Savings Accounts and Health in Pregnancy Grant Bill

We are back where we were in the Public Bill Committee: the Opposition are going to fight on the barricades to protect the child trust fund because it is so important. We are in a world where we are borrowing large sums—we have seen in Ireland what happens if we do not bring the finances under control—and the Labour party wants to borrow money to put it into child trust funds. That sounds interesting, and in 18 years, children will be access that child trust fund. We then have to ask, however, what happens to the money in that child trust fund, and it is relatively difficult to find out. Today, I looked at the annual reports of the Children's Mutual. In 2008, the funds were generally worth less than the money put in. In 2009, some were worth more than the money put in and some were worth less. The idea is that the Government borrow a large sum of money—it was running at a very high rate of about £500 million a year—and invest it to benefit other people. That means that we get a lower return than it costs to borrow it in the first instance. In 18 years' time, those children will get a benefit. By working at an earlier stage, some will already have started paying tax, and that tax will be paying for the cost of the whole process. Given that we have a deficit that we need to bring under control, would it not be better at least to say that we will not borrow money to invest it and lock it away for 18 years, because, frankly, we have not got the money to do that? The Opposition argue that there is evidence that justifies the process because it encourages people to save, but the evidence is not there. The Government are proposing a junior ISA scheme that will be available to everybody from the point at which the child trust funds scheme ends. There is no question that anyone will fail to have a savings vehicle. It is also important to remember the evidence we heard in Committee from the Royal College of Midwives, which said very simply that if a family is on a very low income and has a young baby the best thing they can do is spend the money on good quality food and health. We will soon hear Opposition Members argue that that is important. There are those who say that people do not have to chose whether to spend £10 on better quality food or to invest it in a savings vehicle that is not making them any money and that they can do both, but, I am sorry, that does not add up either. People do not have such options. If they are on a low income, they must decide what to do with the money. They do not have the resources to put money in a child trust fund and lock it away until the child is 18. Although the scheme has the advantage that the money can be locked away until then—it is quite useful for grandparents to know that the money will not be used until then—a family that faces difficulties when a child hits 10 or 13 finds that it is an inflexible vehicle that is not very good for their purposes. On the amendments on children in care, I have a lot of concerns about the care system. There is confusion about the difference between a looked-after child and a child in care and the wrong figures are often quoted. In 2010, 9,500 children in England were taken compulsorily into care and more children were put voluntarily into care by their parents under section 20 of the Children Act 1989. We identified in Committee that the administrative costs to the Government of running the machinery for the child trust funds were about £5 million a year—I think that the Financial Secretary can confirm that figure—[Interruption.] I thought that it was £50 million to start out with, but I had it confirmed that it was £5 million a year and I accept that it is. I have heard various figures from the Opposition for how much it costs to put in the additional cash to maintain the system for children in care, and those figures ranged from £1 million to £2 million a year. If we add the £5 million a year to the larger figure of £2 million a year, we will be putting in £7 million a year, which we are borrowing, to cover putting £2 million a year into an investment vehicle that probably does not produce a return over time to match the long-term benefit that we would have gained by not borrowing the money. We would be far better off simply saying that we will provide some funds when those children reach the age of 18. To spend £7 million in such a way is not a rational means of managing public finances.