has not done that because he does not believe in supporting those three groups. 

Given that the Minister would not accept interventions, particularly on the pupil premium, I will ask him further questions now. First, will he confirm that the pupil premium applies only to England? 

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Mr Hoban:  This is not a general debate about the pupil premium, but I will answer. The pupil premium affects the education budget and it applies to England. The right hon. Gentleman is aware that through the Barnett formula, increases in education and health spending flow through to the resources available for the nations of the UK. It is down to the devolved Administrations to make choices about those resources. 

Mr Hanson:  We are straying into the next set of amendments, but has the Minister discussed with the devolved Administrations the implications of the pupil premium and the withdrawal of the child trust fund? He has introduced the idea that the pupil premium is some sort of salvation from ending the child trust fund, and that it will deal in particular with the children in the poorest third of households, who are specified in amendment 22. He knows that the pupil premium is an England-only invention. It does not apply to children in my constituency in Wales, in the constituency of my hon. Friend the Member for Edinburgh East in Scotland or in the constituency of the hon. Member for South Down in Northern Ireland. It therefore will not help the poorest third of children across the United Kingdom, as would amendment 22. The pupil premium is a red herring in relation to that amendment and the Minister knows it. Even under the Barnett formula, the Welsh Assembly Government will lose £1 billion of resources over the next four years because of his Government’s comprehensive spending review. The pupil premium will have no impact on the objective of amendment 22. 

I am pleased that we have nailed good and proper the assertions of the hon. Member for Birmingham, Yardley on the cost of maintaining the child trust fund in future years. I thank the Minister for his clarification. I had put the figure at about £2.6 million and the Minister said that it would be about £5 million, less the costs of continuing to run the scheme. I think that we are in about the same place, and about £45 million lower than the hon. Gentleman’s assertion. 

John Hemming:  I apologise to the Committee for saying £50 million when it should have been £5 million. However, that does not affect the argument. 

Mr Hanson:  I may have a rudimentary knowledge of mathematics, but the difference between £5 million and £45 million is significant. 

John Hemming:  It does not affect the argument, because we would still be spending £3 to put £1 in somebody’s pocket. 

Mr Hanson:  The point we have been making is that existing recipients of the child trust fund—again, I must declare an interest because one of my children is an existing recipient—will be managed for the next 18 years by a computer system operated by HMRC. A child born on 3 January 2011 will reach their 18th birthday on 3 January 2029, and the scheme will operate for those years, irrespective of clause 1, because it is still operating, with children receiving a lower payment since August and a higher payment before August. The costs are still there, and the three amendments therefore simply represent additional costs as a result of the direct payments made into accounts and the minimal additional cost of the administration. If the hon. Gentleman can give evidence to the contrary, let him do so now. 

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John Hemming:  My understanding from the Minister is that the cost saving from ceasing to open new accounts was £5 million a year. 

Mr Hanson:  There will undoubtedly be costs involved in managing the scheme after 3 January, but there will be costs involved in managing it after 3 January come what may, because of the current cohort of people who will matriculate at some point between 3 January 2011 and 3 January 2029. 

John Hemming:  I understand from being corrected earlier that marginal costs of about £5 million a year will be saved by stopping the opening of new accounts. There are also the additional costs encountered by providers, which are not covered in the £50 fee, which is another issue. 

Mr Hanson:  Indeed. There will be additional costs covered by the providers. Mr Graeme McAusland of The Children’s Mutual said: 

“We recognise that we have a large number of these accounts that we have to run for a long period of time and we are perfectly capable of doing that, and we will be doing that.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 45, Q131.] 

So there is a cost to the providers, which they are happy to absorb. Smaller providers will find it difficult—that is the nature of the position the Minister has put them in—but the largest provider will find it easy. There will be costs to the Treasury in maintaining the system for the next 18 years, unless the Minister comes back with a Bill in a year’s time, when the dust has settled, and says, “Let’s cease the child trust fund operation to date.” Who knows what he might be capable of in due course? As of today, however, the scheme will run until 3 January 2029 for a child born on 3 January 2011, so there will be a continuing cost. The marginal increase in the costs for all three groups is a price worth paying to support looked-after children, the poorest third of children and children on disability living allowance. 

I say genuinely to the Minister that the amendments might be flawed and might not meet the requirements of Treasury counsel in their entirety, but they meet the objectives that he set as a shadow Minister when the Conservative party’s manifesto was compiled. If there are policy difficulties with the poorest third, disabled children and looked-after children, that would have been reflected in his manifesto commitment. With another 20 seats in Parliament, he would presumably have been fulfilling that manifesto commitment. 

Lyn Brown (West Ham) (Lab):  I doubt it. 

Mr Hanson:  My hon. Friend expresses some doubt as to whether he would have done that. I respect my hon. Friend, but I will give the Minister the benefit of the doubt. 

Lyn Brown:  My right hon. Friend is too generous. 

Mr Hanson:  Generous I may be, but I will give him the benefit of the doubt. He wished to go into the election to provide for the poorest third. Whatever mechanisms he has mentioned today, if my mechanism

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is not right, I will happily withdraw it. Let him table an amendment on Report that ties the provisions to benefits—I hope that he will. [ Interruption. ] I might even table an amendment on Report that ties them to benefits—I am grateful for the suggestion. If the Minister lets me, I might even have the use of Treasury counsel so that we can draft the amendments collectively and so that they are acceptable to the Minister. The Minister could then vote for his manifesto commitment and achieve what he said he would do in May. Otherwise, I will have to accept that he does not want to meet those commitments. Whatever his post-May commitments, he thought pre-May that that it was a good idea to do what we propose because it was helping the poorest people to achieve some capital assets at the age of 18. 

I am grateful that the Minister is meeting my right hon. Friend the Member for Wythenshawe and Sale East. Before we conclude, will he tell the Committee whether he has any concrete proposals to take to that meeting after what the Prime Minister said? We are being asked to support clause 1 and to withdraw the amendment on looked-after children or it will be voted against. What is the alternative for looked-after children? Is it solely the junior ISA? If so, as my hon. Friends have asked, how do we get people to save who have a low asset base and whose parents are dead, in prison, not interested in their children’s future or incapable through drugs or alcohol or for other reasons? The reason why children are in care is that parental involvement is absent. How on earth can parents support a junior ISA when they cannot manage their children in any way, let alone in financial contributions? 

Alison McGovern:  Does my right hon. Friend agree that the concern is that we are removing a vehicle to provide an asset for looked-after children without asking what its replacement will be? There has been some speculation about the possibilities of ISAs, but to anybody with any experience of the care system, it seems unlikely that that will ever come about. That demonstrates the importance of the amendment. 

Mr Hanson:  Again, I would be able to answer all those questions in a better frame of mind if I knew exactly what the junior ISA or its replacement will be. 

Mr Hoban:  Without wishing to be tedious and repetitious, I said in my remarks on this group of amendments and at least twice on Thursday that it would be open for local authorities, as the corporate parents—perhaps the hon. Member for Wirral South would like to listen—to contribute to junior ISAs on behalf of looked-after children. They could take that responsibility. In the same way that they contribute to CTFs now, they could contribute towards junior ISAs for looked-after children. That is a clear way to respond to the gap opening up as a consequence of the removal of CTFs and provide a practical method for local authorities to support looked-after children. 

Mr Hanson:  I welcome that and look forward to the Minister’s fleshing it out with my right hon. Friend the Member for Wythenshawe and Sale East. I also look forward to some further fleshing out on Report. At the moment, we still do not know what the cap on the junior ISA will be or who will provide it. We do not

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know how it will be backdated; possibly from October next year. We do not know much of the detail. We are being expected to vote down or withdraw the amendments and accept a clause that abolishes what is and replaces it with what might be. 

I am happy to reflect on all those matters, but the Bill will not be considered in this Committee alone; it will be considered on Report on the Floor of the House as well as in another place just down the road. Another place might take the view that looked-after children are particularly important, and might reflect some of our amendments. Given that the Bill must be enacted by 3 January and that another place might want opportunities for long discussions of it, the Minister has a tight timetable. I suggest that he consider the matter urgently with my right hon. Friend the Member for Wythenshawe and Sale East and propose a suggestion. Otherwise, he might find that Members in another place spend a long time asking why an alternative is not in place and discussing the matter in detail, and I believe that Bills cannot be timetabled in the Lords. The Minister needs to come to some urgent conclusions on those matters in due course. 

For the record, since this debate began, evidence has come to my attention from the Runnymede Trust, which is focusing on the decision to scrap child trust funds and saving gateway accounts and the disproportionate effect that it will have on black and minority ethnic people, who, sadly, form the majority of the poorest cohort of our society. The Runnymede Trust’s evidence to the Committee has assessed why assets matter in a report. Paragraph 2 of its evidence says: 

“One of our key findings is that Black and minority ethnic (BME) people have fewer and lower-value asset-holdings than white people. Although there are many reasons for this lower asset wealth, asset-building policies could potentially provide BME people with different and multiple benefits.” 

Within that poorest group of the population, there are even poorer groups who will be disadvantaged further by these issues. 

12.45 pm 

The three amendments have value. Although technically flawed, I make the offer to the Financial Secretary to withdraw them if he brings them back on Report, looks at the issues in detail, fulfils his manifesto commitments and drafts amendments that help, in his discussions with my right hon. Friend the Member for Wythenshawe and Sale East, create something positive on looked-after children, over and above the ISA, and clarifies how it will work. If he looks at the poorest third of children and drafts an amendment accordingly, which maintains the scheme for them, and if he looks at disability living allowance and does the same, he will be reflecting what he said in February and what he said during the election campaign. He will also do a service to those three groups of people and ensure that we do not enhance inequalities. 

Kate Green:  Does my right hon. Friend agree that it would helpful if the Financial Secretary could table an amendment that would protect one of the important features of the child trust fund—I understand that it cannot be available in the junior ISA—which is the progressive nature of the double payments for the poorest children, including as my right hon. Friend has pointed

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out, children from black and minority ethnic families? Would it be helpful to have an amendment from the Financial Secretary—it may be based on the junior ISA if that is the route that we are taking—which would protect that progressivity with a double payment? 

Mr Hanson:  My hon. Friend makes a valuable point. From my perspective, we were looking at how we could give the Financial Secretary an opportunity to reflect on these matters. As I have said to him, I am happy to withdraw the amendments and for him to bring back suggestions to the Committee. Would he care to do that? His silence suggests that he would not. On that basis, flawed though these amendments may be in their drafting, they establish key principles that the Opposition wish to see maintained. I have moved a long way in saying that we will accept a lower rate for these three groups in order to salvage something from the child trust fund. The Financial Secretary has rejected that offer. We maintain our position of integrity on clause 1, and we will reflect on that later. 

Question put, That the amendment be made. 

The Committee proceeded to a Division.  

John Hemming:  On a point of order, Mr Streeter. On the latter two Divisions, would it be possible to truncate the timetable? 

The Chair:  The Questions will be put formally at that stage. 

John Hemming:  There will be three votes and there is no sense in hanging around with the doors open. 

The Chair:  Leave it to the Chair. 

The Committee having divided: Ayes 7, Noes 10. 

Division No. 4 ]  


Brown, Lyn   

Fovargue, Yvonne   

Gilmore, Sheila   

Green, Kate   

Hanson, rh Mr David   

McCarthy, Kerry   

McGovern, Alison   


Baldwin, Harriett   

Bruce, Fiona   

Goodwill, Mr Robert   

Hemming, John   

Hoban, Mr Mark   

Maynard, Paul   

Newton, Sarah   

Perry, Claire   

Sharma, Alok   

Williams, Stephen   

Question accordingly negatived.  

Amendment proposed: 21, in clause 1, page 1, line 6, at end insert— 

‘(2A) After subsection (1) insert—(1A) A child born on or after 3rd January 2011 in receipt of Disability Living Allowance is an eligible child, notwithstanding the provisions of section 2(1) and subsections (5A), (5B) and (5C).”’.—(Mr Hanson.)

Question put, That the amendment be made. 

The Committee divided: Ayes 7, Noes 10. 

Column number: 196 

Division No. 5 ]  


Brown, Lyn   

Fovargue, Yvonne   

Gilmore, Sheila   

Green, Kate   

Hanson, rh Mr David   

McCarthy, Kerry   

McGovern, Alison   


Baldwin, Harriett   

Bruce, Fiona   

Goodwill, Mr Robert   

Hemming, John   

Hoban, Mr Mark   

Maynard, Paul   

Newton, Sarah   

Perry, Claire   

Sharma, Alok   

Williams, Stephen   

Question accordingly negatived.  

Amendment proposed: 22, in clause 1, page 1, line 6, at end insert— 

‘(2A) After subsection (1) insert—(1A) A child born on or after 3rd January 2011 living in a household which is in the poorest third of households is an eligible child, notwithstanding the provisions of section 2(1) and subsections (5A), (5B) and (5C).(1B) The assessment of the threshold for qualification under subsection (1A) must be made by the Chancellor of the Exchequer, taking advice from the Office for National Statistics.”’.—(Mr Hanson.)

Question put, That the amendment be made. 

The Committee divided: Ayes 7, Noes 10. 

Division No. 6 ]  


Brown, Lyn   

Fovargue, Yvonne   

Gilmore, Sheila   

Green, Kate   

Hanson, rh Mr David   

McCarthy, Kerry   

McGovern, Alison   


Baldwin, Harriett   

Bruce, Fiona   

Goodwill, Mr Robert   

Hemming, John   

Hoban, Mr Mark   

Maynard, Paul   

Newton, Sarah   

Perry, Claire   

Sharma, Alok   

Williams, Stephen   

Question accordingly negatived.  

Mr Hanson:  I beg to move amendment 23, in clause 1, page 2, line 8, at end add— 

‘(5) The provisions of this section shall not apply until formal consultation has been undertaken with the Welsh Assembly Government, Scottish Parliament and Northern Ireland Executive.’.

I have tabled this amendment for several reasons. We have just seen an example of why consultation is required in the last contribution. Even then, the Minister indicated that the pupil premium was the solution to many of the issues relating to looked-after children when he knows that that does not apply in Scotland, Wales or Northern Ireland and is an England-only matter. More than that, it is important that we consider the impact of the abolition of the child trust fund on Wales, Scotland and Northern Ireland. 

I represent a seat in north Wales, close to the English border and adjacent to the constituency of my hon. Friend the Member for Wirral South, which is in England.

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I live two miles from the English border but because of that—again, I declare an interest—my youngest child, Daniel, is in receipt not only of a child trust fund from the UK Government, but a top-up grant from the Welsh Assembly Government. What discussions, not just at official level but at ministerial level, has the Minister had with those who are elected to the Welsh Assembly and who are currently paying additional resources into the child trust fund for the Welsh Assembly Government? 

As hon. Members may not know, a £50 top-up is payable by the Welsh Assembly Government to the child trust fund over and above the existing contributions from the UK Government. To qualify for a £50 top-up in 2010 and 2011, the child must have been born between 1 September 2004 and 31 August 2005. This top-up is paid at a later stage of the child’s development than the initial payment. I declare an interest as my last child was born in 2003, and received a £50 top-up as a result of the Welsh Assembly Government’s decision. The Welsh Assembly Government’s criteria are based on the date, already having a child trust fund account, and the fact that the individual is living in Wales on 15 September 2010.

In addition, the Welsh Assembly Government currently pay an additional premium to individuals on lower incomes of £100 top-up, which is for those children in receipt of free school meals or of child tax credits in 2009-10 when the household income was not greater than £16,040 or, indeed, in receipt of child tax credits in 2009-10 and claiming income support, income-based jobseeker’s allowance, pension credit, employment and support allowance. Importantly, the claims must be made by 31 January 2011. 

On 11 October, the Deputy Minister for Children, Mr Huw Lewis AM said: 

“Unfortunately earlier this year the UK Coalition Government made a decision to end the Child Trust Fund which will clearly disadvantage children in Wales.  This runs counter to our aim of reducing the chances of poorer children in Wales becoming poorer adults. 

Inevitably this announcement does have a knock-on effect on what we can do in Wales.  I want to assure everyone that the Welsh Assembly Government will do everything it can to explore ways in which our existing investment in setting up Child Trust Funds in Wales can be protected and to see what we can do to maintain our commitment to Wales’ children and young people into the future.” 

The key point is whether the Financial Secretary has met the Minister for Children in Wales? Has he had discussions at an official level with the Welsh Assembly Government about the development of the child trust fund in Wales? What is his view of the Welsh Assembly Government’s continuing payments post-3 January to any particular system in place, given that the Treasury is

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still running the scheme for those who exist before 3 January 2011? What is his view on allowing the Welsh Assembly Government to continue those contributions after 3 January? 

It would be helpful if the Minister can clarify his view on the discussions and the Welsh Assembly Government because the Assembly has to prepare the draft Budget, which will be published on 17 November—in a couple of weeks’ time—and the Welsh Assembly Government need to make decisions about their contribution to the additional payments and thus to the payments of children in Wales as a whole. The Welsh Assembly Government are not controlled solely by my party. Interestingly enough, they are part of a coalition of my party and Plaid Cymru, the Welsh nationalists. They have determined that they want contributions to the child trust fund and, as far as I am aware, they have come across no opposition from either the Liberal Democrats or the Conservatives in the Welsh Assembly Government. I should be interested in whether there is scope for the Financial Secretary to examine such issues in detail. 

The Welsh Assembly Government have undertaken those payments, because they recognise that there is great poverty in Wales, particularly in many of the valleys and inner cities, including areas of my constituency. It is a poverty of opportunity, of aspiration and of assets for people at age 18. It is highly unfair that the Welsh Assembly Government can take a political decision to use their resources to support the child trust fund, but that at the same time the Government are not listening to what is being said about the need for that in Wales as a whole. Can the Financial Secretary tell me whether he has met, is meeting or will meet the Minister—not just officials—to discuss the implications of the policy decision? 

Alison McGovern: My right hon. Friend mentioned earlier that our constituencies are close to each other, on the border of the River Dee. It is important for those of us who represent English constituencies very close to Wales that there is a high level of co-operation, discussion and consultation with the Welsh Assembly Government. That enables such discussions to be embedded in whatever policy is taken forward, so that it works well across the piece and so that people on the English side of the border understand Government policy at the UK level. Does he agree that it is important that those people know that there is co-ordination with their near neighbours in Wales? 

1 pm 

The Chairman adjourned the Committee without Question put (Standing Order no. 88).  

Adjourned till this day at Four o’clock.