Mr George Osborne (Tatton, Conservative)

I am still recovering from my shock defeat in the Division.

Most amendments in this group were tabled by the Liberal Democrats, but I tabled amendment No. 117. As we discussed earlier, the Government have made it clear that when parents or guardians fail to open a child trust fund account within a year, the Inland Revenue will do so on their behalf. That is good. The White Paper also made it clear that such accounts will always be stakeholder child trust fund accounts, which include equities. That is also the right way to act, as children should not lose out through the negligence, incompetence or ignorance of their parents. I am sure that the Liberal Democrats will have something to say on that point.

I have a few questions that relate to amendment No. 117. It is made clear that not all financial providers that offer child trust fund accounts will have to offer Revenue-allocated accounts. What estimates has the Minister had of the number of

providers that will offer such accounts? Will there be a wide choice for the Revenue or will only a few providers offer to administer the accounts? From the providers' point of view, it is likely, although not absolutely predictable, that if a parent cannot be bothered to open an account, they will not make substantial contributions to it, so it is unlikely to be lucrative for the provider to administer.

There may be other administrative problems. If the providers have to deal with parents or guardians who did not open the account, they may find it difficult to keep track of where they have moved around the country. If the child comes from a dysfunctional family that splits up, the provider may find it hard to keep track of who is responsible for the account. Some additional administrative costs may be associated with Revenue-allocated accounts, so will the Minister say whether a substantial number of providers will offer them?

The White Paper makes it clear that the accounts will be allocated in turn. I take it from that that there will be a list of providers and the Inland Revenue will simply move down the list to allocate funds on a rota basis. I am suggesting merely that that is done at random, so that there can be no suspicion that people were allocated a duff account provider or poor-performing account. My amendment would mean that we could say with confidence that the accounts were allocated at random.

Amendment No. 117 is a probing amendment designed for discussion of the issue, but there is a serious point. Providers are unable to refuse Revenue-allocated accounts once they have agreed to accept them, but smaller providers may reach a point at which they cannot administer the funds. The current provisions will encourage only large account providers to offer Revenue-allocated accounts. A small building society with only a few branches that has overcome the hurdle of having to offer stakeholder accounts may want to administer a few of the accounts, but would be unable to handle a quarter or sixth of the Revenue-allocated accounts throughout the country. That is an important point in relation to the provisions that require providers to accept all Revenue-allocated accounts, regardless of their situation, once they have accepted the principle of taking such accounts.

What help will the Inland Revenue give to providers of Revenue-allocated accounts in keeping track of the people involved? They are unlikely to have had any direct contact with the parents or family, so will the Inland Revenue inform account providers when the child changes address? That is likely to be picked up by the child benefit administration, but will it pass that information to the account provider? What steps will the Revenue take to remind children throughout their childhood that they have a child trust fund? The children may be completely unaware of the accounts if their parents have not told them about them, and even the parents may be unaware, which is why the account was not set up.

Lastly, will financial providers have to alert children at the age of 18 that they have a child trust fund? Is the

financial provider obliged to track down those who hold such accounts? If one was being cynical, one might say that it was in the provider's interests not to bother tracking down all those with accounts holding £900, £1,000 or £1,100. The cost might be disproportionate, and the provider might not mind having a large number of low-value accounts steadily gaining interest, without anyone being aware that they are entitled to the money.

That is a string of probing questions and I should be grateful if the Minister could deal with some of them.

See this speech in context