Savings Accounts and Health in Pregnancy Grant Bill

Part of Parliament (Amendment) – in the House of Commons at 8:14 pm on 26th October 2010.

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Photo of Simon Danczuk Simon Danczuk Labour, Rochdale 8:14 pm, 26th October 2010

I wish to turn my attention to the child trust fund, in particular, and to start by quoting the Chancellor. In a speech made just 12 months ago to the Conservative party conference, he said:

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

As we have heard tonight from Conservative Members, many of them believe that the benefits we are discussing tonight should not be universal and that we should target them much more closely. That has been a common theme throughout this evening's debate.

Only the Liberal Democrats have never really been in favour of the child trust fund. They have continually proposed to scrap it, although they have not had the decency to turn up to this debate in number. So we have to ask ourselves what the situation really is. Who is the driving force in the coalition Government in terms of punishing the poor? Is it the Conservatives, who want to target their benefits more closely, as we have heard today, or is it the Liberal Democrats, who are happy and enthusiastic about increasing VAT, raising tuition fees and cutting the child trust fund?

The reality of the Chancellor's logic in scrapping the child trust fund is that the most vulnerable will be hit hardest. I can tell colleagues that the child trust fund is neglected in terms of the attention it gets, as has been shown by Conservative Members during today's debate. The fund is a very important tool to encourage saving, particularly for the less well-off. I know that from speaking to parents across my constituency, particularly mothers. It has continually encouraged them to start saving on behalf of their children and it has started them thinking about the future for their children. We cannot underestimate the importance of the child trust fund in that regard. Although I readily accept that what children will receive is between £500 and £1,000, which is never going to pull people out of poverty in a short time, there is absolutely no doubt that it has been a catalyst to get people to start saving. As has been said, it has also encouraged families and friends to start contributing to the savings of young children.

I have described the trust fund as one of the best hand-ups, rather than handouts. As has been said, the Save Child Savings alliance has described the child trust fund as

"the most successful saving scheme ever."

There is irony in the Government cutting the child trust fund at this time, because one of the key reasons for its introduction was to encourage people to engage with financial institutions. People are suspicious of such institutions and, if ever there were a time when we needed to encourage them, it is certainly now. Yet, the Government are scrapping this initiative and the other initiatives dealt with in this Bill, which actually encourage that engagement.

The Government's decision to scrap the child trust fund will, in effect, create a situation where-we heard about this just before I spoke-the elite in society will be continually pumping and stashing thousands of pounds into the personal, private child trust funds that many of the wealthy already have. That dichotomy will continue. What we will have in poorer communities-in parts of Rochdale-is poor families who will be unable to get that start in life for their children, with no £250 or £500 to kick-start their saving. Although the wealthy will continue to have their opportunities in life, the poorer and more vulnerable will not have those opportunities. Come 18, when the children from the wealthier families have the chance to have a good time at university and have a better opportunity to go off on a gap year, to buy a car or take driving lessons, which is all well and good, the reality for the poorer people and the more vulnerable, whom we often see in Rochdale, is that because of these cuts, which could have been avoided, they will not have those opportunities. They are being taken away from them by the Conservatives, ably assisted-especially in this instance-by the Liberal Democrats.

The contrast could not be more obvious. In many respects, the axing of the child trust fund defines the differences between the Labour Government and the coalition Government. The Labour Government were intent on providing a hand-up and not a handout, whereas the coalition Government are not prepared to provide either a hand-up or a handout.