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Baroness Noakes: My Lords, I can speak only for Amendment No. 7. The noble Baroness, Lady Hayman, will decide in due course what she wishes to do in respect of her amendment.
I thank the Minister for his comprehensive reply. Those of us who have raised concerns about this do so because of the discretion that is used. One man's significant motivation is not the next man's in terms of approach.
I welcome what the Minister said about making the decision-making guide available and the many examples he gave. That sounds reasonable in many respects.
I confess that I am still troubled by this area. The message going out to the less well off is mixed. The child trust fund is trying to generate a new approach to saving. However, we still have the existing unamended version of the benefits and tax credits system which is means-tested and which will claw back a considerable amount of the effect of capital accumulation. We were trying to highlight those mixed messages because they dilute the message that saving is a good thing for people in low-income groups to do. If we are to restore the savings ratio on a permanent basis, we need to get that message across.
I thank the Minister for what he has said. It will certainly repay close examination in Hansard. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 [Opening by responsible person or child]:
Lord Naseby moved Amendment No. 9:
- Page 4, line 15, at end insert "except where the application is made by telephone or the internet"
The noble Lord said: My Lords, I shall try to persuade the Minister to move forward on telephone and electronic applications. To do so, I decided to do a little more research on the matter, among government people. I discovered that over the past five years the number of people using online banking services has grown from 1 million to 5.4 million. The Government's e-envoy estimates that half of UK households have Internet access and 29 per cent of those are using online banking services. It is clear that more and more people expect to manage their financial transactions using the Internet.
None of us objects to the idea of the voucher being sent by the Inland Revenue to the young couple who have a new baby and are eligible for the child trust fund; indeed, we encourage the idea. It is a marvellous means of communicating information, education and choice for the parent or guardian and acts as a reminder to them to set up a child trust fund for their child. They have the provision to open an account over the Internet or telephone. That is all very well, but then they have to send in the wretched voucher.
The problem occurs when they do not send in the voucher. We have done some work in our society and, having considered other similar products, such as the baby bond—although it is not similar to the child trust fund except in the use of the Internet—we discovered that about half the people who apply have to be reminded to do something for the second stage. It may happen that a significant number of young couples want to apply, do apply, and open an account with
everything in place except the voucher. Half of them may forget to send the voucher; some of them will lose it—which is inevitable. Life is like that. For some of them, the voucher will expire because they do not get around to doing anything about it until the last minute. Then there will be the extraordinary situation whereby the account is allocated to a provider, so that in the minds of applicants there will be two accounts—the one that they applied for initially when they forgot to send in the voucher and the second one, which is allocated.I hope that the Minister is beginning to get the picture. It seems to me that the process is really a recipe for confusion. We could deal with it if only the Minister and his team would look a little further and recognise that aspect. I believe that we killed off the mass fraud dimension in Committee, so I do not need to go into that. The point that the Minister made in that regard was that it was all to do with microlining on the voucher, but the microlining on the voucher has only four elements on it. It does not even have the child's name, the parents' names or the address on it; it does not say whether it is a stakeholder or non-stakeholder product, whether it is a voluntary contribution, who is paying, or the details of the bank account or the direct debit. A little more keying would not make a huge amount of difference.
I say to the Minister in all sincerity that, given that 5.4 million families are using online banking—young, modern couples who will be the ones who use such a service—and all such services in future will probably do online banking, and if fraud is not an issue, we should get up to date. We should forget about insisting that the voucher must be sent in if the applicant applies over the telephone or via the Internet. I beg to move.
Baroness Noakes: My Lords, I tabled Amendment No. 10 in this group, which has a similar effect to Amendment No. 9 to which my noble friend Lord Naseby has just spoken. I might argue that my amendment is broader than his, which confines itself to the telephone and the Internet. I would gently suggest to him that his amendment to Clause 5(1) is a little difficult as the subsection relates to the Inland Revenue issuing vouchers, which must logically precede an application, so the Inland Revenue would not know what to do. But, leaving aside those issues, which are mere drafting, I think at heart we are in agreement that a child trust fund should be capable of being opened wholly by non-paper means and that the voucher should not need to be physically handed over to the provider.
My noble friend talked about the experience of a 50 per cent failure rate which, of course, leads to extra costs for providers. In the context of a scheme that has a 1.5 per cent cap, that may well be a significant issue.
In Grand Committee the Minister talked about the vouchers playing a part in financial education, but the education is likely to take place when the Inland Revenue gives the voucher to parents. It is really a case of the Government saying that they have an ignorant public and they have to play shops, as it were, by giving them something that looks as if it is valuable to enable the public to learn about financial education, and,
indeed, that physically transporting the voucher will teach parents financial facts of life. That simply ignores the fact that very many parents already carry out transactions on the Internet and would find it extraordinary to have to complete the transaction physically.In Grand Committee the Government also discussed fraud and hacking into, and opening, multiple accounts. That is something that we found quite difficult to understand. I assume that the vouchers will have a unique number. It is not beyond the wit of the Inland Revenue's IT capabilities to have a system that ensures that a unique number is used once and once only. There may well be problems with the purported opening of two accounts. That issue could certainly lead to some additional costs but, if that is the case, I suspect that the majority of the costs would be borne by the providers. If they wish to take the risk of that additional cost of using non-physical transaction methods arising, it surely should be up to them.
We have been disappointed thus far by the Government's non-adherence to the welcoming of the e-world which seems to permeate their other policies. I hope that repentance might be in sight.
8.30 p.m.
Lord Newby: My Lords, we support these amendments although I agree with the noble Baroness, Lady Noakes, that her amendment is possibly technically the superior of the two.
Looking forward, it seems to me that the extent to which we use paper for any purpose at all will be greatly constrained, and that paper will become a relatively rare thing. It certainly is as regards the method of communication of choice of my teenagers. I think that that is increasingly becoming the case with the Inland Revenue which sends me a piece of paper, the purpose of which is very much to tell me that it would rather I did not send it any more pieces of paper, and that it would like me to submit my tax return electronically.
I suspect that in five or 10 years' time any vouchers being issued by the Government will certainly not be on paper. They will be sent electronically. I do not know whether the current definition of "voucher" within the Bill enables it to be sent electronically but it seems to me that to have the kind of belt-and-braces approach which is being proposed by the Government where a piece of paper must supplement an electronic communication, goes against everything else that the Government are trying to do. Therefore, I, too, hope that the Government might change their mind on this point.
Lord McIntosh of Haringey: My Lords, I am a sucker for being told that I need to get up to date and get in touch with the electronic era. I am always tempted by arguments of that kind.
I am sorry that I shall not be able to respond in quite the way that some noble Lords would wish, particularly as I am in dispute with an insurance
company, some loan notes of which I have lost. Every time I say that I have lost them and ask the insurance company to issue me with a duplicate or repay them, it sends me another stamped addressed envelope in which to send the voucher back. If I may, I shall take the relevant bits of Hansard and say that it is the view of all parties—all opposition parties at any rate in your Lordships' House—that I should be let off the hook and not have to recreate the voucher.The situation is a little different in relation to the amendments. Amendment No. 10, in particular, would remove the need for the paper voucher to be produced before an account could be opened. I do not think it true that we have solved the problem of fraud, as the noble Lord, Lord Naseby, seems to think, but I shall not go over the argument again.
Is it really such an effort for the parents to get the voucher to the provider? We are talking about a voucher that is, in effect, a post-dated cheque for £250 or £500. Of course, it is post-dated almost 18 years, but nevertheless it is something that will be opened carefully with a paper knife rather than with the envelope torn in half. It will be treated reasonably respectfully. Some parents will choose to open an account with their usual high-street provider and, naturally, will take the voucher with them when they go. Others will be used to making applications over the Internet, but they will also be used to having to provide supporting paperwork, particularly proof of identity, by post.
I long to see the day when the Internet and electronic communications reduce the amount of paper. I seem to remember that, when the new British Library was first proposed, the Conservative Minister, now a Member of this House, said, "Why do we have to spend all this money on the British Library? By the time that it's completed, books will be out of date and we will have the paperless society". It was the noble Lord, Lord Carlisle of Bucklow, I believe. It was not true, and it will never be true. My experience is that the Internet does not reduce the amount of paper, but increases the amount of copying.
I was interested in what the noble Lord, Lord Naseby, said about the 50 per cent of people who approach the Children's Mutual to open an account but do not pursue it when asked to complete and return the necessary paperwork. If the Children's Mutual requires paperwork to be completed, why should the Government be so different?
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