Clause 3 - Requirements to be satisfied
Child Trust Funds Bill
2:30 pm
Mr Michael Jabez Foster (Hastings and Rye, Labour)
I understand the hon. Gentleman's point, but that would not add significantly to the costs. Certainly, we want people to make regular payments so that the funds build up. However, as they do, the 1 per cent. charge would be levied not on £250 or £500, but on the total value each year. Assuming a 4 per cent. rate of return, which would not be unusual at present, a quarter of that total return would be taken in charges to pay the costs, and if the charge were as great as 2 per cent., half the return would be going in charges. That would be wholly unacceptable; we might as well not have the scheme at all but just send out the voucher.
For the reasons that I have given, I hope that the Government will hold firm to the lowest possible cost and test the market. If the market says no, then of course we must think again. However, I am pretty confident that 1 per cent. will be sufficient.