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Lord Newby: My Lords, your Lordships will know that we opposed the Child Trust Funds Bill for a raft of reasons, but problems about mis-selling were not prominent among them. However, when the FSA expresses concerns even before the programme is
 
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introduced that child trust funds may well be mis-sold, it merely adds to our list of concerns about what might happen.

One thing about the stakeholder advice which must be welcomed is the fact that it will take so much less time. I take the point of the noble Baroness, Lady Noakes, about the difficulties of the Holy Grail and the shortness of the amount of advice. The Holy Grail itself, of course, has proved remarkably elusive. There is no doubt in my mind that the current immensely detailed—and therefore immensely costly—business of selling financial services products, especially when the amount being invested is relatively modest, is bound to reduce the numbers of both providers and investors. Attempting to search for the Holy Grail is therefore worth while.

It clearly makes sense that these products are regulated by the FSA. I share many of the detailed questions of the noble Baroness, Lady Noakes, and a formal review of how this process is going, within a relatively short timescale, is more than usually welcome. That is particularly so as all families with very young children are going to be covered by this, and therefore a very large number of people will be affected by it. If anything goes wrong, there is scope for a very large number of people being mis-sold products over a very short period of time. Subject to those caveats, we support the order.

Lord Davies of Oldham: My Lords, I am grateful for the support advanced in both noble Lords' contributions and I recognise the anxieties about certain aspects of the proposals. The issues regarding the child trust fund were well exercised in another place and, as the noble Lord, Lord Newby, indicated, the Liberal Democrat Party has decided that it cannot support the concept of the child trust fund in principle. The noble Baroness, Lady Noakes, is considerably more generous than that in indicating that she has clear reservations and problems to be resolved, but that she is not against child trust funds in principle. The child trust fund is one of a number of government initiatives to support saving and asset ownership.

Perhaps I may tackle the broad issue. In her general comments on the question of savings, the noble Baroness, Lady Noakes, indicated that there are problems with saving ratios. We must rehearse the arguments that we have had across the Dispatch Box on numerous occasions in the past. She will recognise that people are saving a great deal through house purchases and the mortgages they take out. One would be extremely neglectful of that important dimension of the economy if one did not recognise the extent to which people regard certain aspects of the type of saving we are discussing as "rainy day" savings. That is a more overt strategy for saving. The considerable investment that they put into it relates to other forms of saving, particularly investment in property.

It is suggested that people are currently pushing the boat out too far in borrowing, but we should recognise that that is occurring in the context of greater confidence regarding overall interest rates and because people have a greater asset base on which to borrow. But that does not alter the fact that we want to
 
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encourage intelligent, thoughtful saving that helps to cushion people against the inevitable shocks that occasionally occur in their lives and to make provision for future events. Some of those events are predictable. One of the beauties of the child trust fund is that it seeks to identify that the child will grow to a position in early maturity where substantial costs become a feature of life. That is why it is important that we should have a concept such as this.

The noble Baroness indicated that she had some anxieties about this matter. The FSA has expressed some concerns and it is in response to the FSA that various changes are now occurring. Under the FSA regime, providers must include short but balanced comparisons between stakeholder and non-stakeholder child trust funds so that there is a basis for intelligent comparison. The information pack going out to all parents will set out key points about the CTF and the different types of accounts and guarantee so that we are not faced with dangers of mis-selling. Definitive advice will be available.

As with all new policies, the Government carry out full evaluation of developments. I indicated in my opening statement that, if things go badly wrong, there is recourse to the ombudsman. The Financial Services Authority will also review any suggestions of mis-selling that may arise, and we will get early signals on the development of the policy. A development such as this of course requires constant evaluation and analysis. The noble Baroness will not be surprised if I give the obvious assurance that there are interests at play to guarantee that this process works successfully.

On broader products than the ones I identified, the Government are concerned to extend the range of products. It is for the market, of course, to develop strategies on how this might operate, but for the Government to ensure that there is a framework within which the market can develop in a livelier and more appropriate fashion than in the past. That is the issue with regard to the attempt to put clear ceilings on initial costs so that we ensure that people are not deterred by what look like very substantial outlays before they have even made a decision on whether to invest. That is an important part of the provisions which I outlined.

I recognise that there are anxieties about early development at this stage, particularly with regard to the child trust fund. This was well articulated in the other place; the Liberal Democrat Party indicated that it was not prepared to support the concept, while the party of the noble Baroness, Lady Noakes, adopted a more measured and considered approach. We intend to ensure that it is successful. It is an important part of that armoury of new provision for those who have not saved sufficiently in the past or felt confident enough about procedures to save.

Baroness Noakes: My Lords, before the Minister sits down, the order applies to child trust funds, stakeholder pensions and investments of any kind specified in regulations. I asked the Minister what other investments were being contemplated, given that
 
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the smoothed investment product is now deemed not to be suitable for the simplified advice regime. I also asked when the Treasury would determine that.

Lord Davies of Oldham: My Lords, we will reach a position on that very shortly. I will write to the noble Baroness and give her precise details on that important point. I commend the order to the House.

On Question, Motion agreed to.

Child Benefit and Guardian's Allowance (Decisions and Appeals) (Amendment) Regulations 2004

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham) rose to move, That the draft regulations laid before the House on 16 November be approved [First Report from the Joint Committee].

The noble Baroness said: My Lords, in moving this order, I shall also speak to the Social Security, Child Support and Tax Credits (Decisions and Appeals) Amendment Regulations 2004.

These regulations are highly technical as drafted, which accounts for their combination of lucidity and opaqueness. They are, however, entirely benign; the Council on Tribunals and the Social Security Advisory Committee have been consulted, and they welcome them. Given that, I will be brief but will seek to answer any questions your Lordships may have.

The main draft statutory instrument makes amendments to regulations governing decision making and appeals for social security, including housing benefit and council tax benefit, child support and tax credits. The second draft statutory instrument makes an amendment to mirror one of the provisions in the main amendment regulations, for the purposes of the Child Benefit and Guardian's Allowance (Decisions and Appeals) Regulations, and also makes a small technical clarification. I am doing this on behalf of the Treasury, because the regulations are now the Treasury's responsibility and the Inland Revenue administers them. The main amendment in the second set of regulations therefore mirrors a provision within the first set.

These amending regulations essentially do three things. First, they provide for the removal of provisions for the processing of misconceived appeals. A misconceived appeal is an appeal which by definition cannot succeed. For example, one cannot get attendance allowance until one is 65. If one applies at the age of 63, by definition, it cannot succeed. It is a misconceived appeal. At the moment, this is determined by someone who is not necessarily legally qualified. Given that the matter was a cause for concern, even misconceived appeals which are clearly outside the remit of the jurisdiction will be determined and therefore rejected at that stage by someone who is legally qualified. That is a benign change with an additional safeguard.
 
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Secondly, the regulations make changes to the rules and pay performance for notifying the clerk in relation to requests for oral and paper hearings of appeals. At the moment, the paperwork departs into two systems. We are aligning them. Again, this is a simple and technical change.

Finally the regulations provide new rights of appeal against defective claims to benefit, and extend those rights to legislation governing housing benefit and council tax benefit.

Substantive benefit decisions, such as whether or not one receives housing benefit, carry a right of appeal, but a person cannot appeal against an initial decision about whether his or her claim is in a sufficient state to be processed. For example, the local authority may have received an incomplete form from the claimant, who may have failed to give some details of income, for example, for housing benefit purposes. The local authority sends it back to that claimant to be filled in. Most often, the claimant does that and the claim is processed in the usual way, but sometimes the claimant does not return that form and, as a result, the local authority abandons the claim. It is as though the claimant has decided not to proceed.

It was felt that this might be impugning human rights legislation so this is a belt-and-braces solution. Where the body—whether the local authority or department—decides that it cannot proceed because it does not have all the relevant information following the request, it will in future send a notification to the claimant that it will not proceed and that there will be a right of appeal against that initial decision not to proceed. It gives a right of appeal at the point of discarding an appeal as well as on the substance itself. As I said, this is entirely benign.

We propose these changes to take account of decisions by social security and child support commissioners. All the changes are beneficial to claimants and reflect our desire to keep the law on decisions and appeals under review and to improve it when required. The regulations make small but important changes to the decisions and appeals regulations. In my view, the regulations are compatible with the convention rights. After that very brief introduction, I commend them to the House. I beg to move.

Moved, That the draft Regulations laid before the House on 16 November be approved. [First Report from the Joint Committee].—(Baroness Hollis of Heigham.)

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