Savings Accounts and Health in Pregnancy Grant Bill

The Bill was considered in Committee but it was not amended, despite the fact that we had some 19 Divisions, which showed the strength of feeling among Labour Members. I am pleased to see so many of my hon. Friends who served in Committee in their places today. The Labour Opposition's objection to clause 1 was well rehearsed on Second Reading and in Committee, but I regret to tell the House that it will be rehearsed again as we continue to explain our objection the clause. As ever, I wish to help the Minister and be pragmatic by giving him the opportunity to reflect on the mistake he is making in proposing clause 1 and on the issues we raised in Committee, which my right hon. and hon. Friends want to debate again. My main concern is to delete clause 1, which amendment 1 is designed to achieve, unless we can get the Minister to reconsider some of the amendments we introduced in Committee, which are before us today. I refer particularly to amendment 17, which would delay the abolition of the child trust fund until such time as the proposed child ISA—individual savings account—came into play. We had that debate in Committee and I will refer to it again later. Amendment 4 would allow the abolition of the child trust fund to be delayed until 2016. Again, I want to help the Minister and give him an opportunity to fulfil his manifesto commitment to help the poorest third of children in society. At the general election in May, he said that he would not wish to see them disadvantaged by the abolition of the child trust fund. I also support amendments 51 and 52, tabled by my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), which raise issues that my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) aired in Westminster Hall relating to looked-after children. It is important to return to those issues again today. Amendment 1 would delete clause 1. I want the Minister and the House to know that, however pragmatic our approach to the abolition of the child trust fund, our fundamental objective is to ensure that the fund remains for all children, as proposed by the previous Labour Government. I say that for three reasons. First, we believe that the child trust fund promotes saving, encourages financial education and ensures that all young people have a financial asset at the age of 18, which is particularly important for those who come from poorer families. The child trust fund scheme, introduced by the Labour Government, was having a positive effect between April 2008 and April 2009: a massive 823,504 vouchers were issued—about 70,000 a month; more than 74% of the accounts were opened by parents; and about £2 billion is held in funds. By the end of this year, it is likely that more than 6 million child trust funds would have been opened. That is a success by any stretch of the imagination—a success now being torn up by the coalition Government. Those child trust funds would have helped to support our children when they reached the age of 18. That would have been a progressive measure, which is why Labour Members oppose clause 1. The principal aim of child trust funds was to ensure that families who had never saved for their children undertook such saving as a matter of course. Previously, regular long-term savings had been made for only 18% of children. The child trust fund industry average is now 31%. Money is being saved every month in 30% of the child trust funds of families whose incomes are just above welfare dependency level. Families in the lowest income bracket are saving a higher proportion of their household incomes than those in more affluent groups. In Committee, we heard evidence from Katherine Rake of the Family and Parenting Institution, and from the Children's Mutual. They recognised—I quote from a letter written to The Sunday Times in July—that"““the decision to abolish the Child Trust Fund along with the Savings Gateway””" —to which we shall return later—"““ is short-term and misguided.””" According to the figures we have, there have been regular contributions to child trust funds, made in a highly tax-efficient way, of more than £22 million a month up to July this year. The Government are abolishing a successful scheme, which is why we will oppose clause 1 unless it is amended. Let me again help the Minister. As he can see, amendment 4 alters the date of 3 January 2011 to 3 January 2016, which is later than the date of the next general election. That date was chosen so that the Minister could secure a proper mandate for the abolition of child trust funds. I accept that in Committee the amendment was rejected by 10 votes to seven, but it has been tabled again so that Conservative Members can stick to their manifesto commitment to the electorate. The Minister will know—but it is worth reminding the House—that this was in the manifesto on which he and the other 206 Conservative Members stood:"““We will… cut government contributions to Child Trust Funds for all but the poorest third of families and families with disabled children””." I am being pragmatic about amendment 4, which it is not perfect, but, if the Minister accepts it, I will ask my hon. Friends to support clause 1. The amendment gives the Minister an opportunity to fulfil his manifesto commitments to help the poorest third of families, to help children who are disabled, and to help children who are looked after and in care, who, indeed, form most of the poorest third of children. In February this year, the Government supported an increase in the amount payable to disabled and severely disabled children. Given that and their commitment to retain child trust funds for the poorest children, I hope that the Minister will support our amendment, but I ask him to defend his decision to renege on that commitment. As ever. I exempt the Liberal Democrat hon. Member for Birmingham, Yardley (John Hemming) from the charge, for he and his party stood on a proposal to abolish child trust funds across the board. As I recall, 57 Liberal Democrats and 307 Conservatives were elected in the general election, as well as a substantial number of Labour Members, Scottish National party Members, Plaid Cymru Members, Ulster Unionists, Independents, Democratic Unionists and Sinn Féin Members, none of whom supported the abolition of child trust funds. The policy of abolishing them across the board was officially supported at the general election by only 57 Members of the House of Commons, yet the Minister has come here today prepared—as part of a wider coalition agreement—to give up his principle of supporting the poorest third of families in the community so that the Liberal Democrats can put their seats on the line and their backsides in ministerial cars. Clause 1 will hit the poorest children in our society, and it should be resisted. We should do what the Conservatives felt they should do in May this year, and support poorer families as a whole. Amendment 4 would allow child trust funds to be retained. It would also allow the Minister to go into the next election with his promise to the electorate maintained, although he would be able to argue to the electorate that, if returned in 2015, he will abolish child trust funds completely. The amendment does nothing but allow the Minister to keep to his manifesto pledges. Amendments 51 and 52 stand in the name of my right hon. Friend the Member for Wythenshawe and Sale East but have broad cross-party support. As I said, my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) raised the issue they address in Westminster Hall. Sadly, the new clause that I wished to be selected was not selected today, but these amendments give the Minister an opportunity to reflect on the impact of the abolition of the child trust fund on children in care. I seek to assist the Minister. I want to give him a chance to reflect on his actions. I will put aside the fact that in Committee he voted down amendments we had tabled to maintain the child trust fund for looked-after children, because I hope he has reflected on what the Prime Minister said to my right hon. Friend the Member for Wythenshawe and Sale East at a recent Prime Minister's questions and because I believe he has had some very constructive meetings with my right hon. Friend. I want the Minister to look at the impact of the abolition of the child trust fund on looked-after children. Some 6,000 children go into care each year, and there are 86,000 children in care across the UK—as of March this year, there were 64,000 in England, 5,000 in my home area of Wales, 15,000 in Scotland and just over 1,600 in Northern Ireland. Over previous years, the state has opened 33,158 child trust funds for children who are looked after by the state or by individuals who have been given that power by the state—children in residential care or foster care. When in Committee the Minister refused to allow the child trust fund to continue for those children, he was saying to them that the state no longer has a role to play in helping to support them financially at the age of 18. I believe he will want to reflect on that. Amendments 51 and 52 provide him with an opportunity to realise that we can, after all, offer help and support to such individuals at that time in their lives. The amendments give the Minister an opportunity to look again at the impact of the abolition of the child trust fund and of the implementation of clause 1. They give him an opportunity to look at how we might provide some help and support. We must not allow individuals who do not have parents to contribute to their future to fall through the net. Indeed, for them, parental contributions to the child individual savings accounts that will be introduced in October next year will not be possible, because they do not have parents who play an active role—or their parents might not even be alive. The amendments would avoid a postcode lottery in respect of local authorities. As the Minister said in Committee, they can contribute to the fund, but they might do so individually with no recognition of the specific needs of each individual in their communities. My right hon. Friend the Member for Wythenshawe and Sale East will outline his amendments in more detail, so I will not dwell on them much longer, but I want the Minister to say what we will do for looked-after children if clause 1 is agreed in the House this evening and enacted. Amendment 17 also addresses the child trust fund issue. It is a pragmatic amendment that I hope the Minister will consider. Again, it would give him some flexibility. It would amend the Bill so that eligibility for a child trust fund was not cut off in January 2011, and Ministers could, by regulation at some point in the future, introduce a date to end eligibility. We discussed this matter in great depth in Committee, but I am still interested in the Minister's thinking on it. Amendment 17 does not say that the Minister will not be able to abolish the child trust fund, much as we wish he would change his mind on the issue. We have no final details on the new child ISA and no implementation date for it, although October next year has been suggested. The amendment simply says that in the time between the possible abolition on 3 January, as set out in the Bill, and the introduction of the new child ISA in October or November next year the Minister is allowed to keep the flexibility of the child trust fund for all children, and in particular for the benefit of looked-after children and those in the poorest third. The amendment seeks to ensure that between 3 January and a date provided by regulation the Minister could continue to have lower payments in place, to which the House has already agreed, for children born after 3 January 2011. Alternatively, he could end Government contributions but keep eligibility in place for parental contributions until such time as he introduces the child ISA. There are many good reasons for taking such an approach. Carl Emmerson, of the Institute for Fiscal Studies, has said:"““I do not think that it is possible to make decisions on how the policy should look and also ensure that the financial sector is geared up to operate a market of that size.””––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 16, Q37.]" He was making the point that we do not yet know what the child ISA is, how it will operate and when it will come into play, and we need to know those details before we abolish the child trust fund. Graeme McAusland, chief executive of the Children's Mutual, told us:"““If what happens next is that you launch this new junior ISA, it would seem sensible to leave the child trust fund mechanism in place until it is clear what that new product is and until the industry is ready to participate in it.””––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 46, Q133.]" Amendment 17 gives the Minister a final opportunity to maintain the child trust fund, not for ever, for three years or for five years, but for a further eight months, until we are clear on the implementation of the ISA he is introducing. These amendments are clear, and let me make it clear to the Minister that the Labour party opposes the abolition of the child trust fund and will continue to do so, not just here tonight and as we have done in Committee, but in another place. I hope that he will look favourably on the amendments tabled by my right hon. Friend the Member for Wythenshawe and Sale East relating to looked-after children, so that we can come to a detailed solution on those issues before this Bill abolishes things. I hope that the Minister will consider maintaining his manifesto commitment, because I want him to go back to the electorate with some integrity in 2015. Finally, I hope that he does look pragmatically at ensuring that an alternative product is in place and at maintaining the child trust fund until such time as the child ISA is introduced next October. Serious issues are at stake. I know that my right hon. and hon. Friends feel very strongly about these matters—we all do—and it is important that the Minister responds on them. I hope that having reflected on the 19 Divisions in Committee and the seriousness with which we take these matters, he will at least come back to the House and reflect strongly on the views that we have put today.