Savings Accounts and Health in Pregnancy Grant Bill

Public Bill Committee, 9 November 2010.

Clause 1

David Hanson (Labour, Delyn)

I beg to move amendment 20, page 1, line 6, at end insert—

Gary Streeter (Conservative, South West Devon)

With this it will be convenient to discuss the following: amendment 21, page 1, line 6, at end insert—

Amendment 22, page 1, line 6, at end insert—

David Hanson (Labour, Delyn)

Welcome back to the Chair, Mr Streeter. I hope you had a pleasant weekend. For a brief moment, we had a Labour majority in Committee, but I am pleased to see that the Conservative Whip has done a fine job. For the record, he was outside the room, but I was briefly reminded of the good old days when we had a Labour majority. C’est la vie.

The amendments are important. I hope the Committee will fully debate their substance and reflect the views of both the Opposition and the Government. For the avoidance of doubt, I will commence with the points that I made on Thursday. We believe that clause 1 is damaging and we oppose it. We tabled the amendments to try to mitigate the effects of the clause. If the Committee accepts them, we will reflect on that. If not, we will continue to oppose the clause. We are simply considering how we can try to salvage something from the abolition of the child trust fund. The key areas are looked-after children, children with disabilities and children who form the poorest third of our society. If we can salvage those areas, we will support an amended version of the Bill. I am moving a long way from what the Labour Government did in office and what Labour Members wish to see in practice. I do that for pragmatic reasons, because we want to try to salvage something from the Bill to ensure that we can help the groups of individuals that the amendments cover.

Amendment 20 revises the August amendment date to ensure that children born on or after 3 January 2011, who are in the care of a local authority or similar body, remain eligible for the child trust fund. Amendment 21 ensures that we do the same for children in receipt of disability living allowance. Amendment 22 ensures that children born on or after 3 January 2011, who live in the poorest third of households, remain eligible. I wish to speak about each amendment.

Amendment 20 is important because it deals with a group of individuals who are potentially the most vulnerable in our society and who are currently in receipt of the child trust fund. They are in care, predominantly because they do not have parents who are responsible for them; because the state has deemed that their parents are incapable of managing and supporting them, or for a range of other associated reasons. Each year, about 6,000 children become part of the care population of the United Kingdom, which currently stands at around 86,000. For some, escaping abuse or neglect may be a relief, as I mentioned previously. Others will be split from their families because of illness, poverty or overwhelming problems that mean that the parents cannot look after their child. Life for such children is difficult, whether they are in an institutional setting or in the care of foster families. Thankfully, a minority are in institutions; about three quarters are in foster families.

According to recent statistics from the Department for Education, the Scottish Parliament, the Welsh Assembly and the Northern Ireland Executive, we have 64,400 children in care in England and 15,288 in care in Scotland. In my home region of Wales, we have 5,162 and in Northern Ireland 1,653 children were in care as of 31 March 2010.

The child trust fund was established by the Labour Government in 2002; in 2008, they introduced additional payments for those children looked after in care to help support the needs that they would meet at the age of 18, when they matriculated. If the Bill is enacted, children in care could still be looked after, even with the abolition of clause 1, on 3 January 2029—18 years after the enactment of the Bill. We are considering a long-term proposal for supporting children in care and looked-after children. Whatever the outcome of our debate on the amendment, the mechanism to support looked-after children from 2002 to 2011 will still be maintained for that time.

Before the regulations of 20 July, which the Minister and I debated in depth on that date, a looked-after child would have received £500 as the initial payment and £100 for each continuous year the child is looked after in the care of a local authority, or a health trust in Northern Ireland. From 2008, the Labour Government provided £500 and an annual payment of £100 for children in care. For someone in care for the whole 18 years, that would have been a considerable lump sum to help support them whatever their objectives on leaving care.

The Financial Secretary knows that children leaving care are often the most vulnerable children. They will still face challenges and have more chances of going to prison, of ending up in poverty and of experiencing drug abuse, despite the fact that the care system had invested so much time and energy in their life to date. The argument advanced by the Labour Government at the time was that the initial payment of £500 plus £100 a year was to compensate for the fact that those children in care did not have active parents who could support them. The payments were made to help the children build up a significant asset nest egg at the age of 18. It could assist with putting a deposit on a property, provide help in training and education or go towards the cost of university tuition fees, which will be extremely large now that the Liberal Democrats have broken the promise they made to the electorate last May. That level of funding would be available to help support an individual leaving care at the age of 18.

The regulations that the Minister passed in July and which we opposed reduced the payments quite significantly. They wiped out the majority of the £500 so that, under clause 1, children leaving care up to 3 January 2011 will receive an initial contribution of £100, and £100 a year thereafter. The amendment would ensure that we keep in place the arrangements that were set up in July for looked-after children. That would be a major step. The amendment is not even trying to revert to the previous payment of £500, much as the Labour Government supported it. We are simply saying that the ability of the child trust fund to continue an initial payment of £100, and £100 payment a year when in care is sufficient for the moment to enable the Minister to meet his objectives for the next few years. We have moved a lot on that, and I hope that the hon. Gentleman can meet us halfway by maintaining some form of payment for children in care.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I thank the shadow Minister for giving way, and I apologise for not being in Committee for the start of his speech. Given that charges and returns in the markets have not been so good recently, we heard no evidence from the providers that the sums available from the funds were greater than the sums put into them. What evidence does the right hon. Gentleman have that not paying people the money directly would give them more money?

David Hanson (Labour, Delyn)

Let me quote question 129, which I asked Graeme McAusland, chief executive of the Children’s Mutual. I asked him whether it would be possible, practical and workable for disabled children, looked-after children and those at the lower end of the scale to continue to have the funding. He answered:

“It probably would. The systems are there to do that and from our perspective that would not be overly difficult.”

Graeme McAusland also stated, in answer to Question 130, about maintaining the infrastructure of the child trust fund for looked-after children:

“That fund is effectively provided by various interested parties in the market. There is something in that. In the absence of any Government money, that idea is worth looking at.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 45, Q129-130.]

John Hemming (Liberal Democrat, Birmingham, Yardley)

I thank the shadow Minister for that point, but it does not answer my question. We have heard no evidence that putting money into a child trust fund and their taking it out gives people more money than paying them directly.

David Hanson (Labour, Delyn)

We have had no evidence to the contrary either—that question was not discussed.

John Hemming (Liberal Democrat, Birmingham, Yardley)

With the figure quoted for the average value of the funds of about £800, a rough calculation would indicate that very little, if any, money has been made.

David Hanson (Labour, Delyn)

I am trying to argue a principle, which is that we should continue to support looked-after children. I would wish to see maintained the figure that we previously had under the Labour Government, but for the moment I am attempting to secure a contribution for looked-after children from the Government. If that contribution is continued, it is open to the Financial Secretary or, indeed, to a future Government to increase that in due course.

John Hemming (Liberal Democrat, Birmingham, Yardley)

The Institute for Fiscal Studies stated that if it is important to help looked-after children at 18, we should help them at that age, not in 18 years’ time. My question is: what evidence does the right hon. Gentleman have that helping people in that way is more effective, as it looks less effective than paying them directly?

David Hanson (Labour, Delyn)

I accept that the hon. Gentleman is making a strong debating point that we should reflect on and look at. One purpose of my tabling the amendments today is to get some information from the Government about what they intend to do about looked-after children. I am proposing an amendment to pay those children £100 and then £100 a year while they are in care, which is the current position. That is not what the Labour Government put in place, which I would prefer, but it is what we are proposing as a pragmatic amendment. The Financial Secretary will have to respond shortly—

Mark Hoban (Conservative, Fareham)

Eventually.

David Hanson (Labour, Delyn)

The Financial Secretary must know that it is the Opposition’s democratic right to raise all these issues, and we will talk about them for as long as we feel that it is appropriate to do so. For the benefit of the hon. Member for Birmingham, Yardley, the Financial Secretary will have to determine what he will do about looked-after children. If the answer is nothing, or if it is to have a child ISA, that would not be satisfactory. Even if there were to be related charges, those issues can be examined in Government, the payments can be raised and the fund can be developed as the economy grows. Those matters need looking at—they are not nothing, which is what he is currently proposing.

Kate Green (Labour, Stretford and Urmston)

Does my right hon. Friend agree that one challenging area for children in care is the sense of not belonging, and of not having anyone who takes an interest in them and makes them feel part of the community? On the point made by the hon. Member for Birmingham, Yardley, savings through their lifetime engage children in care not only at 18, but through their childhood and their growing-up period, with the sense that people are interested in their future. Is that not also important?

David Hanson (Labour, Delyn)

My hon. Friend makes an important point. A key factor about the child trust fund generally is that it was a partnership between the Government and the individual—either the family or, in this case, the looked-after child—about an investment in their future after the age of 18. It said to looked-after children that they were not just put into care, but that a nest egg was put away to show them the benefit of saving, to let them see that the fund was about partnership and, ultimately, to allow them to matriculate at 18 with a lump sum to help them on leaving care. That is a vulnerable time for people in the community, and the fund ensured that they would have help and support at that particular time. As my hon. Friend has mentioned, it is extremely important that we have somebody who shows an interest in such children, in terms not only of the care they receive, but of their financial planning for the future.

Alison McGovern (Labour, Wirral South)

Does my right hon. Friend agree that, on pensions, the argument that if pensioners need more money now they should get it has never been considered as the only answer—we have always thought about how to encourage future pensioners to save and the Government have always tried to consider such matters? In this case, when we are thinking about children and their savings, does he agree that it seems inconsistent to think that the only solution to providing for looked-after children, for children with a disability and for the poorest third is to say, “Well, if they need more money now, they should get it”, rather than the savings culture that the Labour Government were trying to create?

David Hanson (Labour, Delyn)

My hon. Friend makes an interesting point, because the general rationale for the child trust fund was to not only provide a capital asset at the age of 18 across the board, but to encourage a savings culture for them and their families. Very often, those who are poor or disabled or in a looked-after environment would not necessarily have been able to have that capital asset at 18. In this case, the vast majority of looked-after children do not have direct families who support them. They are in foster care, which is important and valuable and not to be decried, or they are in residential care, which is important and valuable and not to be decried. They do not have, however, somebody who will necessarily put their hand in their pocket to provide a trust fund ISA contribution for them. They do not have family members who will say, “For this individual in care, we will establish a tax-free ISA and put some money into it.” Either those individuals do not have those family members around—that is why they are in care in the first place—or their family members may be in prison, where they do not have a regular income with which they can top up a tax-free ISA, or they may have issues with drugs or alcohol or other problems, where, again, they will not be contributing to a tax-free ISA.

The purpose of the amendment is at least to provide a base, which the hon. Member for Birmingham, Yardley might not appreciate, of a minimum amount of payments for the moment—I accept that it is a lower level of payment than under the Labour Government—that could, in due course, if the economy picks up as the Financial Secretary says it will, be raised at some future point. Alternatively, if the Labour Government are returned in the future, we could revisit our existing scheme and determine whether that was a priority for our expenditure, as opposed to other issues.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I fully appreciate the need to support people as they leave care. The point that I am making is that there is no evidence that that provides more money. Indeed, there is an indication that it provides less money than is put in.

David Hanson (Labour, Delyn)

Will the hon. Gentleman table an amendment, potentially on Report, saying that there will be a lump sum for 18-year-olds when they leave care? Will he do that?

John Hemming (Liberal Democrat, Birmingham, Yardley)

It is a good idea to do something about what happens when people leave care, but that would not be part of the terms of the Bill.

David Hanson (Labour, Delyn)

This is the key thing, and why I have tabled the amendment. We are being asked, either today or by 4 o’clock on Thursday afternoon, to vote to support clause 1 and withdraw these amendments. If the Committee supports clause 1, it will be part of the Bill. If clause 1 stands part of the Bill, on 3 January next year, there will be no financial support whatsoever for looked-after children. There is no scheme in place, apart from an untested, unthought-out tax-free ISA, which is not yet before the Committee in its detailed form. That untested, untried, undetailed tax-free ISA will be of no value to someone who is in care because their parents are not interested in them or cannot manage them, or because their parents are in a situation involving prison or drugs or alcohol, which mean that their priorities will not be a tax-free ISA contribution for a looked-after child. I ask the Financial Secretary and the hon. Member for Birmingham, Yardley, if that were the case, how does a tax-free ISA help those individuals downstream? Before we abolish this scheme, I want to know what will happen to looked-after children, in care, with the state supporting them, compared with what we have now. The answer, currently, is not very much.

John Hemming (Liberal Democrat, Birmingham, Yardley)

Some 8,000 people will leave care this year who will not be helped in this way. Some 8,000 people will leave care next year who will not be helped. Some 8,000 people will leave care the year afterwards, who also will not be helped. There is plenty of time to sort out what happens in 18 years’ time. We need to sort out what is happening now, which is not in the preamble to the Bill—I just checked.

David Hanson (Labour, Delyn)

I am sorry, but I will stick to my guns on this. The Bill, in clause 1, abolishes the current contribution, which is at a lower level than it was under the Labour Government. In its place, there is nothing but a tax-free ISA, which is of no use to anybody in the circumstance of looked-after children. My opinion can be tested by the court of public opinion, but I think that that is ultimately right, unless the hon. Member for Birmingham, Yardley tells me otherwise.

Research shows that having access to a modest level of savings at the age of 18 makes a difference to someone’s future. The key issue is that children in care do not have the family support network that many of us take for granted. Such children will not have those life chances at age 18 without that partnership with the state.

The Conservative party manifesto commitment was to reduce payments except to “the poorest third” of children, and the Financial Secretary will find that the majority of looked-after children fall within that category. I am not asking him, therefore, to do anything that he did not commit to in May of this year, or that is outrageously expensive; I am asking him to consider a small group of vulnerable people, who in 12 or 13 years will reach the age of 18 and not have the financial support of the state.

The Department for Education’s figures show that the cost of a £100 top-up for looked-after children in 2008-09 was £1,039,833. In 2009-10, it was £1,502,786. Will the deficit be damaged by a payment of approximately £1.5 million in future years? The Financial Secretary will have the might of the Treasury to work out the cost of the scheme for looked-after children. Even if the cost were more than that, will the deficit be damaged by a small amount of money that is not considerable in the grand scheme of things, but will make a real difference to looked-after children?

In a recent debate with my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) in Westminster Hall, the Economic Secretary to the Treasury, the hon. Member for Putney (Justine Greening) said that the provision is an inefficient way of providing the money. The Financial Secretary may say the same, but I give him the opportunity to tell us what he will do in the absence of such a provision. At present, payments are made through Her Majesty’s Revenue and Customs each month to looked-after children as they find, each year, a contribution of £100. What would be the alternative in the absence of such a system?

My right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) raised the matter on the Floor of the House:

“Will the Prime Minister ask his Treasury colleagues to work with me and others to devise an affordable alternative that will give looked-after children the prospect of an asset they can rely on?”

In response, the Prime Minister said:

“I am very happy to ask my colleagues to work with the right hon. Gentleman because we all want to see saving encouraged…We are happy to work with the right hon. Gentleman.”—[Official Report, 27 October 2010; Vol. 517, c. 310-11.]

Has the Financial Secretary made contact or had a meeting with my right hon. Friend the Member for Wythenshawe and Sale East? Is he developing alternative plans for looked-after children apart from the child ISA? Are there mechanisms in that ISA that he wishes to consider to help encourage people who do not have the potential for financial support? Does he have other proposals to help support looked-after children? Does he wish to take on the suggestions of the hon. Member for Birmingham, Yardley and consider a scheme that would be in place for when people matriculate at the age of 18? If the amendment is not accepted, we will have none of those measures—there will be no plans except for the child ISA. I defy the Financial Secretary to tell me how contributions will be made to the child ISAs of looked-after children, given their circumstances. If the most vulnerable in our society will have to pay the cost of the deficit, the Financial Secretary should say so and not hide behind the unworkable aspects of the current scheme.

In response to my hon. Friend the Member for Kilmarnock and Loudoun, the Economic Secretary said:

“We recognise that looked-after children need to have additional support”.—[Official Report, 19 October 2010; Vol. 516, c. 233WH.]

Certainly, we will be looking at how we can ensure that that happens. Before we vote on the clause and abolish the scheme today, we need to know what recognition of that additional support means and what we need to do to ensure that that happens, as the Minister said to my hon. Friend in the debate. There is a real issue, and I think we need to reflect on it seriously.

I again make an offer to the Minister: if he accepts the amendments today, I will put aside the fact that we are disappointed by the drop in finance of £250 and £500 that the regulations introduced in July, and recommend to my hon. Friends that they support the amended clause, and we will vote for it to maintain the scheme. I know it is difficult, but I will ask my hon. Friends to do that because we would have salvaged, for looked-after children, a scheme that the Minister can reflect on over the next two to three years. As the economy improves, he can up the payments, and if the Government change, we can revert to our scheme. However, at the moment, I am faced with either nothing on 3 January, or an amendment that says that we are interested in having a partnership on the issue.

Let me read what a particular teenager from a Scottish campaign said. He said that

“my name’s Liam and I am 19…My dad brought me up for the first few years of my life, but when I was six he got into trouble with the police and ended up going to jail”

for

“a long sentence, which meant that I was put”

in long-term care. How on earth, at the age of 18, in long-term care and with a father in prison, will Liam have money put into a child trust ISA without the partnership and support of the state? The Minister should remember and think about children and young people such as Liam before he makes the decision to reject the amendment and support the clause.

Amendment 21 looks at supporting children with disability living allowance as an

“eligible child, notwithstanding the provisions of section 2(1) and subsections (5A), (5B) and (5C).”

Again, I make an offer to the Minister: if he accepts the amendment, I will gladly recommend that my hon. Friends vote for the clause, difficult though that will be. I know that my hon. Friend the Member for West Ham, the Whip, is very uncomfortable with that, but she is pragmatic and knows that something is better than nothing. We will try to save something from the shipwreck that the Minister is bringing before the Committee.

The amendment should not be too difficult for the Minister to support because, again, it was in his manifesto, as it was in the manifesto of every Conservative member of the Committee. If they thought it was important in May, presumably they think it is important now. I would like to start by asking the Minister not about what has changed since May, because we know what has changed since then—the Conservatives have made a coalition agreement with two Liberal Democrats and an assessment of the financial situation. It is not what has changed since May that I am interested in and concerned about, but what was important in May. If the measure was important then for looked-after and disabled children and children on disability living allowance, why is it not important now? If it is not important now, is it because the Minister has done a deal with the Liberals, or because he thinks the financial situation should be paid for by children who are in receipt of disability living allowance? If so, will he please say so? I would like to know why it was important in May but not now.

I am sure that the hon. Gentleman will not like to be reminded of this fact, but when we debated the matter in February, when the Labour Government improved the offer to children on disability living allowance, he said:

“Although we in the Conservative party intend some reforms for child trust funds, we recognise that additional support is required for children with disabilities, and we have no objections to this statutory instrument.”—[Official Report, Eighth Delegated Legislation Committee, 10 February 2010; c. 4.]

This February, the Minister, the hon. Member for Fareham, standing in the place I am standing in now, said that

“we have no objections to this statutory instrument,”

which gave additional help to children with disabilities and disability living allowance.

The Minister had no objections to the statutory instrument. If he had no objections in February, what are his objections now? Are they due to the two Liberals, who forced him to do it? I recall that there are 300 or so Conservative MPs and 57 Liberals, so if the two forced him to do it, why? If it is because of the economic situation, let him say to the Committee openly and honestly that he believes that disabled children should pay the heaviest price for that situation. If it is none of those things, please will he explain to the Committee why he is bringing these measures forward?

Kate Green (Labour, Stretford and Urmston)

Does my right hon. Friend agree that it is much to be regretted that we do not have an impact assessment for the measures, because that would illustrate the points that are rightly being made about the reasons behind the neglect of disabled children’s needs?

David Hanson (Labour, Delyn)

My hon. Friend anticipates important amendments that we will discuss later, and which I hope the Government will consider.

On 10 February, the Labour Government introduced new payments for children in receipt of disability living allowance as part of the trust fund. That measure passed without a vote and was supported by the hon. Member for Fareham as the shadow Minister. The Liberal Democrat spokesman, Colin Breed, the former Member for South East Cornwall, stated:

“I have no objection to this statutory instrument, although at some stage there will have to be a wider-ranging review of the value of expenditure on trust funds. On that basis, I am happy to support the regulations.”—[Official Report, Eighth Delegated Legislation Committee, 10 February 2010; c. 4.]

About eight weeks before the general election, the Liberal Democrats therefore supported payments to child trust funds for children on disability living allowance.

The Minister went into the election supporting the payments; he came out of it ripping them up and saying that he was not interested in providing child trust funds for children on disability living allowance. If nothing else, the Minister now has the opportunity to explain why he changed his mind. I do not want to hear that it was because of the two Liberals or the economic situation. Why was that measure valid in February, but not now? Why must that asset be taken away from children with disabilities as part of the deficit reduction plan?

The Child Trust Funds Act 2004 allowed the Treasury to make regulations to provide for further Government payments to the accounts of eligible children. A key tenet of the legislation was to recognise that children with disabilities may need extra support and to provide that support with an asset at the age of 18 to meet the costs of disability. In the 2009 Budget, the then Chancellor announced that the Government would contribute an additional £100 to the trust funds of disabled children every year. The most severely disabled children—those who at any point in the tax year were entitled to the highest weekly rate of care components—were to receive £200 into their child trust funds.

Changes were made to that measure in July. Amendment 21 states simply that the situation that was to run from July 2010 to 3 January 2011 should be maintained. The contribution levels can be reviewed in due course, just as the Minister wants. He would also be able to meet his manifesto commitments until the next election. At the moment, he chooses not to do that. I am being pragmatic on these matters, although I am not happy about the situation. We are trying to salvage something that helps to support children with disabilities.

Returning to the evidence session, I asked Mr McAusland, the chief executive of the Children’s Mutual, whether it would be viable for children receiving disability living allowance to receive continued support via the child trust fund. He replied:

“It probably would. The systems are there to do that and from our perspective that would not be overly difficult.”

To answer the hon. Member for Birmingham, Yardley, the major provider said that it would not be a problem to do that. Mr McAusland went on to say:

“The one that I have seen which we are reasonably supportive of is the ResPublica idea. That is based on effectively maintaining the CTF infrastructure, but you create funds that can then be used to support looked-after children, maybe disabled children and maybe those at the lower end of the scale.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 45, Q129.]

It is therefore not impractical for providers to do that. I accept that a lower amount of money is involved, but it can be done. The Minister has a duty to say whether he will consider doing it.

In evidence to the Committee, Marc Bush of Scope stated that

“given the current financial climate, I think that there is merit in looking at some of the alternative proposals, such as ResPublica’s ABC account, which sets out asset building for children. Effectively, you would use means-testing to create some kind of fund that could be reinvested back into the most disadvantaged families.”

He supported very much the idea of health and support for disabled children. Again, in evidence to the Committee, Marc Bush said:

“I think that it is really essential that we have some form of asset-building mechanism that recognises the extra cost incurred by having a family with a disabled child. That is why the payments that came through the child trust fund were so important. The Government have said that they will redirect some of those payments to short break provision. Short break provision for families with disabled children is essential, but it is not mutually exclusive to building towards their future. .”

There is evidence from Scope that such a policy is required. In answer to my hon. Friend the Member for Edinburgh East, Mr Bush made an important point, and said that

“Many disabled children grow up thinking that they should not save and that they should not invest within state benefits, because if they save they will just have to spend it on a wheelchair, a piece of equipment or a housing adaption that they could not get funded. Seeing an asset grow with you is a great way of giving disabled children a positive attitude and confidence that they can build assets and can contribute towards their finances.”

Not only is the measure an important aspect of the asset at the end of the age 18, it goes back to the initial point that the Bill is about the Government showing a partnership with a group of individuals to ensure that they understand the need for a savings culture and work on it in a positive way.

Alison McGovern (Labour, Wirral South)

Does my right hon. Friend agree that we are also seeing a shift in the position of children with disabilities, especially their complex needs? Children whose conditions might have been highly difficult to manage previously have seen much more successful outcomes in respect of their condition at the Lyndale school, a specialist school in Eastham in my constituency. I have witnessed children and parents dealing with the challenge of success. The change taking place in looking after children is precisely what is required so that the children know that their better future is backed up by a financial asset.

David Hanson (Labour, Delyn)

My hon. Friend eloquently makes the case for the child trust fund and why the Labour Government focused particularly on children with disabilities. Two aspects of the child trust fund go across the board, one of which is a way of helping to encourage people to save, who did not save previously. That has been shown to have increased the savings ratio generally. It is particularly important to give people at the age of 18 an asset that they can use to start their lives and face whatever challenges there might be at that time. As my hon. Friend mentioned, there is a changing stream of challenges facing people and disabled children. Perhaps I should declare an interest in that I worked for Scope for six years and know some of the pressures that those individuals and parents face. Those pressures can be helped by an asset to meet the challenges that children face at the age of 18.

Kate Green (Labour, Stretford and Urmston)

Does my right hon. Friend also agree that one of the real concerns of parents of disabled children is how the children will cope in adulthood? As those children make the transition into adulthood, a time when often the gap between child and adult social services badly lets those families down, the knowledge that they have an asset to carry them through the transition period offers great reassurance not only to the young person, but the parents who are already stressed by the experience of raising a disabled child.

David Hanson (Labour, Delyn)

My hon. Friend makes a valuable point, which I had not considered. When I worked for Scope in the mid-1980s as a national and a regional manager, one of the key things that parents of disabled children always worried about was what would happen to the child when they had died. Parents who are giving birth at perhaps an older age now are aware the child trust fund will provide a cash asset sum to help their children face some real challenges.

In answer to a further question, Mr Bush said that, ultimately,

“the Bill will increase inequality, particularly for families with disabled children.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 57-67, Q160, 174, 185.]

Will the Minister think about that statement for a moment? Let us consider the abolition of the child trust fund. The acceptance of clause 1 will, according to Scope—an independent, national charity dealing with disabled people—increase inequality, particularly for families with disabled children. Does the Minister want to have his political record marked on that? Does he want to go through life as the Minister who increased inequality, particularly for families with disabled children? I appeal to his better nature. I think the Minister is a decent man who would not want that on his record and he would want to stand up for his manifesto commitment, what he said in February and for children with disability living allowance. Again, I make him the offer that if he accepts the amendment, we will vote in support of the clause. I will explain to the Labour party why we have sold out on our £250 promise and I will vote in support of the clause. I will give him that opportunity. I have moved some way—let him move some way as well. If he does not vote for the amendment, he will abolish the disability living allowance component that he supported in February, to which he committed in May, and which, according to Scope, will increase inequality, particularly for families with disabled children. I think Government Members will find such a situation uncomfortable.

Finally, in response to question 250, which was asked by my hon. Friend the Member for Stretford and Urmston, Katherine Rake of the Family and Parenting Institute said:

“If it is working, let us keep it in principle…As you say, choices could be made within that about looked-after children, where the state is the parent and wants to make some contribution for children with disabilities. That contribution could be continued during the interim period, and the universal elements could be brought back in later down the line once the economy has picked up.” ––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 4 November 2010; c. 98, Q250.]

Again, I ask the Minister to bear in mind disabled children; looked-after children; lower contributions; massive savings to the Treasury, the pocketing of lots of money, which was going to those children, to pay off the deficit, but maintaining that small amount of money to help retain the scheme. If the economy picks up, let us put that back in place and ensure help and support for those people. If we do not, I have to presume that the abolition is not about the deficit or disabled or looked-after children but about the dogma of not wanting the scheme in place and not believing that the state should be working in partnership with people on child trust funds.

Finally, I turn to amendment 22, which deals with providing support to—

Mark Hoban (Conservative, Fareham)

The poorest third.

David Hanson (Labour, Delyn)

The Financial Secretary knows. I will read it to him so that he gets the full benefit. He sounded a tad impatient. He should recognise that the duty of the Opposition is to talk about the issues and expose the arguments. Under the order of the House, we have until 4 o’clock on Thursday to debate the matters. If need be, we will do so, because we regard them as extremely important. If the hon. Gentleman is impatient or upset that we are discussing these matters, that is tough. These are important issues, which people outside this House expect us to raise on their behalf. The Financial Secretary should find comfort in amendment 22, because it simply does what he said he would do in the general election campaign. That is all it does. We look for the poorest third and we let the Treasury make the assessment of what that poorest third might be.

The Conservative party manifesto, which I confess I and the Liberal Democrats did not stand on, but which eight members of the Committee stood on, said:

“We will…cut government contributions to Child trust funds for all but the poorest third of families and families with disabled children”.

Amendment 22 gives the Minister an opportunity to uphold what he said he would do in the general election manifesto that was agreed at that stage. I will be fair to the Minister. I recognise that he will say that things have changed since the election. Well, two things have changed since then. First, his party did not win a majority and he is dependent on the hon. Members for Birmingham, Yardley and for Bristol West for votes in Committee. Secondly, he will have made an assessment of the economic situation.

It is important that the Financial Secretary tells us why he felt in May that it was important that the poorest third of families had the child trust fund. Whatever was important in May, I would like to hear from him why he felt it was important then that children from the poorest third of families receive the child trust fund. We know why the situation has changed. What I do not know is his motivation in May to say that that was an important thing to maintain.

Presumably it was because the Minister recognised that the children from the poorest third of families have difficulty in establishing a nest egg to meet some of the challenges at the age of 18. Presumably he recognised that for the poorest third of families, the savings culture generated by the child trust fund helped them to contribute to the savings of their own children. Presumably he felt that it was about supporting challenges to deal with inequalities at the age of 18. Presumably he felt that the partnership between the state and the poorest third of families was important at that particular time.

I would like the Financial Secretary to set out clearly, not what has changed in relation to the economy or in terms of the partnership with the Liberals, but why he believed it was the right thing to do in May, why he felt that they could go to the electorate to do that and why he feels that, if all things have changed, of all the choices he could have made to save money for the deficit, he chose to hit the poorest third of families and to abolish the child trust fund, against his own manifesto commitment. He could have chosen a range of other measures to make and found a whole range of schemes to raise the relatively small amount of money that is being made by the change.

I am moving rather a long way. I am not asking to return to our position in July with the amendment, but asking him to maintain the lower levels of payments from August through to 3 January, and through to the future, so that we could at least make some contribution to the poorest third of families. He has the ability then to fulfil his manifesto commitments by looking at those issues again as the economy picks up to see if he can increase the contributions to help those inequalities, which he must have recognised when he drew up the policy before the election. Or else, why did he draw it up then?

Kate Green (Labour, Stretford and Urmston)

Does my right hon. Friend agree that it is inconsistent for the Minister and the Government to proclaim that the effects of the Budget and the comprehensive spending review announcements will make no difference to child poverty, but then very deliberately to make a significant difference when poor children reach the age of 18 and move into adulthood?

David Hanson (Labour, Delyn)

Indeed. I do not want to test your patience, Mr Streeter, by straying across a whole range of other measures that will hit the poorest third of families, but there are several. I will concentrate today on the child trust fund. The Minister indicated in May that he felt it was important. Why is it not important now? That is the key question.

During the evidence session on 4 November, Sian Williams, the head of financial inclusion at Toynbee Hall, which deals with poverty in the east end of London and knows very well the challenges that poverty brings. She said, pragmatically I may add:

“At this stage, given the economic climate, I would not advocate keeping the child trust fund for the entire population. However, for the really disadvantaged—I would include among them the groups that you described and families with extremely low incomes such as those with parents in long-term unemployment and very little hope of employment—I have a real concern that we are pushing towards policies that will increase inequalities.

We work with a lot with young people aged 14 to 25 across London. We help them look at their financial future in terms of training, education and employment opportunities, and”—

this is the key point—

“we know that, for many of them, not having any assets to fall back on reduces their options.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 4 November 2010; c. 103, Q255.]

I will again give the Financial Secretary the benefit of the doubt. He has the opportunity today to reflect on the impact of his actions in abolishing the child trust fund under clause 1. He has the opportunity, with the amendment, to look at how he can help the young people who will leave school or employment at the age of 18, and who are from the poorest third of families, to have that fund, and also look at the ability of that poorest third of families to save for those children’s futures. I hope, on reflection, that he recognises that his initial judgments in May were right, and that he can keep the manifesto commitments that he gave as a whole.

In summary, I hope that the three amendments before the Committee are ones that the Financial Secretary can accept. I say that for three succinct reasons. First, the relative costs of those three amendments are low, in terms of the savings that they make and the financial contribution that they provide. Secondly, the child trust fund mechanism is in place and could remain in place to deal with those issues. Thirdly, he has given manifesto commitments on those key issues. The evidence before the Committee, from all the independent bodies that gave evidence to us, is that not progressing looked-after children, children with disabilities or the poorest third will increase inequality at the age of 18. I contend that the Financial Secretary would not want to do any of those things and that he would want to maintain some element of the child trust fund to help those particular three groups.

I will make my final offer to him. As I have said, if he accepts all those amendments, or even if he only accepts some of them, we will put aside some of our principles and vote with him to ensure that the clause stands. When we have an opportunity, we will return to the scheme, which the Labour Government put in place. If he rejects those amendments, we will oppose the clause and we will expose that rejection to the people outside the room who take an interest in these matters. They will note that he has broken his election promises, he is increasing inequality and that he is making the most poor and the disabled children in the country pay for the deficit.

Yvonne Fovargue (Labour, Makerfield)

Does my right hon. Friend agree that it not only increases inequality, but that it also reduces social mobility? In answer to question 185, Anne Longfield stated:

“This could be an opportunity to give a really important boost to social mobility and to life chances at a key time, but I think that opportunity has been lost.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 67, Q185.]

David Hanson (Labour, Delyn)

One of the key things that we should try to do, and one of the things that the Labour Government tried to do—sometimes not as well as they could have done—is to increase and improve social mobility. I want to see people having an equal opportunity in life to reach the full potential of their talents. One of the things that the child trust fund did was ensure that we had a partnership between the state and a range of people, not least of which were the poorest, the disabled and the looked after. They had life chances which would be enhanced at the age of 18, because through that trust fund they could afford a deposit on a property, help with education, employment and training or help with bringing up a family themselves. Those are real pressures. The Government were saving with them and encouraging saving. Sadly, if the Bill stands as it is, all that will be lost. I commend the three amendments to the Committee and I look forward to hon. Members contributing to the debate on those issues.

Kate Green (Labour, Stretford and Urmston)

Let me begin by saying that my right hon. Friend the Member for Delyn has given a comprehensive explanation of why he is proposing, along with our hon. Friend the Member for Bristol East, the amendments, which I support. I do not need or intend to repeat all the points that have been made this morning. I want to highlight some of the key issues in relation to each of the amendments. I hope that the Financial Secretary will address them in his response.

Amendment 20 is in relation to looked-after children. I know that hon. Members across all parties share deep concerns about the poor outcomes that we continue to see for looked-after children as they grow up and progress into adulthood. That is a considerable concern for us all. Clearly, no one answer will be sufficient to address the significant disadvantage that those young people have experienced in terms of the reasons why they arrive in care and, regrettably, the fact that even being in care does not sufficiently improve their outcomes. There is work to do there. I am not suggesting for one moment that, by simply providing an asset at age 18, we have resolved all the deficiencies in the experience of being brought up in care. It is absolutely right that hon. Members of all parties continue to demand of all Governments that more action be taken to improve the outcomes for those kids.

I want to highlight two issues on looked-after children. First, on arriving at adulthood, they have none of the support mechanisms that the rest of us have in making the transition out of the family and into independent living as an adult. Even the poorest families are able to support their children as they set up their homes with, at the very least, a few basics to put in the kitchen cupboard, and bedding, sheets and blankets. Looked-after children leave with none of those basic material supports—it is to the shame of us all that we continue to cast them out into adult life with absolutely nothing to support them.

I welcome the comments made by the hon. Member for Birmingham, Yardley. I agree that we should look at how we can provide young people reaching 18 now and those reaching 18 between now and 2019 with an asset as they move into adult life. That does not preclude us from planning ahead for young people in care who are under 18. My second point is that how we do that is important. I alluded to that in my intervention on my right hon. Friend about those young people’s sense that nobody cares about them, that they have no connection to the future and that nobody aspires for them.

Stephen Williams (Liberal Democrat, Bristol West)

Does the hon. Lady agree that one of the greatest scandals about looked-after children, who are in the care of the state for much of the time, is their educational outcomes? Their GCSE pass rates are among the lowest of any group at age 16. To give such children a flying start in their adult lives, the Government and the Opposition should be paying attention to that matter.

Kate Green (Labour, Stretford and Urmston)

Of course, it is right that we should do more to improve the educational outcomes and experience of looked-after children. That reinforces my point that one difficulty in engaging with and supporting them adequately is their sense that nobody cares about their future and that they are too often seen simply as a problem to be dealt with here and now.

One real advantage of creating a mechanism and an asset that grows with looked-after children through their childhood and presents them with a vision of the future is that it shows them that people are not only interested in them because of where they now are—the challenges that they present and live with today—but see them as valued future members of society. As well as providing them with support that is better than what is currently available, this mechanism of saving for their future would give those young people the important message that they are precious and cared about. It would show that the fact that they are not cared for within their own family does not mean that nobody has an interest in them beyond seeing them as short-term problems to be got through their childhood, which is what so many of them feel.

I want to make some additional points about maintaining a mechanism to support children on disability living allowance with a payment on their reaching 18. In his evidence to the Committee, Mr Marc Bush—I apologise that I have lost the reference—highlighted the challenge presented to families with a disabled child, in that they not only have to meet additional costs in raising their child as they grow up, which diminishes the parents’ ability to set aside money for their kids, but have more costs kicking in as the child reaches 18 and moves into adulthood. Parents are very concerned about that transition period, because all too often they find that the server support previously provided by children’s social services falls apart at that moment. At least for a short time, money is incredibly useful to plug that gap, although it should not be like that. We should be planning better joined-upness between children’s and adult social services to smooth that transition, but such transitions are always awkward and money provides an extra ability to ensure that they go as smoothly as possible.

Paul Maynard (Conservative, Blackpool North and Cleveleys)

I am delighted to hear the hon. Lady recognise the transition problems for families with disabled children, but does she not agree that, for many such families, particularly those with children with mental health conditions, the transition period starts at the ages of 15 and 16? To impose an arbitrary cut-off age of 18 is to try to fit all families with disabled children into a single box. Sadly, the world is not like that.

Kate Green (Labour, Stretford and Urmston)

The hon. Gentleman makes a valuable point. It is reinforced by Mr Bush’s evidence, which stated that parents of disabled children saw the transition period as being at any point between the ages of 14 and 24. Perhaps we should have designed, and should think about designing, a child trust fund savings mechanism for disabled children with more flexibility, especially in the withdrawal points. The hon. Gentleman has started an interesting line of thought. If we are to go down that imaginative line of thinking, we must first ensure that we do not abandon the product altogether. If we do, we will be unable to make it more flexible so that it meets the particular needs of disabled young people and their families as they face the transition to adult life.

It is well understood that disabled children and young people face additional costs, many of which kick in as they make the transition into adulthood. They might move out of the family home to study at university or college, which many disabled young people rightly aspire to do. They might face exceptional additional costs to meet their mobility needs when they move to student accommodation, to meet extra care needs or to fund their travel and transport. People often face those additional costs at the moment when they are establishing themselves as independent young adults. That is when the lump sum might help.

Alison McGovern (Labour, Wirral South)

Does my hon. Friend agree that there can also be additional educational requirements? The support and provision for young people with disabilities at university or in post-18 education is quite different from at school. That is the time when an asset might be useful to boost people’s potential.

Kate Green (Labour, Stretford and Urmston)

My hon. Friend makes an important point about the different nature of the educational experience in further and higher education, which means that the young person will incur additional costs. There is also a richer range of experiences in which they might wish to participate. The lump sum is important in ensuring that they can make such choices.

Young people with disabilities are already at a higher risk of poverty in adult life, with disability an indicator of vulnerability to poverty. I am concerned that they will lose a useful asset—admittedly a modest one—that might help to compensate for that lifelong higher risk of poverty by giving them a good start in adult life. I hope that the Minister will think again. I am confident that Members on both sides of the House and across the Committee are concerned about the future of disabled young people. This mechanism gives us a chance to address the needs of those people.

Amendment 22 is aimed at the poorest third of children, which is the third group that my right hon. Friend the Member for Delyn has targeted with this group of amendments. The poorest third of children relates to the definition of poor children in the Child Poverty Act 2010, which is those who are growing up in households that receive below 60% of median income. Currently, that is about 30 to 32% of children. Like the Conservative election manifesto, the amendment commits to give all children defined as “in poverty” the boost of maintaining their child trust fund. That was a welcome commitment by the Conservative party. I would have liked it to continue its commitment to a universal payment, but I welcome its recognition of the importance of the definition of income poverty. It was good to see that reinforced in the Conservative manifesto. I am disappointed that the Conservative party is moving away from that commitment. The intentions and the definitions in the 2010 Act were strengthened by the cross-party support that the legislation enjoyed. This is an opportunity to reinforce that point.

I hope that in the measures that the Government introduces, extra attention will be paid to the needs of the poorest children—those who are growing up in households that receive below 60% of median income. I cannot understand how the junior ISA will achieve that because it appears to have an in-built inequality. Better-off families will benefit more, because of the tax break, than the poorest families, who are highly unlikely to be taxpayers. Whatever the merits of the junior ISA, as a vehicle to create a savings habit, or in its delivering a lump sum at a particular age, it has a fundamental difficulty of being a more unequal model than that of the child trust fund. I hope that the Financial Secretary will respond specifically to that point, because I am genuinely concerned that a Government who proclaim their wish to narrow inequality gaps, which I applaud, should introduce a measure that looks likely to make things worse. Perhaps he can reassure me that that is not the case.

There are two other points that relate to the three amendments that are under discussion. The first, important one was made by the hon. Member for Birmingham, Yardley—why wait another 11, 12 or 18 years to deliver the payments? Why not make them now? I could not agree with him more. I should like to see the Government take further steps to narrow the gaps between the poorest adults and the better off in society Those who are on low incomes because of disabilities are at greater risk of poverty, as are those who have left care, who are also at much greater risk of worklessness and poverty.

Regrettably, virtually every measure that the Government have announced in either the emergency Budget or the comprehensive spending review seems to take things the other way for the poorest adults. I hope, therefore, that the comments of the hon. Member for Birmingham, Yardley will relate not only to the legislation, but to the spending plans as a whole.

Finally, I come to social mobility, about which there is considerable misconception and misunderstanding, as much in my own party as elsewhere in the House. We do not know that social mobility stalled under Labour, because we have not been able to measure the group of children who have benefitted from Labour’s spending plans—its investment in tax credits, its increase in child benefit, its improvements in lone parent employment, and so on. We have not been able to measure the effects of such measures on those children when they become adults, so we do not know whether they are in a stronger position than their parents.

Gary Streeter (Conservative, South West Devon)

Order. I remind the Committee that we must not stray too much on to general social policy, but confine ourselves to the amendments.

Alison McGovern (Labour, Wirral South)

My hon. Friend is making a compelling case for a halt on the argument that we cannot have this because there is no measurable effect. Some of the best policies take effect over many years, and that relates to the child trust fund. I do not know whether she would agree that the educational impacts of the past 13 years of Government policy are also yet to be measured. The rushed nature of the legislation is therefore one of its most concerning aspects.

Kate Green (Labour, Stretford and Urmston)

I am grateful to my hon. Friend, who helps me to draw back to the point of the Bill. That point is precisely that, to a certain degree, we must have some faith that long-term measures will improve social mobility before we are able—inevitably able by definition—to measure their effects.

We know from extensive evidence, including that which we heard in the witness sessions last week, about the importance for people of having money and assets behind them at the age of 18. That is one of the components that improve opportunities and, as a result, outcomes, particularly for the poorest young people. It is not true that money does not matter and that other mechanisms can replace it. Many other mechanisms are important, such as education, financial expertise, good health, and so on, but money is an important factor in delivering good outcomes for children, young people and adults. This asset would have helped to provide that additional resource to improve the outcomes for our most vulnerable people. I hope, therefore, that the Minister and the Government will think again and accept the amendment. As my right hon. Friend the Member for Delyn has said, if that is the case, with some reservations and regrets we will vote for the clause.

John Hemming (Liberal Democrat, Birmingham, Yardley)

The inter-relationship between the measure and the care system is important. I am well known to be critical of the care system—a lot of children are in care who should not be, and there are those who should be and are not. To cite an example from my constituency, some children smashed up a children’s home to get moved home, and they were. A study by Southampton university that looked at 473 people who had left care showed that 70% of people went back to their parents.

It is important to remember that every child is different and every child’s circumstances are different. Some maintain links with their families, whereas some do not, and the families of some will have died. We had a meeting with children in care just a couple of doors down a couple of weeks ago. There is no question but that we do not look after children after they leave the care of the state. The process for assisting them through that is not good.

The question today is whether it is worthwhile to pay £50 million a year to maintain infrastructure that delivers £1 million that is not necessarily well invested, and that at the end of the process delivers a couple of thousand pounds to a child in care, or whether the £50 million would be better spent if it was sent straight to people on leaving care.

Kate Green (Labour, Stretford and Urmston)

I agree with the hon. Gentleman that children in care have varying needs, different connections with their birth families and different trajectories of maturity. I invite him to work with me on this issue that concerns us both and to consider how the Bill can be improved to ensure that we have a savings model that delivers flexibility, while ensuring that we have the benefit of the child trust fund model, which recognises the particular costs that children face when they transition into adulthood at the age of 18.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I thank the hon. Lady for her intervention, but the Bill cannot be improved in that way because there is a cost in maintaining the infrastructure. It is important in public policy to get value for money. There is no sense in spending £50 million to give looked-after children £1 million in a few years’ time. That is ludicrous. It is impossible to modify the Bill to achieve that—it is just insanity.

Kate Green (Labour, Stretford and Urmston)

Obviously we are well aware of the significance that the Government attach to reducing the deficit, but the cost of child trust fund payments for children and carers is a modest £2.5 million. Does the hon. Gentleman agree that, even in the straitened circumstances in which the Government say that they find themselves, that is affordable?

John Hemming (Liberal Democrat, Birmingham, Yardley)

I agree that that is entirely affordable, but the infrastructure must be maintained to pay that.

David Hanson (Labour, Delyn)

The infrastructure would cost about £2.6 million a year to run.

John Hemming (Liberal Democrat, Birmingham, Yardley)

That demonstrates the ignorance of the Opposition. There are two aspects to this. The first is a process by which a computer goes clunky-clunk and sends out post, allocates numbers and maintains links to various providers. The figure that will be saved by putting that on hold is £50 million. The Minister will probably give more details on that later. That infrastructure must be in place to pay the additional cash, which I accept is relatively small at £1 million or £2 million.

Alison McGovern (Labour, Wirral South)

By way of comparison, will the hon. Gentleman clarify what the total project cost will be of setting up the junior ISA scheme?

John Hemming (Liberal Democrat, Birmingham, Yardley)

The point is that we are working on various ways to deliver this. The conclusion may be that we should use a model similar to the child trust fund. The difficulty is that there is a cost to opening and maintaining lots of empty accounts, even if computer systems are used. It would involve sending all children born in this country a note, every birthday for 18 years, that for most people will say, “You’ve got no money.” As well as being a rather futile exercise, that would cost at least the postage and the running costs, which must add up to at least 70p. The problem is that there is an infrastructural cost in keeping the scheme running. That cost must be dealt with. There is no sense in spending £52 million to pay people £2 million.

Sheila Gilmore (Labour, Edinburgh East)

One of the problems that we face with the Bill is the same one that I raised with the Minister yesterday in the Chamber: all too often we rush in to make changes without having thought through the implications or without knowing the alternatives.

It is all very well for Members supporting the Government to say constantly, “This would be better”, “That would be better”, “Perhaps we could do this” or “Perhaps we could do that”. Regrettably, the amendments proposed last week, which would have given us a breathing space to look at some things again, were refused by the Government.

From what is being said, clearly a lot of things have not been given proper consideration. There may be aspects of the child trust fund that could be looked at again or that might not be ideal; or, as has been suggested, universality might be difficult to afford—that is not necessarily a view I share, but I can understand where people are coming from. On that basis, it is not beyond us to look at the possibilities of, for example, reducing overheads.

I would like to see the detail on the figures that we have just heard, but if they are correct, I do not see why keeping the child trust fund available for the three categories covered by the amendments—children in care, children with disabilities and the poorest children—necessarily requires us, as the hon. Member for Birmingham, Yardley suggested a few minutes ago, for example, to send out in effect blank birthday cards to every child in the community.

Just because all children covered by the child trust fund—those born since 2002—are currently getting an annual communication does not mean that if we limited the child trust fund to the defined categories, all other children would have to be sent a letter saying, “You’ve got nothing.” That is absurd and, surely, only a regulatory or small change would be needed to stop it happening. Putting up such an objection to a proposal of this nature is putting up a straw man, rather than addressing the issues involved.

It is important to address some of the misrepresentations, or misinterpretations, of the evidence we heard from Marc Bush. He spoke about the difficulties that some families had encountered with the authorities; some officials, apparently, argued that the asset involved in a child trust fund might affect benefit. However, he was illustrating a practical problem that some of the people his organisation dealt with had encountered. As far as I am aware, for that to happen is not the policy of the previous Government or of this Government, but anything in the rules that causes that to happen can be changed. That small glitch could be changed.

What sounds far more likely is that some officials were themselves misinterpreting the regulations. What Marc Bush said—clearly—was that other forms of saving were particularly difficult for families with disabled children, and that the child trust fund was one of the best because it did not involve such difficulties. Other forms of saving would have that effect on the receipt of benefit.

As I heard Marc Bush—it is written down clearly—he was saying that of the savings choices for families of disabled children, this particular one was the best articulated and the best integrated with the benefit system, so he supported it and felt it important that it should continue. Rather than being evidence against continuing it, I submit that his evidence was strongly in favour of continuing it.

I appreciate that we are not meant to stray into too many of the wider issues about benefits and the other changes that are being made, but we should not ignore them entirely, or suggest that taking benefits away does not matter because disabled children may receive moneys in other ways. Families in my constituency have been told in recent months that their disabled children coming up to adulthood would no longer qualify for the independent living fund, for example, because it is only available for people who are definitely in employment for 16 hours or more a week. I now understand that the independent living fund is to disappear altogether, and that alternatives to such benefits will not necessarily be available.

In social policy terms, one big criticism constantly made of Governments is that they do not look enough into the long term. Things are constantly introduced, after which there are changes of Government and policies are interfered with. The child trust fund was a genuine attempt to look to the long term and work towards giving people a degree of independence.

Alison McGovern (Labour, Wirral South)

Does my hon. Friend agree that at least some level of cross-party agreement was apparent on the amendments? People in my constituency and more widely often look for a long-term approach in the form of politicians coming together to reach cross-party agreement. Before the election, a neutral observer would have assumed that there was such an agreement on this matter.

Sheila Gilmore (Labour, Edinburgh East)

Indeed. At the moment, we are faced with the assertion that the overall priority is to reduce the deficit very fast, which is highly dangerous in economic terms. Even if that is the priority, looking at longer-term social policy measures to deal with it seems perverse. If the Government are right and the deficit is reduced within five years, with the economy thereafter flourishing as a result—that appears to be their position—it is all the more important that long-term social policy measures are not interrupted now. They are the very measures that should be kept in place as, if that happens—the Government are confident that it will—it seems particularly perverse to cease such measures and not to be sufficiently optimistic to say, “We will restrict payments to these particular groups at the moment, if necessary, but we can reinstate the fund in future without any great difficulty and without having to reinvent the wheel by coming up with a new policy.” The families of disabled children are such a disadvantaged group, and disabled young people, as they move into adulthood, face such a huge number of problems that they need anything that can assist them.

Finally, it has been suggested that the last Government thought that the measures, including the child trust fund, that are marked out in the Bill, would somehow resolve poverty and deprivation. That is not the case, as each of the measures was a small part of a much wider programme. We are not suggesting that because a young disabled adult or a young person leaving care would receive the money, it would overcome all the other disadvantages they may have, or that in itself it would be enough totally to transform their life. Of course, other factors have to be taken into account as well.

The child trust fund was a measure designed to enhance the life chances of such young people. It is important to keep it in operation, particularly for such groups, at what is a relatively modest cost, to enable us to move forward in the future. I hope that that would be the case with various measures that I hear Government Members espousing and encouraging, and which I hope will work. But that should not be to the exclusion of our proposal, so I urge Government Members to support the amendments.

Yvonne Fovargue (Labour, Makerfield)

I want to turn to an area that has not been examined enough, which is the long-term savings habit that is engendered by the child trust fund. From my work in financial capability and in schools, I believe that all the studies suggest that children learn from their parents. Where are looked-after children to learn from? We are the parents in that case and we have to give that example. The child trust fund has given a practical example to a group of children who quite often—not in all cases—have no practical examples of saving. It is not the same simply to give those children a lump of money at 18, and say, “Here you are. Go out and do something with it.” It is about teaching the idea that savings bring prosperity and life chances. The child trust fund is doing that for looked-after children in particular. It is decreasing the divide between looked-after children and those who are in the care of their family. It is also giving them a lump sum, which gives them extra support at 18 years old, when they leave care, go into their own properties, have to fend for themselves and have to get financial products if they are at work or at university. It gives a practical example of a financial product and how it works, and that makes people engage.

As my hon. Friend the Member for Edinburgh East has mentioned, Marc Bush said that there are no suitable products for disabled children. The problem is that often other products—not the product he mentioned—are taken into account for benefits. People want to save, but they cannot find the products. The value of the child trust fund is that the Government put the money into a product that is suitable.

The stress on parents with a disabled child is particularly great. The phrase that Marc Bush used, which particularly affected me, was “a cliff edge”. He said that the cumulative effect of these changes, including the withdrawal of the child trust fund, is to push those people over “a cliff edge”. I want people to look at how expensive it will be to rescue those who have gone over a cliff edge, when some preventive work could have stopped it.

On the poorest third, what affected me was the phrase “assets mean choices” and the increase in social mobility. I want to return to the examples of saving. We have had much debate about when is the right time to save. Is it when people are particularly stretched for money, or when they have a little to put aside? From my work experience in financial capability and debt work, children learn about saving from example. Practical examples are needed and that is what the child trust fund has given them. A junior ISA, which is not applicable to families who do not pay tax, is not an example to children. The child trust fund, which can be used as an example in schools and in financial capability lessons, gives encouragement for people to save. As Anne Longfield said, it is the simplicity of the product that counts. Can the Financial Secretary say whether that has been taken into account as well?

Alison McGovern (Labour, Wirral South)

I have a few remarks on the amendments, which build on the points my hon. Friend the Member for Makerfield has just raised. The amendments are significant, because we have an incredibly important decision before us. We are looking after some of the people who have least in our society. I was struck by some of the answers that the Minister gave in evidence to the Committee last week. In respect of amendment 22 and the possibility of a junior ISA, in response to my hon. Friend the Member for Makerfield he said:

“The important thing is that there is a vehicle designed to encourage people to save. Encouraging people to save is not just about tax incentives;”—

an important point—

“the money will be locked in. We want to make sure that it is accessible to low-income families”.––[Official Report, Savings Account and Health in Pregnancy Grant Public Bill Committee, 4 November 2010; c. 123, Q298.]

That aspiration is admirable. It is the reason behind the amendment. However, as for the possibility of an alternative, which lots of the argument has turned on today, will the Minister tell us the plan for making the vehicle accessible to low-income families? How will the junior ISA work in relation to that? In my experience, there would usually be a plan aligned to a policy such as junior ISAs and it would help the Committee if we could know more about making sure that junior ISAs are accessible to low-income families. With the advent of child trust funds, tax credits and pension credits, we know a lot as a country about how we ensure that financial products to assist those on the lowest incomes are taken up and used in ways that we would all like to see. I would be interested to know the Treasury’s assessment of how it will make it happen.

In addition, if our amendment is not accepted, and one, two or three years down the line junior ISAs are not taken up by low-income families, what is the Minister’s plan? What will we do then? Colleagues have already commented on the sometimes rushed nature of legislation and it would be worth while if the hon. Gentleman can explain how we might engage families on low incomes in savings plans? I did not come from a particularly wealthy family, but I experienced the culture of putting away £1 here, £10 there and working towards a better future. I hope that we have some expertise in engaging low-income families in savings, and I shall be grateful if the hon. Gentleman will describe how best to protect such a policy in the time to come.

Fiona Bruce (Conservative, Congleton)

Has the child trust fund really succeeded in improving the savings culture and the financial capability of the poorest? In light of evidence given by Dr Samantha Callan, of the savings accounts opened by parents, only 1% had received the maximum funding available. In other words, only 1% of those opened were by people on the lowest incomes.

Alison McGovern (Labour, Wirral South)

That is a funny argument for two reasons. First, it is a slightly odd statement to come from an hon. Lady who stood on a manifesto that sought to preserve the child trust fund. Secondly, it is a funny argument that, because everyone did not save the maximum, it was not worth while for some people to save something.

Our argument for the retention of the child trust fund is that, in the grand scheme of things, it is a relatively new financial product. When we questioned the mutual financial services sector, we heard really strong evidence that it has made a success of it. For that reason, I certainly believe that some delay and the retention of the product is the right way in which to proceed.

Yvonne Fovargue (Labour, Makerfield)

Does my hon. Friend agree with Anne Longfield’s evidence that a higher proportion of income was put into the savings by people on the lowest income? To me, that indicates a success.

Alison McGovern (Labour, Wirral South)

I recall Anne Longfield’s evidence on that. Overall, when listening to the experts who came before us, I was struck by the evidence of the increase of saving and—with the caveat that we are still fairly newly into the culture of the child trust fund—that must be a good thing. We must secure the amendments to the Bill so that we can maintain the child trust fund and keep reflecting as a country on what more we can do to build up the savings culture. That will have the benefit not only of assisting those on the lowest incomes to save—where children are in care or have disabilities—but will also encourage a broader savings culture. The financial services sector in our country needs that culture of more savings and more deposits at this time.

On amendment 20, I want to reflect on the importance of retaining the savings facility for children in care. It is especially important to know the estimation that the Minister and the Treasury have made of the likelihood that such children will have junior ISAs taken out for them. I would be interested to know whether an assessment has been made of that; if not, it ought to be. Before we dispose of a savings product for children in care and offer a different one in the years to come, should we not ask ourselves about the likelihood of such a product working for them?

David Hanson (Labour, Delyn)

Is it not even more important that the Minister outlines what the true nature of the junior ISA will be? He is asking us to support clause 1, which abolishes the child trust fund, but he has not yet provided clarity about what the junior ISA or the cap will be, how the mechanism will work, or how the scheme will operate generally. We are being asked to abolish a measure without having clarity on its replacement.

Alison McGovern (Labour, Wirral South)

My right hon. Friend puts most succinctly the point that I want to make. It is bad policy, generally, to abolish a scheme that has had at least some success according to some of the people who gave evidence in Committee. I recall specifically the evidence from the mutual side of the financial services sector, which was that the product was successful and that it was going well. We have not heard enough detail about the junior ISA to make an assessment of that proposal, and that we are asked to abolish the child trust fund in total ignorance of what—if anything—might replace it, seems to be faulty policy making.

John Hemming (Liberal Democrat, Birmingham, Yardley)

Does the hon. Lady not accept that the 18 years that exist between now and the time when the replacement has to function is sufficient time to get a good replacement?

Alison McGovern (Labour, Wirral South)

The hon. Gentleman’s point rests on a false assumption. The misplaced premise of his argument is that the only benefit of the policy is that which will be received by the child in 18 years’ time. We have heard evidence in Committee that the economics that matter concern not only the transfer payment from the Government to the family now, but the culture and the habits that are formed along the way. Such habits have economic and financial benefits to families, which is why the child trust fund has been so successful as a product and as a policy. That is why I support the amendments, which would try to preserve that.

John Hemming (Liberal Democrat, Birmingham, Yardley)

Although the extreme example is 18 years, would not even a year be enough time to put the replacement in place? Obviously the provision can be backdated to all the children who are born after 3 January.

Alison McGovern (Labour, Wirral South)

If the hon. Gentleman thinks that a year is enough time to get the junior ISA in place and introduce the further policy, why does he not table an amendment to the Bill to preserve the child trust fund for another year?

John Hemming (Liberal Democrat, Birmingham, Yardley)

The point I am making is that whenever a new system is implemented it can be backdated so that nobody misses out. We have to ask whether it is not worth taking a little time to get the system right.

Alison McGovern (Labour, Wirral South)

The hon. Gentleman says, “Oh, it’s fine because we’ll have the junior ISA and we can just backdate it for people who’ve missed out.” However, we are being asked to pass legislation in ignorance of the detail of the junior ISA. That is why I am on my feet asking these questions so that we can get some of the answers on the record. The hon. Gentleman thinks that all will be well because we will have a junior ISA in place in a year and can backdate it for people who have missed out, but why are we here debating legislation that removes the child trust fund in the absence of some of the details about the junior ISA that we might possibly get? That is what I am trying to find out about.

John Hemming (Liberal Democrat, Birmingham, Yardley)

We are here removing the infrastructure because it costs a certain amount to keep it going, and there is no sense spending £50 million to achieve nothing.

Alison McGovern (Labour, Wirral South)

I repeat the question that I asked him in an earlier intervention. It is all very well for him to assert that there is a cost to the child trust fund infrastructure, but in the absence of any detail about the cost of the junior ISA infrastructure or how effective the junior ISA will be in continuing the culture of saving that the child trust fund had built up, the hon. Gentleman is addressing only one side of the question. It is not good policy making to assume that because we can chop a bit off in one place, another cost will not arise somewhere else and that we would not have been better sticking with the original policy.

I will make a bit of progress. In addition to some of the questions that my hon. Friends and I have already asked, I want to ask the Minister about amendment 21. Will he discuss further how the junior ISA might affect disabled children? Will it be an appropriate product? Would there be any interplay between the junior ISA and the benefits that exist for disabled people now? Obviously, the position is changing for those on disability benefits, but it is important, in abolishing what was described to me as one of the best financial products available for children with a disability, to know what might replace it. If the answer is, “We don’t know what might replace it,” and there is no proper option for children with a disability, it would be helpful to know that.

On amendments 20, 21 and 22, the Minister made some comments, and evidence was provided to us, about the importance of lock-ins. We heard evidence from the expert witnesses about the child trust fund’s importance in assisting in locking parents into saving. That was seen as a real benefit, especially for parents on low incomes, who knew that they could not get out the money that they put away. That was a really helpful way to save. That is not the normal culture with the ISA family of savings products, but the Minister gave a distinct indication that the Government would seek to preserve the culture under the child trust fund in the junior ISA, and I would fully support that important point.

We have heard about how flexibility might be developed. We have quite a certain picture of how the child trust fund works and quite a particular model, so it is important to hear how the lock-in might work, how it would relate to other ISAs and what work the Treasury has been doing to make sure that this financial product could be sustainable, because people want continuity of the culture of saving that we had started to build.

Mark Hoban (Conservative, Fareham)

Let my try to focus on the points that were not discussed in last week’s scrutiny session and on the three amendments. We all recognise that there are vulnerable groups in our society who need more help than others. Is the child trust fund the most effective way of providing support to those groups? We do not believe that continuing with the child trust fund eligibility would be the best way of delivering such help. Furthermore, once eligibility for child trust funds ends for children born from January 2011, it will not be practical to retain the infrastructure and processes necessary to give specific groups of children a child trust fund. It refers back to the point made by my hon. Friend the Member for Birmingham, Yardley. I hesitate to correct him, but I will.

The current child trust fund system costs the taxpayer about £5 million a year. If we move to a reduced scheme, there will still be costs incurred. Prior to discussions with child trust fund providers, it was apparent that it would not be economically viable for them to run child trust funds at the lower level, as set out in the statutory instrument that the House passed in July. The chief executive of the Children’s Mutual was an exception to that, but the meetings that I had with stakeholders back in July indicated very clearly to me that if we were to continue to run the regime that has been in place since July, it would not be viable and we would have the same problem that we see with saving gateway, with insufficient numbers of people providing that product for it to continue.

Let me turn to amendment 20 and the proposal to continue the scheme for children in care born on or after 3 January 2011. I will not pick up the drafting problems of the right hon. Member for Delyn, but the amendments are significantly defective in the way in which they have been prepared. There are significant problems with continuing CTF eligibility. It would require local authorities to continue to retain the information systems that forward information to HMRC about children in care. They would need to keep staff to process that information or deal with any problems. As I said, it is unlikely that the providers would continue to offer the accounts. There are costs to local authorities of making top-up payments as well. It costs £22 on top of the amount to make those payments. Clearly, that is money that could be spent on improving the life chances of children who are in care. There are other ways of helping. We have talked about the pupil premium.

Kate Green rose—

Mark Hoban (Conservative, Fareham)

The consultation from the Department for Education specifically included looked-after children as a group that could benefit from that payment. There is clearly a trade-off.

Mr Hanson rose—

Mark Hoban (Conservative, Fareham)

I want to make some progress. We have not made much progress this morning and I am conscious that we want to cover these and other amendments.

David Hanson (Labour, Delyn)

It is normal courtesy to give way.

Mark Hoban (Conservative, Fareham)

I am grateful for lessons in etiquette from Labour Members. I spent enough time in Opposition to know exactly how these things work.

There are different ways of trying to meet the needs of looked-after children. The pupil premium is one way to do that.

David Hanson (Labour, Delyn)

Will the hon. Gentleman give way?

Mark Hoban (Conservative, Fareham)

People need to make a choice about how scarce resources are used and the most effective way of doing so. There was some discussion about whether the children’s ISA would cover looked-after children. We could encourage corporate parents to make contributions to a children’s ISA.

David Hanson (Labour, Delyn)

Will the hon. Gentleman give way on pupil premiums?

Gary Streeter (Conservative, South West Devon)

Order. The Minister has made it clear that he will not give way at the moment. It is up to each individual Member to decide whether to give way.

Mark Hoban (Conservative, Fareham)

There are ways in which corporate parents could contribute towards the junior ISA, to help provide a sum for children who are in care. It is worth bearing in mind that children remain in care for three years on average, so we are talking about a potential contribution of £300 for most children in care. I have mentioned the pupil premium and the possibility of local authorities acting as a corporate parent in connection with the junior ISA. Children who are in care at the age of 18 and who go on to higher education will be in receipt of a £2,000 bursary from their local authority. That is a statutory requirement. There is a danger of looking at the child trust fund in isolation and not thinking more broadly about other mechanisms of support.

The right hon. Gentleman mentioned the intervention of his right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) on the Prime Minister. I have been in contact with the right hon. Gentleman, and we will be meeting next week to talk about the matter in more detail. The Prime Minister said that there are alternative ways of saving, such as the children’s ISA. I look forward to working with the right hon. Member for Wythenshawe and Sale East to see what ideas he has about how the children’s ISA could be used to encourage more support for children in care.

Amendment 21 relates to disabled children. There are issues of practicality to looking after children who are in care. Disabled children are a relatively small group, and it would not be practical to retain the infrastructure and processes necessary to give them a child trust fund. It may be difficult to find institutions that are prepared to offer those accounts. Therefore, it is not right to continue CTF eligibility for those groups. However, the money that would have been spent on additional payments into CTFs for disabled children will be recycled to provide additional respite breaks. The money to support disabled children will be used in a more immediate and targeted way.

The hon. Member for Edinburgh East raised the issue of people assuming or believing that money in child trust funds can be taken into account in the calculation of benefits. That is explicitly not the case as such matters fall outside the benefit system. Any money put into a child trust fund would be excluded from the calculation of benefits, and that is an important reassurance. We must ensure that the information provided by HMRC is clear that child trust funds are excluded from the calculation of benefits.

Amendment 22 deals with the poorest third of children. It raises an issue that we must tease apart. One argument for child trust funds is about asset-based welfare, and another argument is that such funds encourage a savings habit. During the 2008-09 financial year, only 13% of the poorest families made contributions to a child trust fund. It is not clear that a savings habit has been encouraged as a consequence of child trust funds.

Alison McGovern (Labour, Wirral South)

Does the Minister have figures for years other than the financial year 2008-09?

Mark Hoban (Conservative, Fareham)

Those are the most recent figures available. Hon. Members will have argued that the child trust funds create a long-term habit, but if after six years the scheme has not demonstrated a significantly higher impact, I would question how effective it will be in the long term.

Alison McGovern (Labour, Wirral South)

I asked that question because 2008-09 was a special year in our economy. We had seen a massive global financial crash and those on lowest incomes were likely to be feeling under extreme financial pressure. I find it difficult to accept the Minister’s argument that we have not got a savings culture because only 13% of people on low incomes contributed to the fund in a year when they were likely to have lost their job, perhaps with the possibility of losing their home, and to have been under extreme financial pressure.

Mark Hoban (Conservative, Fareham)

The hon. Lady makes a point, but let us look at the facts. Just 13% of families from the lowest income groups made a contribution towards their children’s CTF. That does not suggest strong evidence that the CTF has provided for or created a savings culture in this country. I would cite that evidence. The big question is: how do we use the resources we have in the most effective way to improve the life chances of children in that income group? We believe that it is more important to provide that financial help now for those who need it, instead of locking away public expenditure on assets that cannot be touched for 18 years.

David Hanson (Labour, Delyn)

Why then did the hon. Gentleman commit in his manifesto in May to keep the child trust fund for the poorest third of children? Did he not consider those arguments before he put that in his manifesto?

Mark Hoban (Conservative, Fareham)

We went through that on Thursday afternoon. The right hon. Gentleman knows exactly what the situation was, but let me just remind him. We had an election, there was no clear outcome, we formed a coalition with the Liberal Democrats and the measure was reflected in the coalition agreement. That agreement is the programme for government that we are implementing, and which underpins the measures in the Bill. I do not apologise for implementing that agreement; it is an agreement that we reached. The decisions are not straightforward, and there might be others that we would prefer to make in different circumstances, but that is the measure that we are implementing and this is the structure of the Bill.

David Hanson (Labour, Delyn)

Will the Minister give way on that point?

Mark Hoban (Conservative, Fareham)

No. We dealt with the issue at some length on Thursday afternoon and I do not want to bore the Committee by repeating the argument. [ Interruption. ]

Gary Streeter (Conservative, South West Devon)

Order. Let the Minister continue, please.

Mark Hoban (Conservative, Fareham)

There is a clear school of thought among Labour Members, which the hon. Member for Edinburgh East expressed well, as did her hon. Friend the Member for Wirral South. They would much rather preserve long-term programmes, at—I think the implication was—the expense of short-term programmes, or through higher taxes or more borrowing. They never quite articulated what would replace our spending reductions. Carl Emmerson of the Institute for Fiscal Studies, again pointing to the argument about trying to use money carefully and wisely now to improve children’s life chances, said:

“I would look at spending money on improving education or on increasing the incomes of low-income families, rather than a lump-sum payment to them at birth that can be spent in 18 years’ time.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 8, Q6.]

That is an important and powerful point. We should be taking steps now to improve children’s life chances, particularly at this point when we have to make tough decisions about how we utilise taxpayers’ money.

We are scrapping the child trust fund, and there are other ways in which we will tackle some of the issues around life chances; I mentioned the pupil premium earlier. When we looked at the options for reducing the spending on the child trust fund earlier this year, we decided that it was right to end eligibility altogether, including for those on lower incomes. That maximises the savings that we can make on child trust funds, and the money will therefore be available for the other priorities.

There are some practical problems with keeping the CTF in place for children in lower-income families, as in the amendments. How do we go about calculating who the poorest third of children are? The Opposition propose what sounds like a new system of means-testing, which suggests that decisions should be based on someone’s income at birth. That is a snapshot; it does not consider how a family’s income would—

David Hanson (Labour, Delyn)

Will the Minister give way on that point? Will he give way on that point?

Mark Hoban (Conservative, Fareham)

No. The right hon. Gentleman is getting terribly excited. Just because a family is on a low-income when a child is born does not mean that it will be in the same financial situation when the child reaches 18. So, the amendments are neither fair nor well targeted. It is not clear how determining the poorest third of households could operate in practice. The right hon. Gentleman suggests that the Office for National Statistics would advise the Chancellor, but ONS data are, of course, annonymised, so it would be hard to identify to which households Her Majesty’s Revenue and Customs would be required to make the payments.

David Hanson (Labour, Delyn)

I am interested in how the hon. Gentleman himself would have calculated who the poorest third were, given that according to his May manifesto, the scheme would have applied to the poorest third. Had he won a majority in May, presumably he would be introducing a scheme that included the poorest third.

Mark Hoban (Conservative, Fareham)

Being a practical man, I would have simply linked the child trust fund to an existing benefit. We would have gone down the passporting route. There are plenty of examples of passported benefits that one could have used in constructing the amendments.

In conclusion, the Opposition’s arguments do not take into account the practical problems attached to making the payments to these groups. Taxpayers’ money would have to be spent on keeping the scheme alive and CTF providers are reluctant to continue on the current low payment levels. The money involved will be spent more wisely by investing in the pupil premium and by reducing the deficit, which will in turn reduce the interest costs that we pay. I believe that the measures in the Bill are practical answers to the problems that we face. I ask the right hon. Gentleman to reflect carefully on his commitment to spend taxpayers’ money on unnecessary administration costs, and on whether there are better ways in which we might help these disadvantaged groups.

David Hanson (Labour, Delyn)

I am disappointed by that response. The Minister did not answer the key questions that we put to him about the replacement for the child trust fund and the impact on looked-after children, the poorest third of children and children in receipt of disability living allowance.

To be frank and open, I accept that the amendments may not be perfectly drafted. That is the nature of Opposition proposals. We do not have the resources of the Treasury and parliamentary counsel. However, we have tried to raise issues. I would be happy not to press the amendments if the Minister said that he would put the might of the Treasury and parliamentary counsel into finding policy conclusions that secure his manifesto commitments and provide for the needs of the three groups that we are discussing. He has not done that because he does not believe in supporting those three groups.

Given that the Minister would not accept interventions, particularly on the pupil premium, I will ask him further questions now. First, will he confirm that the pupil premium applies only to England?

Mark Hoban (Conservative, Fareham)

This is not a general debate about the pupil premium, but I will answer. The pupil premium affects the education budget and it applies to England. The right hon. Gentleman is aware that through the Barnett formula, increases in education and health spending flow through to the resources available for the nations of the UK. It is down to the devolved Administrations to make choices about those resources.

David Hanson (Labour, Delyn)

We are straying into the next set of amendments, but has the Minister discussed with the devolved Administrations the implications of the pupil premium and the withdrawal of the child trust fund? He has introduced the idea that the pupil premium is some sort of salvation from ending the child trust fund, and that it will deal in particular with the children in the poorest third of households, who are specified in amendment 22. He knows that the pupil premium is an England-only invention. It does not apply to children in my constituency in Wales, in the constituency of my hon. Friend the Member for Edinburgh East in Scotland or in the constituency of the hon. Member for South Down in Northern Ireland. It therefore will not help the poorest third of children across the United Kingdom, as would amendment 22. The pupil premium is a red herring in relation to that amendment and the Minister knows it. Even under the Barnett formula, the Welsh Assembly Government will lose £1 billion of resources over the next four years because of his Government’s comprehensive spending review. The pupil premium will have no impact on the objective of amendment 22.

I am pleased that we have nailed good and proper the assertions of the hon. Member for Birmingham, Yardley on the cost of maintaining the child trust fund in future years. I thank the Minister for his clarification. I had put the figure at about £2.6 million and the Minister said that it would be about £5 million, less the costs of continuing to run the scheme. I think that we are in about the same place, and about £45 million lower than the hon. Gentleman’s assertion.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I apologise to the Committee for saying £50 million when it should have been £5 million. However, that does not affect the argument.

David Hanson (Labour, Delyn)

I may have a rudimentary knowledge of mathematics, but the difference between £5 million and £45 million is significant.

John Hemming (Liberal Democrat, Birmingham, Yardley)

It does not affect the argument, because we would still be spending £3 to put £1 in somebody’s pocket.

David Hanson (Labour, Delyn)

The point we have been making is that existing recipients of the child trust fund—again, I must declare an interest because one of my children is an existing recipient—will be managed for the next 18 years by a computer system operated by HMRC. A child born on 3 January 2011 will reach their 18th birthday on 3 January 2029, and the scheme will operate for those years, irrespective of clause 1, because it is still operating, with children receiving a lower payment since August and a higher payment before August. The costs are still there, and the three amendments therefore simply represent additional costs as a result of the direct payments made into accounts and the minimal additional cost of the administration. If the hon. Gentleman can give evidence to the contrary, let him do so now.

John Hemming (Liberal Democrat, Birmingham, Yardley)

My understanding from the Minister is that the cost saving from ceasing to open new accounts was £5 million a year.

David Hanson (Labour, Delyn)

There will undoubtedly be costs involved in managing the scheme after 3 January, but there will be costs involved in managing it after 3 January come what may, because of the current cohort of people who will matriculate at some point between 3 January 2011 and 3 January 2029.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I understand from being corrected earlier that marginal costs of about £5 million a year will be saved by stopping the opening of new accounts. There are also the additional costs encountered by providers, which are not covered in the £50 fee, which is another issue.

David Hanson (Labour, Delyn)

Indeed. There will be additional costs covered by the providers. Mr Graeme McAusland of The Children’s Mutual said:

“We recognise that we have a large number of these accounts that we have to run for a long period of time and we are perfectly capable of doing that, and we will be doing that.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 45, Q131.]

So there is a cost to the providers, which they are happy to absorb. Smaller providers will find it difficult—that is the nature of the position the Minister has put them in—but the largest provider will find it easy. There will be costs to the Treasury in maintaining the system for the next 18 years, unless the Minister comes back with a Bill in a year’s time, when the dust has settled, and says, “Let’s cease the child trust fund operation to date.” Who knows what he might be capable of in due course? As of today, however, the scheme will run until 3 January 2029 for a child born on 3 January 2011, so there will be a continuing cost. The marginal increase in the costs for all three groups is a price worth paying to support looked-after children, the poorest third of children and children on disability living allowance.

I say genuinely to the Minister that the amendments might be flawed and might not meet the requirements of Treasury counsel in their entirety, but they meet the objectives that he set as a shadow Minister when the Conservative party’s manifesto was compiled. If there are policy difficulties with the poorest third, disabled children and looked-after children, that would have been reflected in his manifesto commitment. With another 20 seats in Parliament, he would presumably have been fulfilling that manifesto commitment.

Lyn Brown (Labour, West Ham)

I doubt it.

David Hanson (Labour, Delyn)

My hon. Friend expresses some doubt as to whether he would have done that. I respect my hon. Friend, but I will give the Minister the benefit of the doubt.

Lyn Brown (Labour, West Ham)

My right hon. Friend is too generous.

David Hanson (Labour, Delyn)

Generous I may be, but I will give him the benefit of the doubt. He wished to go into the election to provide for the poorest third. Whatever mechanisms he has mentioned today, if my mechanism is not right, I will happily withdraw it. Let him table an amendment on Report that ties the provisions to benefits—I hope that he will. [ Interruption. ] I might even table an amendment on Report that ties them to benefits—I am grateful for the suggestion. If the Minister lets me, I might even have the use of Treasury counsel so that we can draft the amendments collectively and so that they are acceptable to the Minister. The Minister could then vote for his manifesto commitment and achieve what he said he would do in May. Otherwise, I will have to accept that he does not want to meet those commitments. Whatever his post-May commitments, he thought pre-May that that it was a good idea to do what we propose because it was helping the poorest people to achieve some capital assets at the age of 18.

I am grateful that the Minister is meeting my right hon. Friend the Member for Wythenshawe and Sale East. Before we conclude, will he tell the Committee whether he has any concrete proposals to take to that meeting after what the Prime Minister said? We are being asked to support clause 1 and to withdraw the amendment on looked-after children or it will be voted against. What is the alternative for looked-after children? Is it solely the junior ISA? If so, as my hon. Friends have asked, how do we get people to save who have a low asset base and whose parents are dead, in prison, not interested in their children’s future or incapable through drugs or alcohol or for other reasons? The reason why children are in care is that parental involvement is absent. How on earth can parents support a junior ISA when they cannot manage their children in any way, let alone in financial contributions?

Alison McGovern (Labour, Wirral South)

Does my right hon. Friend agree that the concern is that we are removing a vehicle to provide an asset for looked-after children without asking what its replacement will be? There has been some speculation about the possibilities of ISAs, but to anybody with any experience of the care system, it seems unlikely that that will ever come about. That demonstrates the importance of the amendment.

David Hanson (Labour, Delyn)

Again, I would be able to answer all those questions in a better frame of mind if I knew exactly what the junior ISA or its replacement will be.

Mark Hoban (Conservative, Fareham)

Without wishing to be tedious and repetitious, I said in my remarks on this group of amendments and at least twice on Thursday that it would be open for local authorities, as the corporate parents—perhaps the hon. Member for Wirral South would like to listen—to contribute to junior ISAs on behalf of looked-after children. They could take that responsibility. In the same way that they contribute to CTFs now, they could contribute towards junior ISAs for looked-after children. That is a clear way to respond to the gap opening up as a consequence of the removal of CTFs and provide a practical method for local authorities to support looked-after children.

David Hanson (Labour, Delyn)

I welcome that and look forward to the Minister’s fleshing it out with my right hon. Friend the Member for Wythenshawe and Sale East. I also look forward to some further fleshing out on Report. At the moment, we still do not know what the cap on the junior ISA will be or who will provide it. We do not know how it will be backdated; possibly from October next year. We do not know much of the detail. We are being expected to vote down or withdraw the amendments and accept a clause that abolishes what is and replaces it with what might be.

I am happy to reflect on all those matters, but the Bill will not be considered in this Committee alone; it will be considered on Report on the Floor of the House as well as in another place just down the road. Another place might take the view that looked-after children are particularly important, and might reflect some of our amendments. Given that the Bill must be enacted by 3 January and that another place might want opportunities for long discussions of it, the Minister has a tight timetable. I suggest that he consider the matter urgently with my right hon. Friend the Member for Wythenshawe and Sale East and propose a suggestion. Otherwise, he might find that Members in another place spend a long time asking why an alternative is not in place and discussing the matter in detail, and I believe that Bills cannot be timetabled in the Lords. The Minister needs to come to some urgent conclusions on those matters in due course.

For the record, since this debate began, evidence has come to my attention from the Runnymede Trust, which is focusing on the decision to scrap child trust funds and saving gateway accounts and the disproportionate effect that it will have on black and minority ethnic people, who, sadly, form the majority of the poorest cohort of our society. The Runnymede Trust’s evidence to the Committee has assessed why assets matter in a report. Paragraph 2 of its evidence says:

“One of our key findings is that Black and minority ethnic (BME) people have fewer and lower-value asset-holdings than white people. Although there are many reasons for this lower asset wealth, asset-building policies could potentially provide BME people with different and multiple benefits.”

Within that poorest group of the population, there are even poorer groups who will be disadvantaged further by these issues.

The three amendments have value. Although technically flawed, I make the offer to the Financial Secretary to withdraw them if he brings them back on Report, looks at the issues in detail, fulfils his manifesto commitments and drafts amendments that help, in his discussions with my right hon. Friend the Member for Wythenshawe and Sale East, create something positive on looked-after children, over and above the ISA, and clarifies how it will work. If he looks at the poorest third of children and drafts an amendment accordingly, which maintains the scheme for them, and if he looks at disability living allowance and does the same, he will be reflecting what he said in February and what he said during the election campaign. He will also do a service to those three groups of people and ensure that we do not enhance inequalities.

Kate Green (Labour, Stretford and Urmston)

Does my right hon. Friend agree that it would helpful if the Financial Secretary could table an amendment that would protect one of the important features of the child trust fund—I understand that it cannot be available in the junior ISA—which is the progressive nature of the double payments for the poorest children, including as my right hon. Friend has pointed out, children from black and minority ethnic families? Would it be helpful to have an amendment from the Financial Secretary—it may be based on the junior ISA if that is the route that we are taking—which would protect that progressivity with a double payment?

David Hanson (Labour, Delyn)

My hon. Friend makes a valuable point. From my perspective, we were looking at how we could give the Financial Secretary an opportunity to reflect on these matters. As I have said to him, I am happy to withdraw the amendments and for him to bring back suggestions to the Committee. Would he care to do that? His silence suggests that he would not. On that basis, flawed though these amendments may be in their drafting, they establish key principles that the Opposition wish to see maintained. I have moved a long way in saying that we will accept a lower rate for these three groups in order to salvage something from the child trust fund. The Financial Secretary has rejected that offer. We maintain our position of integrity on clause 1, and we will reflect on that later.

John Hemming (Liberal Democrat, Birmingham, Yardley)

On a point of order, Mr Streeter. On the latter two Divisions, would it be possible to truncate the timetable?

Gary Streeter (Conservative, South West Devon)

The Questions will be put formally at that stage.

John Hemming (Liberal Democrat, Birmingham, Yardley)

There will be three votes and there is no sense in hanging around with the doors open.

Gary Streeter (Conservative, South West Devon)

Leave it to the Chair.

David Hanson (Labour, Delyn)

I beg to move amendment 23, in clause 1, page 2, line 8, at end add—

I have tabled this amendment for several reasons. We have just seen an example of why consultation is required in the last contribution. Even then, the Minister indicated that the pupil premium was the solution to many of the issues relating to looked-after children when he knows that that does not apply in Scotland, Wales or Northern Ireland and is an England-only matter. More than that, it is important that we consider the impact of the abolition of the child trust fund on Wales, Scotland and Northern Ireland.

I represent a seat in north Wales, close to the English border and adjacent to the constituency of my hon. Friend the Member for Wirral South, which is in England. I live two miles from the English border but because of that—again, I declare an interest—my youngest child, Daniel, is in receipt not only of a child trust fund from the UK Government, but a top-up grant from the Welsh Assembly Government. What discussions, not just at official level but at ministerial level, has the Minister had with those who are elected to the Welsh Assembly and who are currently paying additional resources into the child trust fund for the Welsh Assembly Government?

In addition, the Welsh Assembly Government currently pay an additional premium to individuals on lower incomes of £100 top-up, which is for those children in receipt of free school meals or of child tax credits in 2009-10 when the household income was not greater than £16,040 or, indeed, in receipt of child tax credits in 2009-10 and claiming income support, income-based jobseeker’s allowance, pension credit, employment and support allowance. Importantly, the claims must be made by 31 January 2011.

On 11 October, the Deputy Minister for Children, Mr Huw Lewis AM said:

“Unfortunately earlier this year the UK Coalition Government made a decision to end the Child Trust Fund which will clearly disadvantage children in Wales. This runs counter to our aim of reducing the chances of poorer children in Wales becoming poorer adults.

Inevitably this announcement does have a knock-on effect on what we can do in Wales. I want to assure everyone that the Welsh Assembly Government will do everything it can to explore ways in which our existing investment in setting up Child Trust Funds in Wales can be protected and to see what we can do to maintain our commitment to Wales’ children and young people into the future.”

The key point is whether the Financial Secretary has met the Minister for Children in Wales? Has he had discussions at an official level with the Welsh Assembly Government about the development of the child trust fund in Wales? What is his view of the Welsh Assembly Government’s continuing payments post-3 January to any particular system in place, given that the Treasury is still running the scheme for those who exist before 3 January 2011? What is his view on allowing the Welsh Assembly Government to continue those contributions after 3 January?

It would be helpful if the Minister can clarify his view on the discussions and the Welsh Assembly Government because the Assembly has to prepare the draft Budget, which will be published on 17 November—in a couple of weeks’ time—and the Welsh Assembly Government need to make decisions about their contribution to the additional payments and thus to the payments of children in Wales as a whole. The Welsh Assembly Government are not controlled solely by my party. Interestingly enough, they are part of a coalition of my party and Plaid Cymru, the Welsh nationalists. They have determined that they want contributions to the child trust fund and, as far as I am aware, they have come across no opposition from either the Liberal Democrats or the Conservatives in the Welsh Assembly Government. I should be interested in whether there is scope for the Financial Secretary to examine such issues in detail.

The Welsh Assembly Government have undertaken those payments, because they recognise that there is great poverty in Wales, particularly in many of the valleys and inner cities, including areas of my constituency. It is a poverty of opportunity, of aspiration and of assets for people at age 18. It is highly unfair that the Welsh Assembly Government can take a political decision to use their resources to support the child trust fund, but that at the same time the Government are not listening to what is being said about the need for that in Wales as a whole. Can the Financial Secretary tell me whether he has met, is meeting or will meet the Minister—not just officials—to discuss the implications of the policy decision?

Alison McGovern (Labour, Wirral South)

My right hon. Friend mentioned earlier that our constituencies are close to each other, on the border of the River Dee. It is important for those of us who represent English constituencies very close to Wales that there is a high level of co-operation, discussion and consultation with the Welsh Assembly Government. That enables such discussions to be embedded in whatever policy is taken forward, so that it works well across the piece and so that people on the English side of the border understand Government policy at the UK level. Does he agree that it is important that those people know that there is co-ordination with their near neighbours in Wales?

David Hanson (Labour, Delyn)

I welcome you back to the Chair, Mr Howarth.

Before the break we were discussing amendment 23, which provides that formal consultation be undertaken with the Welsh Assembly Government, the Scottish Parliament and the Northern Ireland Executive before the implementation of clause 1. I indicated why I felt it important to discuss the matter with the National Assembly for Wales, which will contribute an additional top-up to the child trust fund of some £50 in 2010-11 for children who were born in the defined period, have a trust fund account and are resident in Wales on a given date. There is a further top-up of £100 for children who are claiming free school meals, or are in receipt of child tax credit or other benefits, which I listed.

Focusing on the National Assembly for Wales, it is important to ask the Minister what formal consultation has taken place, not just at official level, but at ministerial level. Several issues bear consideration in relation to the impact on the National Assembly of clause 1, not least of which is the impact on its continuing to contribute the £50 and £100 to child trust funds after 3 January 2011.

I refer the Minister to the proceedings of the National Assembly for Wales on 16 June 2010, when Jane Hutt, who is the Minister for Business and Budget in Wales indicated her concern that the reduction and stopping of all Government contributions to child trust funds would have a dramatic effect. In the Record from that date, she stated:

“That will affect around 32,000 children in Wales annually, who will miss out on a child trust fund account altogether, as well as at least 135,000 children who will now not receive the additional UK Government contribution at the age of seven. The greatest effect will be felt by those who are already living in relative poverty.”

Her contribution leads me to believe that the National Assembly for Wales wishes the child trust fund to continue, because it is contributing, and the fund is a valuable asset in Wales that is helping to achieve the poverty target there. Has the Financial Secretary had any formal discussions with the Minister in the Assembly? If so, it might help the debate if he let me know so that we can decide whether to continue discussing such matters.

Mark Hoban (Conservative, Fareham)

We have.

David Hanson (Labour, Delyn)

With the Minister?

Mark Hoban (Conservative, Fareham)

We have had discussions with both the Minister and her officials in Wales and it is clear that the Welsh Assembly Government can continue to make payments into child trust funds for some time to come, because they make such payments at school age. It will also be open to the Welsh Assembly Government to continue to make payments into the junior ISA if they choose to do so.

David Hanson (Labour, Delyn)

I am grateful to the Financial Secretary. Those contributions will help. I do not know whether the consultations were formal and whether there has been a formal decision from the Assembly. The Financial Secretary has mentioned the junior ISA, but as yet, even Committee members do not know what its final format will be, which is why the amendment is drafted as it is. The provisions under clause 1 will come into effect on 3 January 2011. The National Assembly for Wales does not yet know—neither do we—the position with regard to the junior ISA.

I am asking not that the Minister stops his policy objective, but that before he implements the provisions in clause 1, there should be formal consultation with the Welsh Assembly, Scottish Parliament and Northern Ireland Executive. That seems perfectly fair because, for example, when the junior ISA is finally developed, it might be something that they wish to have a view on; I will elaborate in a moment. It seems to me that the Minister could continue the provisions of the child trust fund for eight, nine or 10 months until the junior ISA is in place, so that the Welsh Assembly, Scottish Parliament and Northern Ireland Executive can have a view on that and other matters.

Let me explain why, with the junior ISA. I have figures about the take-up of the current child trust fund with the National Assembly for Wales, the Scottish Parliament and the Northern Ireland Executive, which I will try to share with the Committee. I will compare them with a random borough and constituency, say Fareham, where there is an 83.5% take-up of the child trust fund before the automatic trigger comes into play and the state opens the trust fund for individuals. In none of the constituencies or boroughs in Wales, Scotland or Northern Ireland does take-up occur at anywhere near that level. It is 70.2% in Aberdeen, 78% in Aberdeenshire, 75% in Angus, 69.5% in Clackmannan and 67% in East Ayrshire. In Wales, it is 67.8% in Blaenau Gwent, 74.4% in my own area in Flintshire, and 80.5% in Powys, which is relatively high, but still not as high as in the Minister’s constituency. In Northern Ireland, the figure is 68.3% in Ards, and 54.8% in Antrim, which is a very low figure; it is 58% in Strabane, and around 68.8% in Down, in the area of my hon. Friend the Member for South Down. I could give all the figures if I wanted to filibuster, but I do not.

George Howarth (Labour, Knowsley)

Good. [ Laughter. ]

David Hanson (Labour, Delyn)

If the hon. Member for Devizes wants me to read out the figures for all the areas in Scotland, Wales and Northern Ireland, I am happy to do so. Who knows? I may yet do so.

I am simply making the point that if there is an 83.5% take-up in Fareham of the child trust fund opened by parents, compared with a figure as low as 54% in Strabane or Ards in Northern Ireland, or the lower figures in Wales, it may be interpreted in a number of ways, but it tells me that the chances of a junior ISA being opened and parents choosing to contribute to it would be higher in Fareham than they would be in Wales, Scotland or Northern Ireland. It would be worth while for the Minister, before he implements the legislation, formally to ask for the views of the Executives in Scotland, Northern Ireland and Wales about the figures and how we can make the junior ISA work better. If it is the case that clause 1 ends the child trust fund, I want the junior ISA to become a success and parents to try to contribute to it. If there is low take-up by parents of the current child trust fund—although there is 100% take-up, there is still low initial take-up by parents in opening the accounts in some areas—and in every county, constituency and borough in Scotland, Northern Ireland and Wales, it is lower than it is in Fareham, I want to see how we can generate take-up and ensure that we do that. The partners in the Executives of all three devolved Administrations will be keen to do that.

On the issues raised by the Minister regarding the pupil premium, there is an important point about how it is implemented in Scotland, Wales and Northern Ireland; we touched on it briefly before lunch. The Minister has made great play of the fact that the pupil premium exists and is a substitute for action on the poorest third of children in our community. I am pleased that my hon. Friend the Member for South Down, the leader of the Social Democratic and Labour party, is in the Committee today. She will know that the pupil premium does not operate in Northern Ireland. My hon. Friend the Member for Edinburgh East will tell me that it does not operate in Scotland, and I can confirm that it does not operate in Wales.

Mark Hoban (Conservative, Fareham)

Will the right hon. Gentleman give way?

David Hanson (Labour, Delyn)

I will show the Financial Secretary the courtesy of giving way in a moment, when I have finished this point.

The pupil premium does not operate in those three areas. There will be a Barnett consequential, which is probably the point the Financial Secretary wants to make. Would it not be useful, therefore, if there were full and frank discussions with the three devolved Administrations on the use of that Barnett consequential, and on whether, if a pupil premium had been in place before he cancelled the child trust fund—as he is doing for England—the loss for the poorest third of children might have been replaced through the pupil premium?

Mark Hoban (Conservative, Fareham)

As the right hon. Gentleman knows, the Barnett consequentials have been where education spending in England has increased, and that increase has flowed through in the settlement for Northern Ireland, Scotland and Wales. I would not presume to tell Ministers in Belfast, Edinburgh or Cardiff how to spend that money, and I am sure the hon. Member for South Down would not want me to do that. It is a devolved matter and it is for the devolved Administrations to decide how to spend the money; it is not for English Ministers to dictate that. That reflects the reality of the devolution settlement.

David Hanson (Labour, Delyn)

I would not expect the Financial Secretary to tell individual Ministers in each of the devolved Administrations how to spend the money. However, it is incumbent on him, before he abolishes the child trust fund, to know what they will do with that resource and whether they will use it. He should know whether the pupil premium will be in place in, say, the constituency of Wirral South, which I can see from my bedroom window a mile across the River Dee, but not in place in my constituency of Delyn, which is directly opposite. My hon. Friend the Member for Wirral South might have a pupil premium and I might not, but the Financial Secretary will abolish the child trust fund based on his belief that the pupil premium offers salvation for all.

I simply say to the Financial Secretary that the amendment would give him an opportunity to discuss in detail with Scotland, Wales and Northern Ireland those and other issues, such as the implementation of the junior ISA, and disability questions, which are largely devolved matters in the three areas. He would be able to have discussions with the Administrations before he abolishes the child trust fund. Whatever discussions he has had, a range of issues have been thrown up by this debate alone, so there needs to be further discussion. I would say, if I may be so honest, that if he gets his clause and abolishes the child trust fund, by all means let him do it, but let it be at a time when he has formally discussed the implications of that abolition with all the devolved Administrations.

This morning, the Financial Secretary said that he believes local authorities could contribute to the junior ISA for looked-after children. I recall that local government is devolved in Northern Ireland, Scotland and Wales, so it is important that he discusses with Ministers for local government in Northern Ireland, Scotland and Wales what the impact would be of local councils’ donating resources to looked-after children. I do not know if he has done that to date; he may want to tell the Committee whether he has met the three local government Ministers to discuss that issue, or whether he has had representations from them. He raised those issues this morning, and I think he should discuss them with the three devolved Administrations.

I make the same point in relation to tackling child poverty in Scotland, on which my hon. Friend the Member for Edinburgh East may wish to comment. There are proposals before the Scottish Executive to produce by April 2011 the Scottish implementation plan and strategy for the Scottish response to the UK Child Poverty Act 2010. That Act created statutory responsibilities for England, Scotland and Northern Ireland to meet targets to tackle poverty and the 2020 goal of eradicating child poverty. My hon. Friends and I, and indeed, the witnesses, believe that the abolition of the child trust fund will increase inequalities in our society. Has Financial Secretary discussed the 2010 Act with Scotland, Wales and Northern Ireland, and will the abolition of the fund make harder their task of eradicating child poverty in the three devolved regions?

There are many areas of extreme poverty in England, and my hon. Friends represent some of them. Having been a Northern Ireland Minister for two years, I know that it has areas of extreme poverty. I can go to parts of Belfast West, Foyle, Strabane, and Belfast North and parts of the constituency of my hon. Friend the Member for South Down and see poverty that is greater than in England. The Minister could accompany me to the south Wales valleys to see the poverty that exists there and the challenges that people face. There are different extremes of poverty in Scotland, Wales and Northern Ireland. I accept that places such as West Ham and your constituency of Knowsley, Mr Howarth, have areas of extreme poverty. However, I contend that the level of poverty is proportionally higher in Scotland, Wales and Northern Ireland. The Minister has a duty to consider the implications of abolition on looked-after children, the poorest third, disabled children and others in each of the devolved Administration areas.

Has the Minister met Nicola Sturgeon, the Scottish nationalist Deputy First Minister who has a responsibility for child poverty in Scotland? Has he had representations from the Scottish Executive on these issues? Will he, prior to the abolition of the child trust fund, discuss the issues with her? Has he met Alex Attwood, the Member of the Legislative Assembly who has taken over from my hon. Friend the Member for South Down? She was previously a Minister in the Department for Social Development, which has devolved responsibility for the child benefit system, child support, housing and other issues, all of which will feel the impact of child trust fund abolition and the wider poverty issues. That is worth discussing. Indeed, I have before me information dated 3 November. I looked up whether Alex Attwood had formally met the Minister—I googled that this very day. The answer was no, he had not, but he had met the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling) to discuss the impact on employment. If Mr Attwood had met the Minister, he would have put something out, as he did about his meeting with the right hon. Member for Epsom and Ewell. I wonder whether Mr Attwood has met the Financial Secretary to discuss these issues. My hon. Friend the Member for South Down indicates that he has not. In the evidence, it was very clear that some of the issues in the Bill—not just the clause that we are debating—are extremely important in Northern Ireland, and I hope that the Minister will look at all those issues in detail.

Finally, the amendment is important because the Welsh Assembly has budgeted for allocating this resource in addition to the child trust fund. It did so in good faith. It believed the Minister’s manifesto commitment before the election. The Northern Ireland Assembly and the Scottish Parliament would also have believed that manifesto commitment. On 6 October 2009, the Chancellor of the Exchequer said in a speech that is on the Conservative party website:

“child trust funds have not been as successful as many like myself hoped.”

But:

“We should continue paying them to the poorest families who often have no savings, and encourage them to use them more”.

That was a speech given by the Chancellor of the Exchequer, the right hon. Member for Tatton (Mr Osborne) before the election.

There has been long-term planning for child trust funds not only by the Treasury but by the Welsh Assembly Government, who invested time and money in developing a scheme, and by the Northern Ireland Executive and the Scottish Parliament, which have targets to reduce poverty. Frankly, the Minister should formally consult them before implementation, given all the things that we have said today on the new ISAs, disability and looked-after children. I want to ensure that all those issues are sorted out between the three devolved Administrations, who have a key role in helping to meet child poverty targets, and who will have a key view on whether the child trust fund abolition will help meet them. What type of discussions has the Minister had with the devolved Administrations? What was the quality of those discussions, and what feedback has he received? Does he intend to discuss with them the matters that he has considered since meeting them, such as child ISAs, disability living allowance and looked-after children, before implementation?

Although he will not drop the proposals completely, will the Minister accept the amendment to ensure that there is formal consultation before they are implemented? That would perhaps buy a few months in which the issues that we have discussed today might be teased out.

Margaret Ritchie (Social Democratic and Labour Party, South Down)

I strongly support my right hon. Friend’s amendment. As the Member for South Down and a former Minister for Social Development in Northern Ireland with direct responsibility for the social welfare and benefits system, I am well aware of the levels of deprivation, as is my right hon. Friend, who is a former Minister at the Northern Ireland Office.

There are 36 neighbourhood renewal areas in Northern Ireland, which are defined by the Noble statistics on deprivation. Over the past few years, we have tried to alleviate poverty in Northern Ireland by directing funding to those areas on a cross-departmental basis. I am led to believe that the Northern Ireland Executive, of whom I used to be a member, were not consulted about the abolition of child trust funds. There is considerable concern given that it is an area with high levels of deprivation. Was the Northern Ireland Commissioner for Children and Young People consulted about the legislation? That post is dedicated to addressing the needs of children.

It is interesting that children’s funds were established in the first mandate of the Northern Ireland Executive and the Northern Ireland Assembly. You, Mr Howarth, and my right hon. Friend the Member for Delyn might be particularly aware of that, because the previous Administration abolished them. There was a clear need for them at that stage.

The evidence of deprivation is still apparent. My successor in the Department for Social Development is discussing with Lord Freud the areas of flexibility in social security legislation. Although we recognise the issue of parity, it is possible to exercise flexibility to take account of special circumstances, such as poverty and the particular needs of rural areas, perhaps relating to inaccessibility.

Consultation is vital in taking account of the more acute levels of poverty. It is also important to address the particular needs of a region that is coming out of conflict. We are dealing with a legacy of nigh on 40 years of conflict and violence. The levels of deprivation are higher in areas of conflict. My right hon. Friend highlighted areas where the dependence on free school meals, benefits and other measures associated with poverty is much greater. There is a need for consultation with the Northern Ireland Executive, who are trying to address not only the levels of poverty, but the legacy of conflict. There is a need to underpin the new devolutionary measures in Northern Ireland and the new institutions of Government. One way to do that is to undertake the necessary consultation on the abolition of the child trust fund, and on the Government’s proposals to replace it. I therefore support the amendment.

Sheila Gilmore (Labour, Edinburgh East)

The Financial Secretary’s intervention demonstrated what is going wrong with the relationship between the current Government and the devolved Administrations. It is not as simple as saying, “We should not tell them or dictate to them what they do.” We are not yet in a federal constitution set-up, but we are also not in one where it can be said that, because we have devolution, we have no interest in what they do. That would be wholly appropriate if there were independence, but neither I nor Government Members support that.

We have an interweaving of our financial affairs in particular. The Scottish Parliament, until such time as any further political powers are devolved, which may happen in the future—I understand that the Government are committed to implementing the recommendations of the Calman report—receives a set amount of money from Westminster. Changes that are made in Westminster directly affect what is happening in Scotland. Yes, the Scottish Government have the ability to decide within that overall package how it is split up, but the fundamental decision on that total amount is very important.

As important as that total funding package is the impact of changes in provisions, which in this case come from the Treasury, but in other cases will come from the Department for Work and Pensions. What happens here will have an impact. The Scottish Government may take a different view, as other devolved Administrations have, of how they want to set about dealing with child poverty, but it is important first to have advanced notice of what may be happening, to be able to plan and to have consultation. That is not taking place, which is regrettable.

If the Government are committed to retaining the Union, and do not want to see further pressure from Scotland for independence, they are going absolutely the wrong way about it. We heard a lot about the respect agenda for the devolved Administrations initially, but in measure after measure we find that there has been little consultation and opportunity for those Administrations to come forward and say, “That doesn’t work, here is our other proposal”, or, “What can we work out to make this work better for us.” It has not taken place here and it does not take place in other measures. We are treading dangerous political ground if we keep that up.

Given that there are implications, it may be that the Barnett consequentials of increased spending, which may come through in the pupil premium in England, will affect Scotland. That may be the case, although I understand that overall the pupil premium is likely to be a substitute for other elements of education spending in England, in which case there will be no Barnett consequential. That is what we need to know and that is exactly what the Scottish Parliament needs to know. In that respect, I urge the Minister to accept the amendment.

Mark Hoban (Conservative, Fareham)

It is a pleasure to serve under your chairmanship, Mr Howarth. Let us be clear about the measures in front of us today and their relationship to the devolution settlement. The balance of the UK Government’s and the devolved Administrations’ roles and responsibilities is clearly set out in the devolution settlement. Child trust funds are a reserved UK-wide matter and therefore lie within the competence of Parliament. Given that, a formal consultation process with the devolved Administrations would not be appropriate. I do not believe that a requirement for that should be set out in legislation. As I said in an intervention on the right hon. Member for Delyn, the Welsh Assembly Government have been in contact with me about the abolition of the child trust fund, but neither the Northern Ireland Executive nor the Scottish Government have been.

We will continue to work with the devolved Administrations to ensure that they are aware of the Government’s plans, including how they might impact on individual Administrations’ current practices. My officials are happy to talk to their counterparts about it, and they have been in contact with the Welsh Assembly Government in particular. That Government will be the most directly affected devolved Administration because, unlike the Scottish Government or the Northern Ireland Executive, they make payment into CTFs for children living in Wales. What happens with those payments is entirely a matter for the Welsh Assembly Government. As I have said, they are currently made to Welsh children entering primary school and they will continue to be made for several years. It will be possible for the Welsh Assembly Government to make payments into junior ISAs.

Let me deal with whether CTF abolition will make child poverty targets harder to meet. That matter has cropped up a couple of times in our discussions. The reality is that, because child poverty targets are measured on household income, CTFs fall outside that calculation. They are deemed to be locked up until a child is 18 and are therefore not part of the calculation of child poverty. As I have said several times, delaying the end of eligibility for child trust funds would mean additional costs of up to £20 million a year if eligibility were to continue until April 2011, for example. If we accept the amendment, we would delay the date of abolition. That would not be a good use of taxpayers’ funds, particularly given that it is a United Kingdom matter not a matter for devolved Administrations. If the right hon. Gentleman chooses to press the amendment to a Division, I will ask my hon. Friends to oppose it.

David Hanson (Labour, Delyn)

That was short and sweet. I thank the Minister. Our discussions are greatly appreciated, but I do not accept his assessment. I fully accept that we are debating a non-devolved matter. As a Member of this House, I want clarity about what is a UK-reserved matter and what are devolved matters for the Welsh Assembly Government, the Scottish Parliament and the Northern Ireland Executive. I drafted the amendments in such a way because the devolved Administration in Wales have made a commitment to fund additional payments to the child trust fund for the future. I am still not clear about matters. I might be at fault, but perhaps the Minister can clarify whether the Welsh Assembly Government could set up a fund for children born post-3 January 2011. I suspect that, under clause 1, they could not.

Mark Hoban (Conservative, Fareham)

To be clear again and as I said in my remarks, the Welsh Assembly Government could continue to put money into junior ISAs for children in Wales. I said that in the context of local authorities, and the children in their care. The same applies to the Welsh Assembly Government. Third parties will be able to contribute to children’s ISAs so that children born after 3 January 2011 who live in Wales could, if the Welsh Assembly Government chose to spend their money in that way, receive a contribution from them into their junior ISA.

David Hanson (Labour, Delyn)

I am grateful to the Minister. I understood the junior ISA point. All I wanted to know was whether, if the child trust fund is abolished from 3 January as is set out in clause 1, there was still scope for the Welsh Assembly Government to contribute money to a new child trust fund. The only option for the Welsh Assembly Government to consider as part of their budget considerations is whether they wish to put money into a junior ISA—a tax-free saving vehicle for those who happen to pay tax. It would not be a universal payment, as the child trust fund payment is. The Welsh Assembly Government will have to consider and examine whether they wish to continue their contribution, based on the revised discussions.

I do not want to be repetitive, because we can fill our discussion time until 4 o’clock on Thursday without my needing to repeat myself, but we do not yet know the form of the new ISA. The Minister has not yet been able to come to us today and say, “This is what the new junior ISA looks like, this is what we have consulted on, this is its final form, this is the capped level, this is how contributions are made.” There are a whole range of issues that we do not yet know. According to the Minister’s own press release, which we discussed in an earlier sitting, the junior ISA, which is to replace the child trust fund, will not be in place probably until October next year, although admittedly it will be backdated to 3 January.

The Minister is asking the Welsh Assembly Government to take budgetary decisions in two weeks’ time on whether they wish to continue a £50 or £100 contribution without formal consultation, without knowing what the junior ISA is or how the backdating mechanism will work, and without their having yet decided whether they wish to continue that funding at a time when they are losing £1 billion because of the comprehensive spending review settlement. The Minister argues that, to compensate for poverty, the pupil premium will be put in place, yet the Welsh Assembly Government are already losing £1 billion of resources from the Conservative-Liberal Democrat Government as part of the comprehensive spending review settlement. Those are unknowns on which the Welsh Assembly need to be consulted.

My hon. Friend the Member for South Down has made valid points about the levels of poverty in the north of Ireland. There are real levels of poverty in Northern Ireland. That is in addition to the higher levels of poverty that we have in other parts of the United Kingdom, for the very reasons she mentioned. I was a Northern Ireland Office Minister for two years, and I would meet people who were the children and grandchildren of poverty. They were poverty-linked because of the difficulties with the troubles in the late ’60s and early ’70s. There was inter-religious and inter-community violence for many years, which has added to the poverty and the lack of investment in the area. The child trust fund, as a cross-community and cross-religion asset-building base, would have been particularly valuable in helping people when they reached the age of 18.

Again, I would not expect the Minister to spend the Northern Ireland Executive’s resource on their behalf, but I would expect him to discuss with them their challenging issues of poverty and what role the child trust fund played in that regard. A similar argument applies for Scotland. I am afraid that I am not happy with the Minister’s response. We need formal consultation and, in the interests of ensuring that the devolved Administrations get that, I would like to press the amendment to a Division.

David Hanson (Labour, Delyn)

I beg to move amendment 25, in clause 1, page 2, line 8, at end add—

I hope that the amendment, which I have moved to secure discussion of the issues, can be accepted by the Minister. Again, it may not be perfectly formed, and he may want to talk about the way in which we have crafted it, but surely the principle is right. We are not denying the Minister any legislative competencies under the order that we agreed on, I think, 20 July—that order reduced the payments for the child trust fund. We are not asking him to not abolish the child trust fund under clause 1. What we are asking him to do through the amendment is simply look in 12 months’ time at what the implications are, and produce a report for the House and the public at large on how well it is all going, as I am sure it will be going very well at that particular point in time.

The starting point for the amendment is that we are looking at the situation from 3 January 2011. Let me remind the Committee of what that will be. All Government contributions to child trust funds will have ended. The eligibility of children born after that date will have been scrapped. That means that there will be no £50 for every child—or no £250 before the Child Trust Funds (Amendment No. 3) Regulations 2010—no £50 top-up for the poorest, no top-up for disabled people, and no additional payments for children in care. It means none of the payments for seven-year-olds that were put in place before the regulations, and it potentially means that we will have a new child ISA in place at some point in 2011, but on what date we do not yet know. It also means that current providers will have provided, for 12 months, a child trust fund for people who were eligible before the abolition, and will be looking at how that impacts them in 2011.

The amendment does not seek in any way, shape or form to negate the frankly appalling impacts of the Bill, and of the regulations in July. All it seeks to do is ask the Minister, “Please, by 3 January 2011—one year away—will you bring to the public domain an assessment of how it is all going?” I hope that he can do that on a regular basis, post-2012. We have rehearsed the arguments here in much detail, but there are several points that I think we need to look at, and we need to look at the impact of the policies 12 months on—perhaps even five years on and beyond, but certainly, in principle, 12 months on.

The first point is: what will be the impact on the savings ratio, which the child trust fund has been so successful, in my view, in improving to date? We have seen incontrovertible evidence during the course of the debate that the level of saving has risen because of the child trust fund, which is focused on children. I would like to know whether, in the 12 months after the abolition of the child trust fund and the contributions, the savings ratio goes up or down, whether it stays the same or changes, and whether the parents of the poorest children in our communities are saving less, the same amount, or more. I would like to know whether payments, either at the higher level or the lower level, have been a major kick-start and a generator of contributions—that is the case we made in Committee. It would be useful to know, 12 months after the abolition of the child trust fund, whether saving has tailed off. I would like to know that, but not in order to beat the Minister over the head with it. I hope that whatever succeeds the child trust fund, hard though we are fighting to save it, has a useful function, is worth while, and meets the objectives that we in Committee seek—the objectives of raising savings and dealing with some of the most challenging people in our community.

Kate Green (Labour, Stretford and Urmston)

Does my right hon. Friend agree that such a review should not simply look at the savings ratio in the year ending March 2012, but should compare back over perhaps a period of five years, in light of the point made by my hon. Friend the Member for Wirral South this morning? We have had a couple of untypical years in the economy, which means that we need a history of savings ratios to be able to make a meaningful comparison with more stable times.

David Hanson (Labour, Delyn)

My hon. Friend makes a valid point. Echoing what my hon. Friend the Member for Wirral South said this morning, we had some challenging years when the economy was in a difficult place, and the efforts of the previous Government and this Government to get us out of that are important. We need to look at the trajectory over the first few years of the child trust fund and over the next 12 months.

My first contention is that the review would be useful; not to revisit the battles that we are having in Committee, on the Floor of the House and, possibly, in another place, but simply for the world to know whether the child trust fund did what it said on the tin, which was to raise the savings ratio and deal with the poorest in our society. We should see whether the next 12 months see a rise, a fall or stability in the level of saving compared with previous years and that period particularly.

Secondly, what is the impact in terms of some of the issues we talked about this morning—for example in relation to looked-after children? The payments will stop on 3 January and we will have 12 months, if the review happens, to see what has happened. The Minister said that local authorities could give money towards the ISAs. I would like to know, formally, in 12 months’ time how many local authorities have done so, which ones, and how much they put in. We do not want a postcode lottery of local authorities determining who provides the money.

It might be fair for Cornwall county council, the hon. Member for Truro and Falmouth’s council, to put money into the child ISA, but Hereford and Worcester county council—Worcestershire county council, or whatever it is called nowadays—might not put in money. In my area, Flintshire county council might be able to do it. The borough of Newham might not be able to, because it has a range of pressures due to poverty and other difficulties faced by the constituents of my hon. Friend the Member for West Ham, which we can compare with the pressures in Reading, for example. I do not know the answers, but in 12 months it will be worth examining whether looked-after children are being treated as equally as they were under the child trust fund by whatever arrangements replace it on 3 January next year.

It is fair to make an assessment. The proposal is not meant to be politically charged; it may be that Tory authorities put money in and Labour authorities do not. The assessment might show my colleagues in local government in a bad light or show the Liberal Democrats in a bad light. I do not know, but we need to know which authorities are paying—urban, rural or city. We need to know about those issues. It is an important thing to consider 12 months on.

Alison McGovern (Labour, Wirral South)

Does my right hon. Friend agree that the discussions we had this morning were instructive in showing how difficult it can be to get the right products to encourage the savings culture that we all want? A report, after a year, would give us all a chance to check and ensure that the product is right.

David Hanson (Labour, Delyn)

Indeed. The difficulty I face with the general suggestion, and which I put to the Committee in relation to my amendment, is that perhaps 12 months is too soon. Maybe we need a review later on. We learned today that the junior ISA will not be ready until October next year, so it will not have been running successfully or for very long before the review takes place. I hope that the Minister will indicate that he accepts the amendment and, potentially, will review it further down the line.

The amendment is not about being malicious about the revised product or about the abolition of the child trust fund. I simply want to say to my hon. Friends and to the Committee that when we take action it is important that we do not simply forget about it; we need to review it to see whether the replacement product meets the objectives for the previous product. Those were to increase the savings ratio and to try to give cash assets to the poorest and most vulnerable in our society. We need to look at the impact of the measure on the three devolved Administrations and to ensure that we do so in a way that learns lessons from the 12-month operation.

As I said, the effect on looked-after children could be one area we look at. The Minister suggested that looked-after children could be supported by local authority contributions. It is important to consider the point about a postcode lottery. We will know within 12 months what the policies are of each local authority in relation to that. The impact on children with disabilities, through the abolition of the disabled person’s additional finance, is equally important. Scope’s evidence suggested that it was extremely worried about that. I have taken that evidence in good faith, and I would like to see a review of whether the evidence rolls out in practice to impact on those particular areas.

We have had some fun, kicking around different manifesto commitments. The important point, however, is that the Minister believed, earlier this year, that in making a manifesto commitment to look at the poorest third of children, it was important to maintain the child trust fund. He must have had a reason for that. He needs an opportunity to reflect on whether the total abolition of the scheme is detrimental to the poorest third of children. I want him to go back to his electorate and say that he has completed his manifesto commitments. If the removal of the child trust fund, as witnesses have said, will increase inequality, damage the poorest third of our community and make the poor poorer, he needs to reflect on that in 12 months’ time to see whether he needs to tweak his junior ISA.

We need to look at how the junior ISA is operating in practice, although I accept that January 2012 may be a little early to do that. We need a formal review of whether that product is meeting its objectives. That could be commenced in January 2012. I hope the Minister will do it on a regular basis. The review could first look at who is contributing to the junior ISA. Is it, as in the figures I have quoted on the child trust fund, the wealthier areas of the country that have higher take-up, such as, dare I say, Fareham? Those areas have a higher take-up, as high as 83%, than some areas in Northern Ireland where it was as low as 50%. Is the junior ISA being taken up by those in the poorest third of constituencies? Are people in West Ham contributing to the junior ISA to the same degree as those in Fareham? That is not to be qualitative about the outcome of the discussion, but we need to know how the junior ISA is working in practice, downstream, so that we can judge whether it is meeting its objectives.

We also need oversight of what the impact is of the loss of that resource going into the child trust fund as a whole, in relation to the higher and lower payments across the board. That would be useful. I need the Minister to tell me what the costs of administering the remaining child trust fund scheme are in that 12-month period, how those costs are being borne by the Treasury and what their impact will be on his deficit reduction plan. We need to look at those issues as a whole.

My last point is about the providers of existing child trust funds. We have heard from the Children’s Mutual and others. Children’s Mutual is the major provider of existing child trust funds. It will have a legacy provision for many years to come—possibly as many as 18 years from 3 January 2011. It is important that we look at what impact clause 1 has on the providers in 12 months’ time. Each and every provider entered into the child trust fund in good faith. They invested resources in developing the child trust fund product in good faith. They even, before the general election, looked at the lie of the land and thought, in good faith, that of the two parties that were likely to form the Government, one supported the current objectives of the child trust fund and the other supported its being operated for the poorest third, looked-after children and children with disabilities. They accepted, in principle, that they have put investment into the child trust fund, which will continue for some time. They now find that if clause 1 is accepted, on 3 January all the things that they believed were truths will disappear and the landscape of the child trust fund will be dramatically altered by policy decisions. The Minister is entitled to take such decisions, but they will change the landscape completely.

It is important that 12 months on, and two or three years on, we consider what such a change means for the providers of the existing child trust funds in relation to their economic viability, and to their ability to generate a rate of return that will ensure a reasonable dowry at age 18 that is of value to people who have the funds now. Again, I declare a semi-interest in that one of my four children is the recipient of a child trust fund.

A key point is that this morning my hon. Friend the Member for West Ham expressed a degree of scepticism, which I pooh-poohed, about the ability of the child trust fund to survive for the next 18 years; I want it to survive for people who currently have it. I am worried that if we do not review the fund in a positive way after the first 12 months, the current fund providers might at some point in the next two years come to the Minister and say, “We’ve been trying to make the best of this. You have sliced our legs off—and our head, and our arms—but we’re struggling along as best we can. Unfortunately, we can’t run this profitably to make a return for the child trust fund investors, and we’re making a loss on the costs of providing the fund to date.” The Minister will say, “I’m sorry about that—that’s a great shame. I can’t do much about it—the deficit’s this and we’re trying to do that. These things happen—it’s part of the policy consequences of what we have done and, unfortunately, that’s the way it is.” At some point in future, there might be demands to fold the existing child trust fund.

The amendment would give the Minister the chance to consider formally those pressures over the next 12 months; to consider how such pressures are being developed; to consider whether Children’s Mutual is able to continue providing its current level of service; to consider whether the smaller providers, which are much more dependent on the level of Government contribution, can continue; and to consider whether he wants to review such issues in a positive way.

I think that the Minister will want to ensure that those who have put their own private money into supporting the public contribution to the existing child trust funds get the best return. Such people, who have contributed from their own savings and who are from all sections of the community, might be worried if the capacity of organisations such as Children’s Mutual, and particularly the smaller organisations, were greatly diminished.

I would particularly like to see whether the savings contributions by parents to the existing child trust funds, which operate until 3 January 2011, continue at the same level after that date. There may be a temptation for people to think that because the child trust fund is dead, they should not put any more money into the existing funds. People might wonder why they should do that when they could transfer to the new junior ISA. That would make the current child trust funds, which will still operate, even less viable than they are now, because of the scale of the operations. The Minister should review such matters seriously in the next 12 months and reach conclusions.

The amendment is straightforward. With the integrity with which I have tabled it, it would not deny the Minister’s abolishing the trust fund under clause 1, nor would it deny his having already reduced the payments in July. We opposed both those measures, and we will oppose clause 1 when the opportunity arises. The amendment would not stop the Minister doing those things, however; it simply requires him to produce a report in 12 months’ time to consider the impact of the provision on the providers, the recipients, the savings ratio, the contributions, the success of the junior ISA, and all the issues that we have discussed at great length today.

I hope the Minister will not see the proposal as a wrecking amendment in any way, shape or form. It cannot stop him doing whatever he wants to do. It is simply an opportunity for him to come back to the House and put a formal review in the Library. We can then learn lessons and see whether we need to tweak the decisions that we will be taking in the next few weeks and months.

Alison McGovern (Labour, Wirral South)

I want to make a few brief remarks in support of the amendment and also to ask the Minister a couple of questions. Earlier today, I raised an issue about the statistic that he provided for the 2008-09 financial year and what a strange year that was. In our opinion, it was a very distressing year for many, especially those on low incomes. That point is at the heart of my remarks, and I hope the Minister will take this opportunity to provide the Committee with further information that the Treasury may have on savings rates and ratios across the past decade or so, and how the child trust fund has contributed to building a savings culture.

Some economists believe that savings ratios may be counter-cyclical. There is some statistical evidence that the savings ratio moves in an opposite direction to the economic cycle, which is odd, because when interest rates are low, it seems that the rate of interest people might expect is not necessarily connected to their propensity to save. However, that propensity may be affected by feelings of uncertainty and nervousness, although, globally, propensities to save can be observed to be related to a wide variety of things. In China, we know that it is connected to the absence of a welfare state, the inability to join a trade union and the lack of family support. I digress, but we have an opportunity for the Government to examine the savings culture, especially of those on low incomes.

The statistics mentioned earlier on how much low-income families have put into child trust funds could be explained by a number of factors. I could imagine a correlation for people on low incomes who faced either the threat of redundancy or actually being made redundant in the financial year 2008-09. That could have had a grave effect on their ability to pay into a child trust fund. The amendment is important in providing us with an opportunity to look at that point in depth. If we believe the economists who say that the savings ratio is likely to be counter-cyclical, that would mean that the child trust fund came into existence in an economy in which we might have expected the savings ratio to be steadily falling as the economy was perceived by many to be steadily growing.

We had a long period of growth from 2000 onwards. The child trust fund came into being after people had expected steady rates of growth, because that is what they had grown used to. It might be the case that the child trust fund meant savings were being made at a time when we might have expected the savings ratio to decline. From the perspective of economists in the Treasury and elsewhere, and from the perspective of non-governmental organisations and the third sector, a review carried out by the Government would be extremely important. It would help to inform debates in the House and elsewhere about how we encourage the savings culture, especially for those on low incomes and for children who are likely to be asset-poor in the future.

Mark Hoban (Conservative, Fareham)

There have been a series of views on what the report might cover; we should probably start it now, given the range of such views and the fact that the right hon. Member for Delyn wants it published by 3 January 2012. At that point the vouchers for CTFs opened until 3 January 2011 would only just have expired, so perhaps he was right to suggest that the date was too early, and maybe on that basis he should withdraw his amendment.

Mr Hanson rose—

Mark Hoban (Conservative, Fareham)

I am just warming up.

Lyn Brown (Labour, West Ham)

That fills us with joy.

Mark Hoban (Conservative, Fareham)

I am sure it does and so it should.

The right hon. Member for Delyn may want to come back with a more sensible date on Report—that is his choice. I will deal with the themes touched on by him and by the hon. Member for Wirral South on the impact of the abolition of the child trust fund. On the impact that it might have on the savings ratio, which they both commented on, I am interested in the right hon. Gentleman’s view that the CTF has driven it up, because in 2008 the savings ratio hit its lowest point since the 1950s, when it was actually negative. I cannot see a causal link between the savings ratio and the child trust fund, and if there is one, it did not work in 2008. The amount of money in CTFs is unlikely to have an impact on the overall level of that ratio.

As has been mentioned, in relation to whether CTFs have been effective, we know that only 13% of the poorest families contributed to such a fund in 2008-09, and the Committee should bear in mind the number of families on low incomes who still contribute to ISAs. The hon. Member for Wirral South suggested that 2008 was just a bad year for that group, but CTFs started in 2005, and the years 2006 and 2007 were also bad years for savings. In 2006, the figure was 14.6%, in 2007 it was 13.8% and in 2008 it was 13.3%, so 2008 was not a particularly bad year.

The hon. Lady said that perhaps people were lulled into a false sense of security by continuing economic growth and therefore they did not save. Perhaps they believed the former Prime Minister, when he said that there would be no return to boom and bust. If they had disbelieved him, they might have saved a bit more for a rainy day. The previous Government’s record on savings was lamentable, and Opposition Members can take no comfort whatever from the measures that they introduced to improve the savings ratio, given that it fell during their time in office.

Harriett Baldwin (Conservative, West Worcestershire)

During the Committee’s first oral evidence session, we heard from the Institute of Fiscal Studies that the effect of getting rid of the child trust fund on national saving is “about zero.”

Mark Hoban (Conservative, Fareham)

My hon. Friend hits the nail on the head. It is hard to argue that there is a general link between CTFs and the savings ratio.

Alison McGovern (Labour, Wirral South)

Actually, the point I was trying—perhaps badly—to make was rather more subtle: given the way the savings ratio moves or the way in which the data appear to move, it is difficult to unpack the impact of the child trust fund without considerable work to control for other factors. The hon. Member for West Worcestershire made an interesting remark about the impact or otherwise of the child trust fund, but there is a micro-macro question. The report might look both at the micro impact on families and on what they might otherwise have done, and at the macro effect that such Government measures might have on the child trust fund. I do not think that I ever suggested that the child trust fund had a driving-off impact. The most important point, however, is that an inquiry of that nature—whether this year, next year or in five years’ time—would be incredibly useful, and the amendment is trying to make that point.

Mark Hoban (Conservative, Fareham)

The hon. Lady makes an interesting point. If she had been an MP in the previous Parliament, she could have suggested to her hon. Friends on the Treasury Benches that there should be a pilot study about the impact of the child trust fund. However, that did not happen. Such a study would have proven whether child trust funds were effective at that point. We have made our choice about the direction we want to take savings policy, part of which is the junior ISA. I do not want to get sidetracked into a long debate about that. Other measures have been taken to improve the savings environment in this country.

If people want to save, there are vehicles that will succeed the child trust fund. There is a view on the Opposition Benches that people on lower incomes just do not understand ISAs. That is surprising, given that the evidence shows that 12 million people with incomes of less than £20,000 have an ISA. The product is well known among people with lower incomes. Someone on the Opposition Benches suggested that the product is the preserve of the elderly. Only 20% of ISAs are held by the over-64s, whereas twice that proportion are held by the under-44s. Clearly, the product is understood by people on low incomes and by people who are at the younger end of the age spectrum.

There was a discussion about the impact of the end of the CTF on providers. The advantage I have, for obvious reasons, over the right hon. Member for Delyn is that I spoke to a number of providers during the formulation of the policy, so I understand the impact that it will have. The argument in relation to existing providers is that the amount in the child trust fund will be sufficient to enable them to service the back book of business, as it were. A number of providers were concerned about the lower rates that we announced in July and said it would not be economically viable for them to continue. As a consequence of representations made by providers, we laid regulations last month that would enable child trust providers to close to new child trust fund business in order to secure their long-term viability.

Of course, the new replacement product has been warmly welcomed by existing providers and other financial institutions. We are working with them to ensure that the sunk costs they have invested in the systems can, as far as possible, be recycled into arrangements for the new product, and that they reuse those schemes, rather than spend money on new software and IT. We have already done an awful lot of work on developing the policy. We thought about the implications for saving and for providers, and considered the data we already have available. In reality, producing a report—whether for next January or the January after—would be a poor waste of taxpayers’ money. If the right hon. Gentleman chooses to pursue the amendment, I will advise my hon. Friends to oppose it.

David Hanson (Labour, Delyn)

Perhaps it is the nature of my job in this Committee to be disappointed by what the Minister has said, but I confirm, for the avoidance of any doubt, that I am disappointed with what he has said. We are not asking a lot in the amendment. We are simply asking that the implications of the measures the Minister is proposing—when agreed by the Committee, the House, another place and Parliament as a whole—are reviewed in 12 months’ time.

I introduced my comments by saying that perhaps the date of 2012 was slightly premature. I will happily withdraw the amendment if the Minister agrees that maybe, let us say, in three years’ time in 2014—[Interruption.] The Minister is not listening—he is not even listening to the fact that I am telling him he is not listening. [Interruption.] I thank the hon. Member for Bristol West for listening because there is nothing more frustrating than making an argument and not having people listen to it. [Interruption.] The Minister makes some derogatory remark about the quality of the argument. It is not my argument; it is the argument of people outside the House. Today, I am a channel for some of the arguments that are being made by voluntary agencies, academics and the providers of services. It is incumbent on the Minister to listen to those arguments and to defend his position in Committee. That is what democracy is all about. If such measures were not taken, we could have happily rolled over and let every part of the Bill go through without amendment. We have not done that, because there are important matters to be discussed.

The important matter that we must discuss now is whether the measures in the Bill will do what the Minister intends them to do in an effective way in 12 months’ time. I cannot see that to have a report, which the Treasury would probably do anyway—at least, I hope that it would—to assess on a continuous basis the impact of its policies, to have that report formalised and published by January 2012, potentially even as part of the Red Book, which is now the Green Book in respect of our discussions on the Budget, at some point in the future, would be a damaging exercise for the Government to undertake. It might even make their case, and the hon. Gentleman could stand up in future and say to me from the Dispatch Box, “We have done this report. It shows that everything you said in Committee was tosh and that what we as the Government said was correct.” If that were the case, I would take a kicking from the hon. Gentleman and have to accept the position.

However, the Minister does not want to produce the report and publish it because, secretly, he knows that the measures he is taking today will increase inequality, hit the poorest hardest, damage the interests of disabled children, and wreck the existing savings that are being undertaken for the current child trust fund. It will not necessarily show that the current revision of the product that he is bringing forward some time next year, details of which we are not sure about, will be a positive incentive. It will not show what the savings will be as a result of the new product, and it will not show whether it is just middle-class, well-off people putting in the money. None of the facts will emerge unless we assiduously table questions to find out such answers by stealth, as I promise him I will do if I still have the honour to hold this position.

The Minister could author and produce a report under his own volition or he could find himself answering 500 parliamentary questions tabled by me and my hon. Friends in 18 months’ time about the impact of the measure. That is the choice before him today. He can avoid some of the discussions, but he cannot hide from some of the arguments. In due course, we will table questions to discover whether inequality has risen, whether the take-up has not been as good and the trust fund is attracting only those who can afford to put money into it, and whether the disabled or looked-after family have been disadvantaged. We will find a way in which to find out those things. Treasury Committees can product reports on such issues. Parliamentary questions can be tabled. Debates can be held. We can discuss the issues.

I am simply giving the hon. Gentleman an opportunity to frame the debate around a report in which he can put the issues in context and produce it for the interests of all the people involved. I remind him that the amendment would not stop him doing anything. He can do all that he has said he wants to do. It simply asks him to produce a report on the impacts of the policy in due course. I would be happy to withdraw the amendment if he suggested that I table one on Report to ask for a review in three years’ time, and picked the date of 3 January 2014. Would the hon. Gentleman accept such an amendment? I give him the opportunity to intervene and tell me whether he would accept an amendment whereby he would produce a report in three years’ time rather than the 12 months that we have outlined today. Does he want to intervene?

Mark Hoban (Conservative, Fareham)

No.

David Hanson (Labour, Delyn)

Just for the record, the Minister has said no. He is not interested in knowing the impact of his policy in 12 months’ time, in two years’ time, in three years’ time—not ever. It will therefore have to be for me and my hon. Friends to find a way in which to ensure that we get that information to date. The hon. Gentleman might well find himself in 18 months’ time before the Treasury Committee having to examine such issues. He might find himself answering 500 parliamentary questions tabled by me and my hon. Friends. He might find himself in debates. We might pick Opposition days to discuss the matters. He will be a lot busier than if he just accepted the amendment and produced a report for us to scrutinise, comment on and use accordingly. However, if he wants to waste Treasury resources to deal with matters in that way rather than accept the amendment, so be it.

The art of opposition was not lost on Ministers such as myself when we were in government. We have seen and learnt some lessons from the hon. Member for Fareham and his colleagues. We can make life difficult for Ministers. We can fill the hon. Gentleman’s box every week of the year with questions, letters, preparation for debates and Treasury Committee briefs, all because he does not want to have a report of his own in 12 or 18 months’ time on this particular issue. If that is the Minister’s choice, let him vote for it.

Perhaps I can invite his hon. Friends behind him to vote with the Opposition on this occasion, simply to relieve him of the some of the burdens that he will have to face by answering the questions further down the line in a different format. Perhaps the hon. Member for Bristol West, who I know is a considered individual—I am pleased that he stayed—could help, in the spirit of co-operation in the coalition, by voting with us, to relieve the Minister of that burden in 18 months. Perhaps the hon. Members for Truro and Falmouth and for Devizes could do the same, simply to relieve the pressure on the Minister, because I do not want to see him overburdened and stressed in 18 months.

Claire Perry (Conservative, Devizes)

The right hon. Gentleman raises the issue of not wasting taxpayers’ money in tabling numerous parliamentary questions. Surely where we are going with this chuntering from a standing position is a perfect example of wasting taxpayers’ money.

David Hanson (Labour, Delyn)

I am very interested in what the hon. Lady says.

George Howarth (Labour, Knowsley)

Order. I do not think that that relates at all to the amendment, and I do not think you should respond to it.

David Hanson (Labour, Delyn)

The amendment is there because we feel strongly that we should review the policy. It is good management practice to implement something, look at how it works, learn lessons, be open and transparent about the lessons, and potentially make changes. I am not stopping the Minister doing anything. What I am doing today is exercising the historic rights of people in this place to argue a case for certain issues—if chuntering is the word for it, so be it. If the Minister does not like it, that, I am afraid, is tough. We have until 4 o’clock on Thursday to debate the Bill. We feel strongly about it, and if I wish to debate the Bill until 4 o’clock on Thursday, I and my hon. Friends will debate it until then. We will continue to debate it for as long as we wish to. That is the nature of the business.

For 13 years, I sat where the Minister sits and I listened to arguments from the Opposition Benches, and occasionally, dare I say, I have accepted some of them and tabled amendments to the House based on some of the points made by the Opposition. The amendment simply says to the Minister, “Review it,” which is a valuable point. If he wants to bring it back in three years’ time to review it, that is fine by me. I will table an amendment, come what may, on Report, which I hope will be selected by Mr Speaker, which will give an opportunity to review it in three years. Today, however, I will press the amendment to a vote, and I hope that the Committee will speak. I expect to lose—that is the nature of the business of where I sit now—but it does not mean that I am wrong.

George Howarth (Labour, Knowsley)

Before we proceed to amendment 36, I give notice that I am minded to conclude that the principle of clause 1, which the Committee has been debating since 3 pm last Thursday, has been adequately discussed in the course of debate on the amendments. When we have disposed of amendment 36, I will put the question that clause 1 stand part of the Bill without further debate.

David Hanson (Labour, Delyn)

I beg to move amendment 36, in clause 1, page 2, line 8, at end add—

Amendment 36 would require a full equalities assessment on the impact of clause 1 and the abolition of the child trust fund before commencement of the Bill. Again, I am trying to be helpful to the Minister. I recognise that an initial assessment has been made of the Bill’s impact on equality. Helpfully, a paper was tabled formally today that has been available for some time, showing the initial assessment of the Bill’s impact on equalities. I am not filibustering. If I were, I would read every sentence of it for the next 20 minutes to put it on the record, but I am not minded to do so, although my hon. Friend the Member for West Ham appears to be encouraging me to consider that option. Who knows? We will see what the Minister says in due course.

Having listened to the Second Reading debate and Committee evidence sessions, I am concerned that no comprehensive equality impact assessment on the Bill has been done. The document tabled today is an initial assessment of the impacts on equality. No fuller assessment on impact has been undertaken, although the Treasury could have done so if it wished. I have read it in detail. The Treasury has assessed a number of issues, but has not undertaken the full assessment normal for a Bill.

Claire Perry (Conservative, Devizes)

I am sure that the right hon. Gentleman is aware that during his own Government—I know this because I carried out a freedom of information request—no equality impact assessments were carried out for some fairly major pieces of legislation, such as the last Budget and previous Budget report of the right hon. Member for Edinburgh South West (Mr Darling). Will he comment on that omission while he is discussing this one?

David Hanson (Labour, Delyn)

I am happy to.

George Howarth (Labour, Knowsley)

Not too much, I hope.

David Hanson (Labour, Delyn)

I am not interested in other Bills; I am interested in this one. We can debate a range of issues all day, but this Bill will impact hardest on the poorest in society, disabled people and looked-after children. Its later clauses, which we are not debating now, will impact the hardest on women. It will impact hardest on black and minority ethnic individuals. Indeed, earlier today we read SA03 from the Runnymede Trust. In its assessment of why assets matter, the trust said:

“One of our key findings is that Black and minority ethnic (BME) people have fewer and lower-value asset-holdings than white people. Although there are many reasons for this lower asset wealth, asset-building policies could potentially provide BME people with different and multiple benefits.”

Taking away asset holdings from the black and minority ethnic population, particularly in constituencies such as that of my hon. Friend the Member for West Ham, will have a disproportionate effect on equality and on the equality impact assessment under the Bill. I am surprised, whatever the hon. Member for Devizes says, that for this Bill, which could hit poor, black and disabled people and women hardest, no fuller equality impact assessment has been undertaken.

The Cabinet Office website says:

“An equality impact assessment covering race, gender and disability is a statutory requirement and must”—

must is underlined—

“be completed for all Bills, even in the rare cases where a full Impact Assessment is not required. The Equality Impact Assessment should be published alongside any white paper or consultation on the proposals in the Bill, then alongside the Bill itself when it is published in draft or introduced to Parliament.”

To be honest, I had not considered tabling the amendment before the commencement of the evidence sessions last week. I had not considered whether a full impact assessment would be needed, and I would not have tabled the amendment had we not had the evidence sessions. Members can believe that or not, but it is the truth. I tabled the amendment by way of a manuscript draft that I gave to the Clerk during the evidence session, and I did that because Mr Marc Bush, head of public policy at Scope, said:

“There is real concern that, as with other measures, there has not been assessment of the impact that the measure will have on specific groups. Groups that will be disproportionately affected by the reform are families with disabled children, and disabled people themselves. My concern is that if we put a new saving mechanism in place and it does not have that level of scrutiny or, especially, that impact assessment, we will not know what the impact will be of transitioning from a child trust fund to a junior ISA. For us, that is a real concern”.

That was backed up by Anne Longfield, who has already been quoted, in the same evidence session. She said:

“We think that there are huge risks of children falling off. There are some good basic principles in place, but there is a huge risk of throwing out the baby with the bathwater. There needs to be a responsibility to look at the aspects in great depth and really to scrutinise what they will mean and what the impact assessment will be. We owe it to those children whose expectations we have already raised on this to look at the issue and make those decisions properly. ”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 65-66, Q180 and 182.]

Whatever the result of the initial impact assessment on equality, we could do a deeper, more thorough assessment, to work through the concerns that we have legitimately raised in Committee, not on behalf of ourselves but on behalf of people outside the Committee.

I refer hon. Members to the table at the back of the equality impact assessment. Under “Equality Group” it says “Different racial groups” and under “Impact on population” it says “None identified”. Does that mean that the Treasury impact assessment has not looked at the “Why Do Assets Matter?” publication by the Runnymede Trust, which was submitted to the Committee? That document states, independently, that black and ethnic minority people will be disproportionately affected by the child trust fund abolition. It strikes me that “None identified” reflects a relatively cursory look at the impact of the issues on the black and ethnic minority population. Under “Different gender groups” the answer is “None identified,” with “No significant impact identified” of the Bill as a whole. Clause 1 relates to the child trust fund, but the assessment could have made in relation to the saving gateway and the maternity grant, both of which we will consider later. There is a real need for an impact assessment on those issues. Under “Different age groups” and “Transsexual or transgender” the answer, again, is “None identified”. Under “Different political opinion”—we can accept that there is a bit of a difference there, and an impact—the assessment states “None identified”, in the broadest sense of the word.

The impact assessment that has been done, welcome though it is, is not as thorough as a full impact assessment could be. Try as the Minister might, he will not convince me that the Bill will not increase inequality and unfairness, and do great damage to disabled people, looked-after children, women and black and ethnic minority populations. Therefore, I ask again that he consider the amendment. I do so, finally, because the amendment will not stop the Minister doing anything.

Clause 1 will, undoubtedly in short order, sail through the Committee. It will shortly again be considered on the Floor of the House of Commons, and in another place in the next few weeks. At some point the matter will be settled, and the child trust fund, if my runes are read correctly, will be abolished. All I want to ensure from the Minister, before that final statement is taken, is that we look at every nook and cranny to ensure that no groups are disadvantaged disproportionately by the legislation, and that we do so in a way that means, if the Minister continues to force the Bill on the British public, at least he does so in the full knowledge of the impact of the Bill—in relation to not just the groups I mentioned but also, referring to an earlier debate, to the differences for the populations in Northern Ireland, Wales, Scotland and across the country.

I ask the Minister to reflect on the amendment. If it is faulty, as it usually is, I ask the Minister perhaps to table his own amendment in due course—I will withdraw mine on that basis. If he is able to do so, I ask him to produce the further assessment before the matter is considered for a final time.

The Minister needs to reflect on such matters and, before he presses the button to end the scheme, he needs to know exactly what the Bill will mean. I commend the amendment to the Committee.

Kate Green (Labour, Stretford and Urmston)

I want to speak briefly in support of the amendment, with particular reference to an equality impact assessment with regard to black and minority ethnic people.

I want to highlight that such communities are often particularly reluctant to use mainstream financial institutions. Sometimes that is because they are intimidated—I guess it would be reasonable to say—by the institutions or feel that the institutions would not welcome or serve their needs well. Sometimes, indeed, the products of those financial institutions might be inimical to the cultural values of some of the ethnic minorities who are potential customers but, because of the nature of some of the services provided by the institutions, who might feel that they cannot be the customer of such an institution at all.

I draw no conclusions about whether the child trust fund in any way served to get around some of those difficulties or opened up access to a different range of financial institutions for black and minority ethnic savers. However, I consider the Government’s impact assessment to be slight. I would like to have seen it review much more fully a group that significantly under-saves and lacks assets. Therefore, it would have been useful to understand the attitudes to financial institutions and whether the child trust fund offered any learning points.

The other point that I would highlight specifically is, again, quite typical in some of the black and minority ethnic communities in my constituency—indeed, in some white communities too. As my right hon. Friend the Member for Delyn suggested, there is a sort of indirect equality impact issue in relation to women, because mothers are probably particularly likely to have taken an interest in the savings that were undertaken for their children through the child trust fund. Again, I draw no conclusion as to what might have been uncovered by a proper equality impact assessment, but I am genuinely interested that we should have had one. That is why I support the amendment and I hope that the Minister will address the points.

Mark Hoban (Conservative, Fareham)

The debate has been helpful, but the right hon. Member for Delyn rather brushed off the intervention of my hon. Friend the Member for Devizes. The right hon. Gentleman should be commending us for going further than his Government went with equality impact assessments and for making an initial assessment. I cannot remember one being done for the 10p tax rate, which had a huge impact. The shadow Minister and the hon. Member for Stretford and Urmston should, therefore, be congratulating us for what we have done, because the previous Government, which the hon. Lady would have supported, did not do such things. We have actually made a significant move forward in meeting our statutory obligations. It is right that we pay due regard to the need to eliminate discrimination and promote equality when we consider policy options. If policies have a disproportionate impact on a particular group, it is right that we consider what actions can be taken to avoid or mitigate any unfair impact. A full equality impact assessment is only one way of demonstrating that we are taking these factors into account. The absence of a full assessment does not mean that we have not taken them into account, and full equality impact assessments do not need to be used in all circumstances. However, they should be used when they have effectively contributed to the analysis and development of policy options.

On 15 September, we prepared and published our initial assessments of the equality impact measures, including in relation to this Bill. The various mitigating measures have been rather more extensive in covering different groups than the right hon. Member for Delyn implied. He simply mentioned the first two lines in one box of the impact assessment, which state “none identified,” without taking into account that we then talk through the consequences of the measures for different groups.

The assessment we published back in September sets out the impact of the measures in the same way that any further equality impact assessment would. It demonstrates that the ending of CTF eligibility will have an impact on people with disabilities and on different age groups. However, that impact is likely to be limited. We have already made it clear how we will mitigate the effects of child trust fund changes on disabled people by recycling the money that would have been used for additional payments into additional respite breaks. We have talked about how we will help disadvantaged children in our society build assets with the new junior ISA, which will assist in their transition to adulthood. We will make sure that the junior ISA is accessible to disabled children, looked-after children and children from lower income families. In the context of the child trust fund, we have gone through a proper analysis of the impact on different groups. Unlike our predecessors, we have published that information—I even tabled a written ministerial statement to draw the House’s attention to the matter.

Claire Perry (Conservative, Devizes)

Is my hon. Friend saying that he has never in his years as a shadow Minister seen any equality impact assessments carried out by the previous Government on any financial matter?

Mark Hoban (Conservative, Fareham)

My hon. Friend tempts me. I cannot recollect seeing any at all. So it is a bit rich to be preached at by the Opposition, given their failures to address these issues when they were in Government. I encourage all my hon. Friends to take it with a pinch of salt when the right hon. Member for Delyn expresses disappointment again and seeks to help us by pushing his amendment. The Opposition do not have much of a track record on this matter, and I am rather surprised in their courageousness in pressing the amendment.

Alison McGovern (Labour, Wirral South)

Surely the point that the Minister is making is a little bit like wondering whether Wilson or Callaghan might have made equalities impact assessments in that the procedures for such assessments have been shaped by quite recent equalities legislation? I dare say he has a point and I am not trying to say that the previous Labour Government were perfect in any way, shape or form—I would not say that because I have a little more grace than perhaps some hon. Members—but does he recognise that our role as the Opposition is not to comment on previous practice, but to question the Government on what they might do today?

Mark Hoban (Conservative, Fareham)

The hon. Lady addresses the matter with a due tone of humility, and recognises the failures of her colleagues in Government.

Alison McGovern (Labour, Wirral South)

Imperfections.

Mark Hoban (Conservative, Fareham)

The hon. Lady says imperfections; I prefer the word “failures.” She accepts that the previous Government failed in this area, and I hope she recognises that we are taking the matter forward and dealing with it very seriously. When the right hon. Member for Delyn pushes the matter to a vote, I hope that she will recognise with humility that the previous Government did not deal with the issue particularly well. This Government are making real strides in ensuring that there is an impact assessment and she should give us the benefit of the doubt.

We have done a very thorough piece of work in identifying some of the impacts of the measure. It is important to think about these things very carefully. I know that we have done so in preparing the policy. We think that the document that we published in September sets that out clearly. With that, I would encourage the right hon. Member for Delyn to recognise and share the humility of his hon. Friend the Member for Wirral South—his neighbour across the border in England—and accept that his Government did not get it right, and that this Government are making real strides to ensure that these things do happen properly.

David Hanson (Labour, Delyn)

With humility, I do not intend to withdraw the amendments. It is important that we reflect on the need for a full equality assessment on the Bill. I say that because the Bill will impact upon the poor, the disabled, looked-after children and those from the poorest regions of the United Kingdom. We need to reflect on that and the assessment that has been made.

Let me pick up on a couple of points on the current assessment—copies of which are available to all members of the Committee. First, I will look at different language users. The current assessment states:

“Some of the affected population will have different language needs, but there is not expected to be a disproportionate impact on these groups.”

Fair enough, we will accept that as a starting point. Secondly, it states:

“HMRC will consider requests from individuals or groups for communications on these changes to be in languages other than English.”

At the moment, the Bill will abolish the child trust fund and it will do so in English. It “will consider requests” from individuals or groups for the changes to be communicated in other languages. For example, what information will there be on the new child trust fund ISA that is being established? I happen to represent a constituency where the language is predominantly English, but 16% of my constituents speak Welsh as a first language. I have few other languages spoken in my constituency, but I could point to others in inner-city London where 30, 40 or 50 languages may be prevalent.

Kate Green (Labour, Stretford and Urmston)

My right hon. Friend draws attention to an important issue in relation to community languages. Many different languages are spoken, particularly in the Old Trafford ward in my constituency. I am very aware of what he his discussing. Does he agree that—in addition to the need to consider the provision by HMRC of information about the proposals in community languages—one of the reasons that an impact assessment would have been helpful is that it would have enabled us to compare how information was given about the launch of the child trust fund and the entitlement to the child trust fund in different languages with what commercial organisations offer? That might offer some useful learning points for the Minister, who is thinking of introducing the replacement junior ISA through a commercial vehicle.

David Hanson (Labour, Delyn)

My hon. Friend makes a valuable point based on her constituents’ experience in the Greater Manchester area where a number of different languages are spoken. The current assessment, which is not detailed enough to meet the objectives that I would want to have in place, states:

“HMRC will consider requests from individuals or groups for communications on these changes to be in languages other than English.”

That presumes that people know to request those things in the first place. It presumes that the languages that are used will provide sufficient information. I would not want to see the new child ISA fail, particularly for the poor, the black or the illiterate, because the information was lacking, because the only language was English or that HMRC will only “consider” requests for the information to be provided in other languages. Before I withdraw the amendment, will the Minister give a commitment to the Committee that, before Report stage, he will produce some information about how in many languages, in what form and when, HMRC expects to transmit information about the new child ISA and the abolition of the child trust fund to the many people who will require it? I am afraid that that backs up the comments made by the Runnymede Trust that insufficient consideration has been given to the transmission of the information and that the changes will disproportionately hit those from black and ethnic minority communities.

On the question of disability and the child trust fund, the current impact assessment states under “Mitigating Action”:

“The Government has announced that the money that would have been spent on additional payments to the CTFs of disabled children will be recycled to provide additional respite breaks, from 2011-12. The funding would allow for upwards of 8,000 week long respite breaks each year.”

It does not say that the funding is only for England. The 8,000 week-long respite breaks each year will not be funded for the constituents of my hon. Friends the Members for South Down and for Edinburgh East, or for my constituents in north Wales. The impact assessment says that problems in relation to disabled children will be mitigated by 8,000 week-long breaks, which do not apply to three nations of the United Kingdom. The Treasury has not conducted a thorough impact assessment on the impact of the legislation.

Kate Green (Labour, Stretford and Urmston)

Does my right hon. Friend agree that the impact assessment completely misses the point? We are comparing the protection of young adults as they begin their adult life with an asset that enables them to open up choices and develop their aspirations with a very important respite provision for children and their families, which addresses their immediate need. Saying, “The money will be spent on some other completely different need and that is a sufficient consideration” trivialises the impact assessment.

David Hanson (Labour, Delyn)

I am grateful to my hon. Friend for her comments. She has basically said what I was going to say next. [ Interruption. ] The hon. Member for Scarborough and Whitby says that we will save time. Just to make the point, I will say it, anyway. My hon. Friend the Member for Wirral South says she would like to hear it. Let me say to the hon. Member for Scarborough and Whitby and to my hon. Friend the Member for Wirral South that the proposal for providing 8,000 week-long respite breaks each year for disabled children in England—not in Wales, Scotland or Northern Ireland—trivialises the nature of the child trust fund, to echo the points made by my hon. Friend the Member for Stretford and Urmston. The fund was about building a capital asset for people at the age of 18 to help them meet the needs of their 18th birthday and beyond, and to help with accommodation, tuition fees, employment and training, and the challenges that will affect them in the years 2020 to 2029 and beyond. It is an entirely different product if one of the mitigating factors in terms of the impact on disabled people is to say, “Well, give them a respite break for a couple of weeks”, welcome though that is.

If the constituents of my hon. Friend the Member for Wirral South can have a respite break across the border in Heswall, so be it. We will look from our side of the border with great admiration at the fact that those 8,000 children can have that respite break, but it is not going to happen in Wales, Scotland and Northern Ireland, and it is not a substitute, as my hon. Friend the Member for Stretford and Urmston said, for the capital asset-building product that it is replacing. So, I do not think that the impact assessment has done justice to the impact of this measure on children and others with disabilities.

On the question of “with or without dependants”, the impact statement says:

“CTF: While parents are involved in opening and managing CTFs, they are the property of the child. No specific impact has therefore been identified on those with or without dependants.”

We have spent hours discussing the question of looked-after children. Under “Mitigating Action”, the impact assessment says, “No mitigating action necessary.” So the impact assessment says that there is no impact on looked-after children, and there is no mitigating action. The Minister has missed a trick. Whatever previous Labour Governments have done, I do not think that their legislation was about increasing inequality, unfairness and poverty and removing life chances. They were about trying to tackle those issues. I wish I could give the Minister chapter and verse on what previous Finance Ministers have done in relation to equality impact assessments. Unfortunately, I cannot. I am trying to explain in a helpful way. I was in the Home Office, the Ministry of Justice, the Northern Ireland Office and the Wales Office at No. 10. I cannot be responsible for what happened in Treasury Departments. I cannot give him chapter and verse on that off the top of my head; I can say that the Bill will damage equality. It will hit the poorest hardest—disabled people, black people, people from ethnic minorities and looked-after children—and will damage their life chances. A thorough impact assessment has not been carried out and, just on the points that I have made, we cannot accept the measure and must press it to a vote. Before I do so, I would welcome the Minister’s response to my comments.

May I place on the record that the Minister does not wish to respond to the fact that Her Majesty’s Revenue and Customs would “consider requests” from communications in languages other than English? There are ways in which we can deal with these matters: we can be friendly and co-operative in Committee and we can ask questions gently, which the Minister can reflect on and respond to. If he does not do so, we must consider other ways to tease out from him which languages HMRC will produce information in, and how and when. That will involve our tabling parliamentary questions on a range of issues and perhaps segmenting each language in turn, which will fill the Minister’s box and create—possibly only a night’s—inconvenience for him. He could agree today to ask his officials to consider the matter. He could say, “The Opposition spokesperson has made a valid point about how people with a non-English language understand the new ISA, the abolition of the previous scheme, and the later issues concerning the health and pregnancy grant and the saving gateway.” I would hope that on occasion he would, as a Minister, recognise that there might be a scintilla of point in what the Opposition say.

There are times when I have sat in his chair and thought, “I hadn’t thought of that, the Opposition have made a good point. Let me look at it, reflect on it and come back to it.” The Minister has not done that today.

Mark Hoban (Conservative, Fareham)

Just so the right hon. Gentleman can withdraw his amendment and get on with life, HMRC regularly communicates a range of issues in a range of language and is skilled in doing so—the change does not add to that burden.

I have been thinking about the number of questions on child trust funds that I have answered from the right hon. Gentleman today. One might have thought that he had tabled 20, 30, 40 or 50, but he has tabled none to me. If he is as serious about the matter as he appears to be, he will recognise and know from his experience from having an extensive role in different Government Departments that such Departments are skilled in communicating in different languages.

David Hanson (Labour, Delyn)

The important point is that I am being asked to accept that the impact assessment on equality has been thorough and has dealt with all the concerns. Yet, in the mitigating action, on different language users, for example, it simply states:

“HMRC will consider requests…for communications on these changes”.

It would be much more proactive to say, “HMRC will undertake to ensure that there are communications in languages other than English.” That would satisfy me on the matter. In my view, a thorough impact assessment has not been undertaken, so I wish to press the amendment to a vote.

Clause 2

David Hanson (Labour, Delyn)

I beg to move amendment 38, in clause 2, page 2, line 10, at end insert ‘with effect from 1st January 2014’.

George Howarth (Labour, Knowsley)

With this it will be convenient to discuss the following: amendment 43, page 2, line 10, at end insert—

Amendment 39, in clause 4, page 2, line 36, leave out subsection (2).

Amendment 40, page 2, line 39, leave out ‘the rest of this Act’ and insert ‘this Act, apart from section 2’.

David Hanson (Labour, Delyn)

In passing, there has always been added pressure for any member of the Committee to have a name at the beginning of the alphabet, and I sympathise with those who were born with the surname starting with “A” or “B”, because it involves that extra amount of concentration.

We move on now, having not succeeded in amending clause 1, which is related to child trust funds, to the amendments relating to the saving gateway. Amendment 38 would insert

“with effect from the 1st January 2014”,

to clause 2(1), as opposed to the existing phraseology, which will repeal the Saving Gateway Accounts Act 2009 with immediate effect on Royal Assent. I wish to see the Act’s repeal deferred until 1 January 2014.

The amendment is designed to test whether the Government’s decision not to introduce the saving gateway is about saving money or, once again, about dogma. The proposal in the Bill will certainly save an element of resources because the saving gateway will not be rolled out. However, we need to first consider whether we need an immediate abolition of the saving gateway, or whether we need to reflect during a three-year gap, when we can consider several issues, not least whether the economic situation improves, whether we wish to see the pilots further evaluated, and whether we believe that the saving gateway scheme is a good idea in principle.

The Saving Gateway Accounts Act 2009 (Commencement No. 2) Order 2010 was made on 24 March 2010, again by the Labour Government, to ensure that we had the development of the saving gateway scheme. That order was revoked by the Saving Gateway Accounts Act 2009 (Revocation of Commencement) Order 2010 on 26 June. That revocation meant that, unfortunately, the first account for savers could not be opened in July 2010, as planned by the previous Government.

I live in hope that the Minister will reflect on such matters and accept the amendment. Should he do so, I will be the first to go outside this building and praise him. My hon. Friend the Member for West Ham suggests that I buy the Minister a drink. I will happily do that and I will happily put out a press release to say that he has done a good job in accepting an amendment to defer the repeal of the Act for three years. If the amendment is accepted, the saving gateway scheme could be introduced in three years’ time, if the coalition Government believe that the UK economic situation has improved. Will the Minister tell us the coalition’s view on the saving gateway scheme?

The right hon. Member for Eastleigh (Chris Huhne), a member of the Cabinet, said that he is not,

“lashed to the mast with a particular set of numbers.”

He said that it was a bit like setting sail; if the wind changes, one has to tack about to get to the destination. He added that global growth could be either higher or lower over the next three years.

Let us accept that there is a three-year deficit reduction plan. Whatever our disagreements on that plan—they are many and they are deep—the Government have a plan and if it works, there will be a reduction in the deficit. Savings in public spending will be achieved by that plan, by taking out 500,000 public sector workers, for example, or by generally decimating services. However, savings will be made.

Growth may occur in the economy as a whole; there may be the creation of further jobs and successful economies. All sorts of things could happen—who knows? By accepting the amendment, the Minister could freeze the pilots with effect from today, maintain the Act on the statute book, and ensure that in three years’ time he revisits the issue and looks at whether revocation of the legislation should progress.

I would be interested to know whether there is any cost to keeping the Act on the statute book for three years. We would not be taking anything away or developing something that involved a major cost. All we would do is not progress from the pilots to a fully rolled-out scheme. The pilots have happened and they involved a cost. There is no cost in not progressing with the scheme at the moment. Nevertheless, the Minister seeks to abolish the saving gateway scheme and the relevant legislation as soon as the Bill receives Royal Assent. My question to the Minister is about the principle of the saving gateway scheme.

We know from extensive piloting that the saving gateway scheme was proving successful. It demonstrated that it could generate new savers and new savings. Crucially, individuals continued to save after the end of their accounts. We know that because the Bill had support from across the House.

It may be uncomfortable for me to remind the Minister of this—I hope that it is not—but when the Saving Gateway Accounts Act 2009 was going through the House, and when he sat where I sit now, he said:

“The Bill serves a valuable purpose in encouraging people, particularly those on low incomes, to save. People on higher incomes have an opportunity to smooth out fluctuations in income and expenses to which those on low incomes do not have access. If the Bill is successful in encouraging people to save, it will enable them to create a modest buffer against variations in income, such as the unexpected expense of being laid-off for a short period. It will give people a degree of financial security they have not had hitherto.”

That is what the Minister said more than 18 months ago. At that time, the official Opposition did not oppose the Bill, but supported it; they recognised that it had some merits and they sanctioned the carrying out of pilots.

For the benefit of the hon. Member for Birmingham, Yardley, who takes an interest in these matters as a member of the coalition, I will quote the Minister of State, Foreign and Commonwealth Office, the hon. Member for Taunton Deane (Mr Browne), who spoke for the Liberal Democrats on Third Reading of the then Saving Gateway Accounts Bill. He said that

“it is the equivalent of the share-owning democracy being extended to people in the bottom 10 to 20 per cent. of society. That will bring widespread social benefits if the Bill works out as successfully as we all hope.”—[Official Report, 25 February 2009; Vol. 488, c. 323-25.]

Some 18 months ago, before the general election, the Liberal Democrats and the Conservatives were happy to support the principle of saving gateways, because they recognised—I do not wish to put words into their mouths—that contributions from the state to help poorer people to save were a good use of state resources to help generate income and ensure that those on lower incomes saved for their concerns at the time.

On 26 October 2010, the Financial Secretary said:

“I believe that people in Britain, including those on lower incomes, need to save more, and there was evidence from the saving gateway pilots that matching was a popular and easily understood incentive to save, but”—

this is the crucial point—

“when we looked at the proposal ahead of the Budget, it was clear that this would have been exactly the wrong time to introduce a new scheme that would have cost us up to £115 million a year.”—[Official Report, 26 October 2010; Vol. 517, c. 206.]

Basically, the Financial Secretary believed it was a good scheme and that the pilots worked. He supported it in opposition, but budgetary constraints of £115 million a year mean that he does not now wish to proceed with it.

I will give the Financial Secretary the opportunity not to proceed in that way now, so that he can have the next three years to reconsider. He does not need to do it immediately. He would not need to repeal the Act or scrap the scheme, but he could reconsider it over the next three years. At any point during that time, when the economy picks up, he can introduce the scheme and adjust the costs accordingly. If he believes in it, why is he abolishing it? Why is he not just taking the payment holiday that the amendment would give him?

As a good judge of what is right and what is wrong, my hon. Friend the Member for West Ham keeps me on a fair track on these matters. I know that she and other members of the Committee would say to me, as the Opposition spokesman, “Go ahead with the scheme now.” That is my favoured option and, for the avoidance of doubt, if the amendment is not agreed, I will ask my hon. Friends to vote against clause stand part in due course. My favoured option would ensure that we do not wreck a lot of work on the saving gateway, that we do not throw out the pilots that we have had, that we do not waste those opportunities, and that we do not let the Financial Secretary stand on his head again by saying one thing in opposition and another in government.

The hon. Member for Bristol West is in the Committee Room at the moment. When he was outside, I said to his hon. Friend the hon. Member for Birmingham, Yardley, that the Liberal Democrats supported the then Saving Gateway Accounts Bill on Second Reading. Their spokesman in opposition, the hon. Member for Taunton Deane, supported it and said that it was a good thing. He wished it well and urged that the pilots be made a success. I looked forward to his supporting that policy during the election, and he made no manifesto commitment to abolish the saving gateway. The Financial Secretary did not do so either, but the amendment would give him the chance to look at the economic situation, to put the roll-out of the pilots on hold for whatever period of time he feels it necessary to do so, and to bank whatever savings he wishes. He could do that without our having to think again, in 2014, that this was a good idea, which should have been taken forward, and without the whole of the legislation having to be revisited and looked at again in detail.

The Financial Secretary will know that the saving gateway was to be a tax-free cash savings account for working people on lower incomes, with eligibility passported from receipt of certain benefits and tax credits. Under the saving gateway, accounts would have lasted for two years. At their maturity, the Government would have made a contribution of 50p for each pound saved, up to a maximum of £300. We would be encouraging poorer people on lower incomes and on certain benefits, with strict eligibility, to put some money aside for their future. Let us encourage people on lower incomes to save in partnership with the Government, by putting in at the end of that process—not at the start or in the middle—50p for each pound saved, up to a maximum of £300.

A savings culture is important. We need to ensure that not only those with trust funds from their families, not only those who are wealthy millionaires or just the well-off in society, but those who are poorer save towards their future. A proven method was used. The pilots showed that it was important that people could save and have independence and security throughout their lives. The then Government introduced individual savings accounts to develop a fairer distribution of tax relief, but the objective of the saving gateway was simple. It was first to kick-start a savings habit among people on lower incomes by providing a strong incentive to save through matching Government contributions. Secondly, it was to promote financial inclusion by encouraging people to engage with mainstream financial services—something that had cross-party agreement.

Such a scheme was good. It was positive. Will the Minister tell me first and foremost whether he still believes that the scheme is good? Let us put aside for one moment the £150 million a year that he has estimated it will cost this year, next year and the year after. Does he believe that the scheme is a good thing? If he does, I urge him to accept the amendment. Again, we are making some sacrifices. We should have started the scheme in July this year. That has now not proved possible because the current Government have wrecked the proposal. I am willing to reflect on our amendment in order to save the scheme. Let us look at matters when the economy picks up. Let us look at whether the Minister actually believes what he said in February 2009, and let us see whether the Liberal Democrats believe what they said in February 2009.

For the benefit of those in Committee who are not aware of such matters, the saving gateway pilots were delivered in partnership with the then Department for Education and Skills and the Halifax, now HBOS plc, to provide banking facilities. The first pilots ran from August 2002 to November 2004 with individual accounts open for an 18-month period, and about 1,500 participants took part. The initial pilot covered five areas. It ran in Cambridge, east London—part of which my hon. Friend the Member for West Ham represents—and the city of Hull, a fine city, although it has great poverty. I went to university there and I know it well. My right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), the shadow Chancellor, represents a seat in that area. The county of Cumbria was another area, as was the city of Manchester, which is close to the constituency of my hon. Friend the Member for Stretford and Urmston.

People living in those areas were eligible to open an account if they were of working age between 16 and 65 and if they fulfilled three particular criteria: they formed a household earning less than £15,000 a year; they earned less than £11,000 a year, or they received out-of-work benefits or benefits generally. Individuals could save up to £25 a month under the saving gateway pilot and up to a maximum of £375 overall, for which they received a pound-for-pound match when the account matured. The final evaluation of the first pilot was published in March 2005.

I accept that the Minister will undoubtedly make great play of the fact that the Labour Government took a while to get the scheme up and running. Hands up on that one. It was much slower than we wished, but then the initial pilot was in place. It ran and we did the first evaluation in March 2005. That led to the second, larger saving gateway pilot, which ran in the same five locations of Cambridge, east London, Hull, Cumbria and Manchester and was also piloted in the additional area of South Yorkshire. That pilot started in 2005. Accounts were open for 18 months, as under the first pilot, and about 22,000 accounts were opened. That was a success. Twenty-two thousand accounts were opened, which would not have existed before, by people on low incomes who had not been saving.

The second pilot was open to a wider income group in order to see whether we could extend demand in due course. Individuals in the second pilot were of working age—16 to 65—and had household incomes of less than £50,000 a year or individual incomes of less than £25,000 a year, or were, as before, out of work or receiving benefits.

I welcome the Minister’s view on the success of the pilots. Although I am sure that he will give it, I ask him formally: does he think that the pilots were a success? I think that they pointed to a success in matching a targeted incentive to lower-income savers. The pilots’ key findings were that the saving gateway generated both new savers and new saving among existing savers and brought individuals into contact with mainstream financial institutions, often for the first time in their lives.

The research showed that 60% of participants were still saving regularly two years after the pilot ended and that three in 10 participants who had not saved regularly before taking part in the pilot were doing so at the time of the further research. Participants were also positive about the saving gateway: 98% of people who took part in the pilots said that they would open another saving gateway account if given the chance, and 99% would recommend it to a friend. I emphasise that people who were not saving before and were on low incomes saved money, and 99% said that they would recommend the scheme to a friend. That shows that the pilot was successful in its objective of encouraging people on lower incomes to save.

My right hon. Friend the Member for Edinburgh South West, then the Chancellor of the Exchequer, announced in the Budget on 24 March this year that the first saving gateway accounts would be available in July 2010 and that Lloyds Banking Group, Post Office and the Royal Bank of Scotland Group intended to offer the accounts in 2010. The Government also expected at the time that several credit unions would offer the accounts, and continued to discuss the saving gateway with potential providers. The point about the credit unions is particularly important to my hon. Friend the Member for South Down, because as we heard in earlier evidence—and, I think, as she said herself—credit unions are a preferred method of saving in Northern Ireland, and they could and should take up the slack where the major banks that I mentioned could not offer the accounts.

A key feature of the saving gateway is the fund matching element; the Government offered a contribution for each £1 saved. The pilots showed that that provided a simple, transparent and easily understood incentive to save. Building on that, the Government recognised the need for a wider section of society to develop the savings habit earlier in life. The Budget 2010 announced that the Government would explore options for widening access to matched savings accounts, with the potential addition of more support by the end of this Parliament.

Obviously, things have changed, and we are no longer the Government, but the principle was accepted by the Opposition and the Liberal Democrats as a good thing. The only problem now appears to be the fact that it will cost £150 million a year. Again, I accept that it might be the Minister’s choice to make those on lower incomes the issue when it comes to funding the deficit reduction plan, but I cannot see why he will not accept the amendment and offer the payment holiday.

It is difficult for me to propose such an amendment, because we were looking forward to the beginning of the scheme in July this year, but the Minister has the chance to say that he will maintain the Act on the statute book and reflect on it over the next three years. At any point in that three-year period, he can introduce amendments that start the scheme in July, as initially planned. He can commence it in 2011, 2012 or 2013; indeed, in 2014, at the end of the three-year period, he can consider whether to pass another measure to defer the scheme for another year or bring it on board.

If the Minister believed that the scheme was a good thing when it was introduced in 2009, and if his only objection now is the cost, the amendment will give him a chance to put the cost aside and not roll out the scheme, while maintaining the principle of it so that at some point, the cross-party co-operation on this issue among the Liberals, the previous Government and him could come into play.

The saving gateway account is open for those on income support, jobseeker’s allowance, incapacity benefit, employment support allowance, severe disability allowance, carer’s allowance or tax credits. There will be a lot more people on jobseeker’s allowance in the near future due to the Government’s policies, and many more people wishing to save for the future. Incapacity benefit changes are in play, and I accept that, but we need to look at the issues. The basic principle is there: there is a scheme in place, which could provide a vehicle, that does not need the £150 million the Minister mentioned.

I remind the Minister that he said on 25 February 2009:

“Some might argue that the Bill is a distraction from the economic and financial crisis that the country is facing, but we also need to bear in mind that one in three households in this country have no savings and no cushion against being laid off, or are facing wage cuts or an end to overtime. This Bill serves a valuable purpose in encouraging people, particularly those on low incomes, to save… It will give people a degree of financial security that they have not had hitherto.”—[Official Report, 25 February 2009; Vol. 488, c. 322-3.]

If he scraps the saving gateway today and continues with clause 2(1)—

“The Saving Gateway Account Act 2009 is repealed.”—

he is not giving people the

“degree of financial security that they have not had hitherto”.

Not for the first time on this Committee or on this topic, the Minister is standing on its head what he said was the right thing to do before the election.

Perhaps there is a coalition agreement to abolish the child trust fund and the saving gateway. Perhaps the Minister has accepted that the hon. Members for Bristol West and for Birmingham, Yardley could cause them to be abolished. He stood on his head to save money and to agree the coalition agreement. There is no coalition agreement to abolish the saving gateway; there is no agreement by the Liberals or the Minister—both supported it. I am offering him the chance to save the £150 million next year, and I will, undoubtedly, be told off by colleagues for doing so, but I am offering him that opportunity. He should accept it and take it without destroying what was a universally accepted and agreed scheme.

On 25 February 2009, the Minister also said:

“As the Economic Secretary said, there is broad support for the Bill. —[Official Report, 25 February 2009; Vol. 488, c. 322.]

I hope that the Minister can do us the courtesy of telling us whether he thinks that the Bill and the words he used in February were nonsense. Did he say them to get himself through the election and to prove that he was not part of the nasty party any more, because it had changed and was concerned about savings and poor people having an opportunity to save? If that is the case, perhaps he could say so today, but if, as I hope, he believed what he said at the time and thought that the saving gateway was a good thing, and, with the Liberal Democrats, believed that it was a mechanism to encourage saving, to allow contributions from the state to poorer people and to have the partnership that we have talked about throughout our proceedings, will he reflect on that and accept the amendment, and not emasculate the Saving Gateway Accounts Act 2009, but reconsider it when the economic situation improves in future?

Before I finish, I would like the Minister’s view on my, perhaps wrong, reading of the current Budget proposals and the previous Budget proposals. The question I ask might make me look foolish, but it is important to ask it anyway. The March 2009 Labour Budget, “Table A1: Budget 2010 policy decisions”, says that the saving gateway funding spend was £10 million for 2010-11, zero for 2011-12 and 2012-13, and that the net index in 2010-11 was £10 million. That is in column 21 of the Red Book for the Labour Government’s Budget. In the Budget policy decisions, part of June’s Conservative Budget, item 28 on page 40 says:

“Savings gateway: not introduce in July 2010”.

However, it says that the savings in 2010 will be £10 million. That tallies with the Labour Government proposal—savings of £10 million. Savings in 2011-12 are down as zero, which again tallies with the Labour Government proposal. Savings in 2012-13 are £75 million. Savings for 2012-13 under the Labour Government proposal were zero. I would like to know where that £75 million of savings has come from.

Now, it might be a foolish question—I do not know the answer to it. It is always good practice to know the answer to questions that one raises, but I want to get that on the record, just so that we can have the Minister talk to us about that particular issue.

For the moment, as I read this year’s Labour Government proposal and this year’s Conservative Government proposal, the costs in 2011-12 are zero to the Exchequer. Now, if there is zero cost to the Exchequer in 2011-12, why not accept the amendment not to remove the saving gateway now? Why not allow the scheme to develop and, if it is appropriate, pull it next year?

This is an opportunity for the Minister to reflect on all those issues. I would like him to justify to the Committee why he thinks that the saving gateway, which he supported in Opposition, is such a bad idea, which did not do “what it said on the tin” and did not generate savings. Why does he think he cannot accept a situation that allows him to reflect on that still further, at no cost to the Exchequer?

I look forward to the Minister’s accepting the amendment or at least adopting a reasoned approach and saying why he cannot accept it.

Mark Hoban (Conservative, Fareham)

Let me be clear at the outset. As I said on Second Reading, I support the aims that lie behind the saving gateway. The right hon. Gentleman quoted at length from my speech when the original debate took place and I do not back away from those words at all. Also, I recognise the attraction of matching as a means of encouraging savings. There is quite a lively debate in the pensions and savings world about that issue.

However, we have also been absolutely clear that we will not launch a saving gateway scheme during this Parliament, and there are two principal reasons for that. The first is that the scheme would cost more than £300 million during the next five years and in the context of the deficit that we face, it is unavoidable that we have to cancel this scheme.

The right hon. Gentleman talked about the gap between what was in the Budget document this year and what was in the previous Government’s Budget document. I think that he will find that the cost of the saving gateway scheme was score-carded in an earlier Budget by the right hon. Member for Edinburgh South West (Mr Darling), the former Chancellor.

I also have other concerns. The right hon. Gentleman touched on those when he talked about the comments of the former Chancellor, about who would offer these accounts, because clearly there was not going to be widespread and significant coverage. Adrian Coles, the director-general of the Building Societies Association, said in the evidence session:

“No building society had committed to offer a savings gateway”.––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 34, Q98.]

Eric Leenders, the executive director at the British Bankers Association, said of the banks that

“there were only a couple of providers who felt that it was suitably beneficial for them to provide the account”. ––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 34, Q98.]

The Post Office said that it would do it only if there was going to be taxpayer subsidy to enable it to do so. I do not therefore think that that was a very satisfactory base on which to offer the savings gateway account.

Yvonne Fovargue (Labour, Makerfield)

Does the Financial Secretary accept that the institutions that he has missed out are the credit unions, which operate in the majority of applicable areas, particularly those with low-income consumers, and that would have provided not only a means for the savers to save in the credit unions, but the credit unions with a means to expand their reach and expand into more areas?

Mark Hoban (Conservative, Fareham)

The hon. Lady makes an important point and I am sure that if I spoke to a credit union and I asked it how best to deliver support to it, it might not suggest that the saving gateway account was the most effective or efficient way of doing that.

Kerry McCarthy (Labour, Bristol East)

If the Minister had been here when the Association of British Credit Unions Ltd gave evidence last week, he would have had an opportunity to question the credit union movement. He would have found that it was enthusiastic and looking forward to the saving gateway being rolled out, and disappointed that it will not happen.

Mark Hoban (Conservative, Fareham)

I have spoken to the credit union movement on the subject on a number of occasions, so I understand its enthusiasm, but there are more effective ways of helping credit unions than this expensive scheme. The £10 million mentioned in the 2010 Budget was the cost of rolling the scheme out to post offices; the scorecard cost was from 2008.

The evidence is mixed. It is not entirely clear that the saving gateway account would have added to savings. On that basis, and given the fiscal position that the country faces, it is not appropriate to continue with the programme, and I expressed those concerns during the debate on the saving gateway account. Indeed, before the second pilot, questions were raised about whether the scheme would be effective in meeting the objective of increasing savings. There was no statistically significant evidence that, in delivering genuine net savings, the saving gateway account would still deliver higher net worth. The evidence is uncertain. Carl Emmerson of the IFS made the same point.

The evidence base is not as strong as it could be. In principle, the scheme is a good idea, but given the current economic constraints, it would not be an appropriate use of taxpayers’ money to pursue it. It is better to have clarity about the Government’s intention. We do not intend to roll it out in this Parliament. It is best that the measure is removed from the statute book, and that is the purpose of clause 2. It provides absolute clarity to all who are interested that the Government do not intend to pursue it. Anyone who came forward with a scheme at a later date might wish to redesign it completely, so there is no benefit in keeping it on the statute book.

Claire Perry (Conservative, Devizes)

The hon. Member for Bristol East made an important point about the credit unions. It was an extremely interesting evidence session, and I know that the Minister has read the evidence. I draw his attention to question 149, when I asked Mark Lyonette, the chairman of ABCUL, for his assessment of how the most impoverished families could increase savings. In response specifically to what we are doing with the post office, he said:

“the channels issue is about how we make that step change. Compared with the scale of Government support in the past four years, it is a much easier and better value thing to do”—

that is rolling out the post office network—

“than to keep doing the same or to salami slice what is already happening.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 51, Q149.]

Does the Minister agree that the bold moves that we are undertaking, particularly in rolling out the post office channel, is a way to help our most disadvantaged families gain access to financial services?

Mark Hoban (Conservative, Fareham)

My hon. Friend makes an important point. We need to think carefully about when to give support for tackling financial inclusion, and where we might get the maximum benefit from that support. The role of the post office is important, and discussions are ongoing about whether the credit unions could access the post office network.

Kerry McCarthy (Labour, Bristol East)

We have been in Committee for much of the day and have not had much of a chance to catch up with the news, but I was in my office for a brief period and I understand that the Government have pulled the plug on any concept of the Post Office bank going ahead on the ground that it was too expensive. Is the Minister aware of that announcement?

Mark Hoban (Conservative, Fareham)

There are clearly a number of ways in which we can encourage people to make greater use of the post office network, and I know that the post office will offer greater service, acting as a conduit and allowing customers of other banks to use it for transactions. That has already happened in a number of cases. The credit unions have put forward a proposal to use the post office infrastructure to help the growth of their business. We are looking a range of activities that could strengthen the post office network. It is important when tackling financial inclusion to increase the number of access points. One problem with that project is that there would clearly not be enough access points. That was one reason why we chose to end it.

Although we support the principle of the savings gateway, there is insufficient evidence to show that it would have been effective. There was clearly a problem with the network of outlets for the savings gateway. It is on that basis that we chose to scrap it. The money that we are saving will help tackle the deficit, which is the most pressing priority facing the people of this country today. This is the right thing to do.

Sheila Gilmore (Labour, Edinburgh East)

Once again, we are making the mistake of moving too quickly to abolish something that many people have said would have been a good thing in principle—even the Minister said that again just now. Why is it necessary at this point to do away with the proposition that we could have had, to put the scheme on ice—although I would much rather see it start to operate?

In the event, we would have been in a position to incentivise people on very low incomes to save—they will not be incentivised by tax schemes because they do not pay tax, which was the particular reason for a matching scheme. We do not want to reinvent it, to re-legislate and to set up again everything that went into the legislation—we saw how long it took from when the legislation went through in 2009 until the point in 2010 when it was about to come into force. Why is it necessary to do away with it, unless it is not actually a good thing—although that has not been clear from what the Minister has said?

There is so much ambiguity in what is being said. On the one hand, changes of this sort are presented as being an economic necessity—they have to be done because of the deficit. On the other, there is a lot of criticism of the proposed scheme itself—it is not necessarily the best way to help people to save, and we can help credit unions in some other way, although unspecified.

The clear evidence of the credit unions to the Committee was that the scheme was by no means the only way in which people could save. Equally, however, the representatives of the credit unions said that it was an important means of doing so. It was one way in which the business could be built up. People could be incentivised to save and put in contact with credit unions, some perhaps having not been in such contact before. In so doing, those people would become eligible for cheaper loans on a short-term basis, if needed to face a crisis. By making contact with a credit union, they would be open to getting advice and assistance that they might not have sought before, which, in turn, would also help them with their wider financial problems. As a means of helping people not just save but actually get in touch with cheaper forms of credit and financial advice, that important vehicle enabled that to happen.

If credit unions do not have enough outlets, one of the things under discussion—I hope still under discussion—is the suggestion that they might be able to operate in partnership with post offices. That would give people another means of getting in contact with credit unions, which would be a good thing. The lack of it having happened prior to July 2010 does not seem to be a reason for not going ahead with such a proposal. If the scheme had gone ahead and people had started to use it, that would have been an opportunity to widen provision and would have strengthened the case for that link with the Post Office.

Sometimes we have to get going with proposals and new initiatives, and to get them properly on the ground, before they ever work. If we keep waiting for the right time or for sufficient evidence that enough people will save, we might wait for ever. People need to see their friends and neighbours and the people in their community being enabled to save in this way—one of the biggest ways that people are helped, initially at least, to make contact with organisations such as the credit unions is through word of mouth. If people see their friends and neighbours and the people they work with becoming involved, they are likely to want to take up that option as well.

Alison McGovern (Labour, Wirral South)

On that very point of Post Office involvement and how the scheme might have linked in with a greater role for the Post Office, would the hon. Lady agree with the National Pensioners Convention, which said about the Government’s announcement on the Post Office today that the decision not to have a Post Office bank was extremely short-sighted and would put the future of the post office network in jeopardy?

George Howarth (Labour, Knowsley)

Order. The hon. Lady makes an interesting point, but I am not sure how it relates to clause 2.

Sheila Gilmore (Labour, Edinburgh East)

I certainly agree with my hon. Friend that it is regrettable that the idea of a Post Office bank seems to have gone the way of many other proposals. I hope that the proposals on partnerships between credit unions and post offices will not go the same way because, regardless of whether there is the saving gateway or not, such partnerships would immensely benefit both credit unions and local communities.

My point about the second pilot was that although there was evidence that some people who had saved in this manner would have saved otherwise, that generally related to people on higher incomes. The second part of the saving gateway spanned a broad level of income, which the proposal in the Act would not—a much more limited scheme was legislated on. The people on the lowest incomes and on benefits who were in that saving gateway pilot were the very people who did save when they had previously not saved, albeit the amounts were small. As was much discussed in the evidence given by various people to the Committee, small savings can make a tremendous difference to people’s financial position and to their ability to weather the storms that they come across.

Is the Minister saying that the scheme is such a thoroughly bad idea that it should not be reopened at a future date without having to go through a legislative process? If that is the case, it means starting again from scratch with all the paraphernalia of legislation. That is absolutely not necessary. I still fundamentally believe that it is regrettable even to suggest putting the scheme on ice because, in such a difficult time, people are experiencing greater financial difficulty, and I suspect that many will go to much less creditable places to get loans.

David Hanson (Labour, Delyn)

May I confirm for my hon. Friend that when I said that putting the scheme on ice was not the preferred option, in fact I hoped that even the three-year gap that we have now suggested could, in fact, be a six-month gap. The simple objective is to avoid the cancellation that clause 2 currently provides for.

The rest of the debate is in Hansard.