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Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Newby, has gone to the heart of the matter. I listened very carefully to the noble Baroness, Lady Noakes; she presented the amendment as if it were significantly different from the one moved in Grand Committee. It is a different approach, but it is intended to achieve the same objective of restricting how the money could be used when the child becomes a young adult at 18. That is the same purpose as sought in Grand Committee. I shall have to treat the amendment as if, for real purposes, it were the same as the one moved in Committee.

The noble Lord, Lord Newby, is right: the core of the matter is our belief that 18 year-olds are best placed to decide the best use of the money for them. Of course there could be misuse; we cannot deny that, and I did not attempt to do so in Committee. The noble Lord implied that using the money to fund a gap year might not be appropriate. He said that his 18 year-old was raising money for a gap year. I would have thought that it was a very good use of a CTF account to allow a wider range of teenagers than those from the middle classes who do so now to benefit from the experience

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of travel. If it were my son or daughter, I would not be at all worried if a CTF were made available for that purpose.

I said in Grand Committee that it was patronising to assume that 18 year-olds would not make the decisions that were best for them—research by the Children's Mutual indicates that that is the case. But is it not also patronising to assume that their parents or some committee would necessarily make better decisions?

Improving financial awareness is one of the key objectives of the child trust fund. The financial education that will run alongside the child trust fund will help young adults to make the right decisions for their own circumstances. We believe that the amendment to allow 16 year-olds to manage their own child trust fund accounts will encourage a greater sense of responsibility about the money in that account.

I remind the House that the Electoral Commission is considering those matters at the moment. It recommended that the voting age should remain 18 but that people could stand for Parliament at 18. No decision has been taken about that, but generally society is, rightly, giving greater responsibilities to younger people. To accept the amendment would be to go in the opposite direction.

In response to the point made by the noble Lord, Lord MacGregor, I wrote to him and others to say that, even if we had the necessary powers in the Bill, our legal advice is that any such restriction would be regarded as a deprivation of the child's property, engaging its human rights under Article 1 of the First Protocol. There would also be a risk of incompatibility with those rights. That is more than what the noble Baroness, Lady Noakes, calls a "legal nicety". But the fundamental point is that made by the noble Lord, Lord Newby: the potential for incompatibility depends entirely on what the restriction is and how it is applied. I shall not rely for this purpose on the European Convention on Human Rights. On the merits of the case itself, it is right that we should treat young adults as young adults when they reach age 18.

7.45 p.m.

Baroness Noakes: My Lords, I thank the Minister for that reply and all noble Lords for their contributions. The Minister said that he did not want to rely on the European Convention on Human Rights. However, in pushing to one side the European Convention on Human Rights, he did not answer the points made by my noble friend Lord MacGregor on what that meant in practice, particularly his very telling point on the read-over to annuities.

The Minister said that my amendment was the same in effect as the one in Grand Committee. I am no lawyer. It was intended to be subtly different, but clearly failed that test. It was intended to make it clear that the Government did not create an unfettered property right but only a fettered one. I would have thought that if the Government wished to have the ability to control how funds could be used, they could create that. If my amendment fails technically, so be it.

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But we return to the Government's view that 18 year-olds are best placed to decide how to spend their money. We disagree on that. It is taxpayers' money that they will be spending, and the Government should be capable of producing a scheme for how that money should be spent—though not necessarily introducing it in practice.

I should like to think further on the human rights issues. Perhaps we may take up the Minister's offer of a further discussion before the final stage. For today, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 [Inalienability]:

Lord McIntosh of Haringey moved Amendment No. 5:

    Page 4, line 9, leave out from first "estate" to end of line 10.

The noble Lord said: My Lords, this amendment should be in the name of the noble Baroness, Lady Noakes, as she brought it forward. I would have liked to have had the opportunity to offer it to her to table in her name. It is a drafting amendment to deal with a matter raised by the Scottish Law Society. It removes an inappropriate reference to the Solicitors (Scotland) Act 1980. I am grateful to her for bringing it forward. I beg to move.

On Question, amendment agreed to.

Baroness Wilcox moved Amendment No. 6:

    After Clause 4, insert the following new clause—

(1) It shall be an offence for any person to induce or attempt to induce a child to carry out an act within subsection (1) of section 4.
(2) A person guilty of an offence under this section is liable on summary conviction to imprisonment for a term not exceeding 6 months or a fine not exceeding level 5 on the standard scale or both."

The noble Baroness said: My Lords, this amendment stands in my name and that of the noble Baroness, Lady Noakes. We brought forward this new clause in Committee in an attempt to add some weight to Clause 4, on inalienability, by creating an offence. The issue is straightforward, and I hope that noble Lords will forgive me if I briefly run through the facts to make the case for our amendment clear.

Clause 4 is intended to protect a young person with a child trust fund. It prevents the assets of a young person being transferred to a third party when the fund matures on the 18th birthday of the young person. That is designed to stop loan sharks or others using funds from a CTF account as security on a loan and subsequently appropriating the money when the fund is accessible at age 18.

That is a laudable measure and it is a vital protection in the Bill. My worry, however, is that it lacks teeth. The noble Lord, Lord McIntosh, argued in Committee that the amendment was inappropriate. He claimed:

    "Clause 4(1) tackles the practical problem at its source by providing that any assignment of the investments in a CTF, for example, by way of security for borrowing, is void-that is, legally ineffective. There is therefore no incentive for any person to induce a child to assign or charge their CTF assets. Loan providers will

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    not attempt to use CTFs as security for loans because they would not gain any advantage from so doing. They would achieve no legal rights to the assets within the child's trust fund".—[Official Report, 18/03/04; col. GC183.]

I return to the point that I made in Committee. We are not talking about reputable loan providers, who will know the rules and abide by them. I envisage a dodgy loan shark, a manipulative "friend of the family" or other malicious adult who persuades a vulnerable and desperate young person, of say 16 or 17, to accept a loan on condition that they pay it back with interest from their CTF account when it matures. Such activity goes on as it is anyway. Young people are particularly liable to be targeted by disreputable adults. One only has to think about the number of young people who leave home due to family problems and are on the streets trying to make ends meet without sufficient funds. Now think of the circumstances when large sums of money will be available to every single young person on their 18th birthday.

I do not want to paint a morbid picture of the state of our society, but it is likely that there will be more frequent instances of individuals trying to con young people out of the funds due to them at 18 from their CTF accounts by offering an advance repayable with interest. How is the young person in question to know about Clause 4(1)? The agreement with the loan shark or adult will not be legally binding. However, anyone who will undertake to defraud a 17 year-old out of their CTF will have no qualms about using any methods of intimidation to recoup their funds when the account matures.

In Committee, I listened with interest to the noble Lord, Lord Newby, who said that creating an offence of the kind envisaged by our amendment was too draconian and would make criminal such activity as the loan of money from a parent for, say, driving lessons, which would then be repaid from the money from a CTF available at 18. This is activity that we would in no way wish to criminalise. We have looked again at our amendment and redrafted it to make it tighter and to try to address those circumstances.

Subsection (1) of our amendment states that any person who induces, or attempts to induce, a young person to assign their funds over to a third person before maturity, and who demands a charge thereof, is guilty of a criminal offence. This would not criminalise a situation where a 17 year-old approached his parents and asked informally for them to pay for driving lessons with the understanding that he would be able to pay back the money the following year.

What penalty would there be for an adult who ignored Clause 4(1) and successfully persuaded an unknowing young person to hand over their funds? There would be no penalty and no recourse to law, because no offence would have been committed. The young person, apparently, should have known that their CTF was inalienable under Clause 4(1), and should therefore have refused to repay whatever money was owed from their CTF.

If the young person were to dare to challenge their loan shark under Clause 4(1), the loan shark might possibly accept that actually they had acted illegally,

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and the original amount of their loan would be lost to them. Is this a significant deterrent for loan sharks and devious adults? I would like to think that it is, but I fully believe that it is no deterrent whatever to a manipulative person attempting to exploit a child and appropriate a portion of their funds at 18.

I stand firm in believing that, far from being draconian, this new clause on offences is vital in safeguarding the protection of children and young people and their right to the full value of their CTF at 18. I beg to move.

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