Good morning, witnesses, and welcome. Thank you very much for coming. As you probably know, this is the third sitting of the Committee, which is exploring the Savings Accounts and Health in Pregnancy Grant Bill. We are now going to hear oral evidence from the National Childbirth Trust, the Family and Parenting Institute and the Royal College of Midwives. May I ask witnesses to introduce themselves for the record?
The criticism of the grant that is most often made is that it is paid quite late in a woman’s pregnancy. Do you think that there would be an advantage to bringing forward the date on which it is paid?
Belinda Phipps: The grant is important because it puts money into pregnancy at a crucial time, so we support putting that money into pregnancy. Even late on, it can have beneficial effects. It depends what you think you are trying to do with it. If you are setting out primarily to improve the nutrition of the mother to improve the health of the baby, it needs to be earlier. If you are setting out to use it to support her education as a parent, it is okay where it is. But if you really want to change the future of the baby, it needs to be as early as possible. It is not possible easily to do it pre-conception, but the earlier in pregnancy you can do it, the better.
There is strong evidence that quite a number of women suffer from low levels of micronutrients early in pregnancy. Providing them with a small amount of extra income enables them to feed themselves properly, which has a huge knock-on effect for the health of the baby. It primarily reduces premature births, which gives you a good return on investment, because every time you reduce a premature birth you save an awful lot of money. We know that premature births cost the health service at least one and a half times the cost of a normal term birth. We absolutely support the grant and the need for it, but if we had a magic wand, we would provide it much earlier.
In terms of what the grant is actually spent on, some suspicious minds on Second Reading suggested that women could not be trusted to spend it on their own health in pregnancy or for the benefit of their unborn child, and would spend it on handbags or haircuts or whatever. What is your evidence on whether people are using it wisely and sensibly?
Louise Silverton: I think that is a very patronising approach to how women make decisions. We do not give unemployment benefit and support to people on the basis of what they are going to spend their money on. If you think about the name of the health in pregnancy grant, were it to be tied in to women accessing antenatal care before the end of the 12th week of pregnancy, which is the time recommended by this Government and by the previous Government for women to access antenatal care, you would significantly improve outcomes. At that time, you would allow midwives to give advice on nutrition and healthy living.
It is called the health in pregnancy grant, so the money could be spent on nutrition or on women accessing exercise classes—we know that aquaaerobics is very good for women towards the end of pregnancy. I feel very annoyed about that patronising approach. It is an expensive time—you reach the end of pregnancy and you start to want to get equipment and other things for your baby, even by buying second-hand cots and baby equipment. That time is an ideal opportunity to give what is essentially advance child benefit, which is what it is and what it was planned to be, to assist parents to get ready for having their child. If we want to support young parents and to encourage them in parenting, this is a really good way of doing it.
What you say about the grant being advance child benefit is very interesting, because we obviously do not dictate to people what they spend their child benefit money on. At the moment there is a debate about whether people who do not need child benefit, because their household income is higher, should be eligible for it any longer. What would you feel if the health in pregnancy grant went down a similar route, so that in effect it was means-tested by being linked to child benefit?
Belinda Phipps: I am absolutely with Louise on the whole business of what this money is spent on—I am with her 100%. Our evidence is that when we talk to women who are becoming mothers, they say, irrespective of how they got to be pregnant, that now that they are pregnant they want to do the very best for their child, and that is what they aim to do. They are not always in the best position to know what the best is—that is a matter of education—but they do the best they can for the child. Because the grant is paid when it is, it is less likely to be used for food and more likely to be used for those one-off expenditures on things they need to buy. Although we can do an awful lot with NCT nearly new sales, it clearly still costs a lot of money to set up for having a baby.
The link to child benefit is important because, if we had a magic wand, we would like to see the extension of child benefit back into pregnancy. If we were to start child benefit at 12 weeks or something like that, with a small sum being provided each week, that would have the maximum benefit—given the constraints on being able to get money to mothers—for the maximum number of women on their diet. That would be the way to do it. Another way would be to link the money to the Healthy Start programme, which is directed at poorer women. Whatever the case, it is important that that money remains in pregnancy.
Katherine Rake: I want to use this as an opportunity to make a broader point about the reality of family life, especially when somebody is facing the birth of a new baby. That is not a point in family life at which people are looking at luxuries; most families are struggling to make ends meet. The cuts that we are talking about today have to be put in the broader context of the announcements made before the comprehensive spending review and in that review. Families with small children are on the front line of many of those cuts. It is not the case that we are withdrawing universal benefits, but maintaining means-tested benefits. For example, the Sure Start maternity grant will be abolished for second and subsequent children, so no simple trade-off is being made. All families are being affected by the range of proposed cuts, and poorest families are being affected particularly harshly. Combined with the changes to child tax credit and the freezing of child benefit, which applies to all families and not just to the better-off ones, we are seeing an across-the-board targeting of families with small children through those cuts.
We need to think about the reality of family life, because for many women the switch to motherhood is actually a route into poverty. The Prime Minister has declared his very laudable ambition to make the UK one of the most family-friendly societies in Europe. The way we should do that is actively to support that transition. I am afraid that we are the very poor cousin of our European neighbours in the generosity we show to families with small children. I fear that the package of reforms in front of us has made us an even poorer cousin, with all the consequent impacts on the family, the couple in the relationship and the child—and on the child’s ability to realise their ambitions. We need a reality check about where we are sitting. We are talking not about a simple trade-off between universal mean-tested benefits; all benefits are being affected, and some of the poorest families are being affected.
I want to go back to what Belinda said about its being more useful to have an advance child benefit that is paid at a low weekly level. I am showing my ignorance now—would you be talking about £10 a week?
Belinda Phipps: It depends on who you give it to and how you do it, but it would probably work out at £6 or £7 a week, depending on what parameters were used. It depends on whose figures you believe. The Joseph Rowntree Foundation believes that it costs about £44 a week to feed yourself adequately, but other people say that it is £30 a week. At the moment, people who are in that situation are spending about £18 a week, so there is at least a £10 gap in what they need to feed themselves. That is the sort of money that would help to make the difference.
There is a trade-off, though. Child poverty groups have debated whether it is best to boost weekly income or, as Save the Children argued, to give seasonal grants to meet certain kinds of lump sum expenditure. Obviously, if you are talking about food, a weekly amount is useful, but if you are talking about expensive items such as buggies or cots, a lump sum would be more useful. I do not know what Louise and Katherine think about this issue.
Belinda Phipps: Ideally, both are needed. It depends on what you are setting out to do. At the moment, parents struggle in both respects. If you want to think about the economic climate, we are now seeing the end effects of a lot of poor nutrition early in pregnancy. We have a high level of prematurity, which leads to all sorts of expensive problems in children later and to devastating problems for the families. If we want to make a difference to the health of the public, the place to start is in pregnancy. Although we would like to see the £190 left as a lump sum because there are very good uses for it, such as paying for antenatal education to prepare people for being parents, it is even more important to ensure that an adequate diet is being eaten by everybody, because that will knock on into savings that can be reinvested to make the other improvements.
Obviously nobody is saying that paying the health in pregnancy grant is a bad idea. The question is how best to deal with the process of pregnancy and giving birth. From listening to you, it is obvious that there are things that lump sums have to be spent on. Perhaps bringing forward the payment of the maternity grant prior to birth would be a useful thing to look at. If we assume for the purposes of discussion that the health in pregnancy grant will go, what we are saying is that there are lump sum things around birth for which funds are needed. Would it therefore be useful to bring forward the maternity grant?
Belinda Phipps: In total, the amount of money going to pregnant women, and particularly to poorer pregnant women, is insufficient. We start from that baseline. The principle of bringing things into pregnancy is helpful because we know that pregnancy is when the baby is being built and so is when you need to work on nutrition. It depends how it is done, but it would be helpful if those two principles were applied.
I was thinking of the equipment side of it first, before I went on to the issue of health. You referred in particular to micronutrients being important. There is evidence on that, and you can give precise information later. It strikes me that we should look at maternal health throughout pregnancy. Would considering a way of getting nutritional supplements to people be a sensible approach?
Belinda Phipps: It is better to eat a whole diet. Nutritionists would recommend eating a whole and healthy diet. You need to have a sufficient weekly income to cope with that so that you do not run out of money two thirds of the way through the week and end up eating something that is not very nutritious. The principle is that you should bring money into pregnancy wherever you possibly can.
What evidence is there that the payment of the health in pregnancy grant over the last year has had an effect on the health of the baby in particular?
Belinda Phipps: The evidence on that is more difficult because it is paid in the last trimester of pregnancy. It does have an effect, as far as we can tell, but it does not have as much of an effect as it would earlier on. What it does have an effect on though—enormously—is the stress that parents feel when they are having a baby. Often when you start out, you really have absolutely no understanding of the real financial impact of pregnancy, imagining yourself not being able to work, not having the time to do the things that you do, and that becomes very real as the pregnancy proceeds. The relief people feel to have a lump sum of money that allows them to spend on those things that are essential for when you are having a new baby is enormous. We know that being stressed is also very bad for you personally, your ability to look after a baby and for the baby itself, so we absolutely support the payment of that money. We believe it does good. We would love to see it stay. If it were possible to put something in earlier as well, or even instead of that, that would be even more helpful.
Katherine Rake: The point that I would make about the health in pregnancy grant—I understand that it applies also to the child trust fund—is that some of the ambitions behind those policies were very long term and very large. They are ambitions about changing eating habits at an early stage, with a knock-on positive impact on the baby and on that family’s behaviour. Likewise with the child trust fund, the ambitions were to create a savings habit. What was recognised was that basically it is the nudge principle that inertia is the death of behavioural change. Inertia is what stops us from doing what we know we should. There are points in people’s lives where people re-evaluate and pregnancy is one of those points. When you are expecting your first or subsequent child, it is a point at which you re-evaluate your eating behaviour, your savings behaviour and so on.
The Government had recognised that that was a point at which you could begin to nudge people in the right direction. Our concern is that the overall issues of obesity and poor eating and the overall issues of a low savings rate will be with us three, four or five years down the road. All the evidence is that those are going to get worse rather than get better, so we need to think, if these mechanisms are being abolished, at what point in the return to better economic times, which we are all hoping for, will they come back into play, because we have to change that underlying behaviour. The Government have to use the opportunities that they do, and pregnancy is one of those opportunities in order to nudge people along.
The simple answer to your question is that we had barely got out our notebooks and pencils, and the thing is being abolished. So we do not know the real evidence of impact, but for both of those policies some of the impacts should have been felt in the much longer term and be intergenerational.
Can you take us a little bit further in the health issue and preparing for pregnancy? One of you referred to the fact that preconception is also an important issue. Would you also agree therefore that we need to be addressing the incomes of all women of child-bearing age to ensure that they are able to conceive, from the position of being able to afford a healthy diet and so on?
Lou i se Silverton: It has always been a rather vexed point about when to start pre-conception care. The proportion of pregnancies that are actually planned is relatively low. That does not mean that these are not wanted pregnancies, but depending on which research you look at, the proportion of actual planned pregnancies can be as low as a third. Now a further third are definitely wanted, but may be not quite now, and then the other third are the ones where people think, “Don’t want it at all,” or they come round to the idea of it.
Of course, you could say that any woman in her fertile years is essentially in a pre-conceptual state. There is a big issue about the level of income that women have and whether they are able to spend sufficient money on their own nutrition. It is a much bigger issue than we are able to look at here. Certainly, however, encouraging women to think about being in the best state of health at all stages of life is important.
Thank you. That is really helpful and although it is a bit beyond the scope of the Bill, it is useful to have on the record.
May I ask one other question, which is probably for Louise? What is your assessment of the importance—or perhaps it has not been an essential feature of the health in pregnancy grant—of the linking to checks and appointments with the health professional?
Lou i se Silverton: There was a lot of discussion at the point that the grant was being developed about whether that should be done. We had some discussion about the French model, under which you have to have had a series of antenatal checks for that to take place. It was felt to be extremely bureaucratic and quite difficult to do. However, if the initiation point for being able to access the start of this grant was tied in to having your first assessment from your midwife or obstetrician before the end of the 12th week of pregnancy, that could be done. Subsequent payments would be relative to receiving antenatal checks. We do not want that to result in women appearing for antenatal assessment when they do not need it, because the number of visits that women in the UK need, and that many have experienced, has been reduced in the guidance.
Belinda Phipps: Healthy Start payment is linked to attendance with a midwife. As well as providing the vouchers, that has the advantage of giving the midwife the opportunity to provide some education, which works very well indeed. It is also synergistic with the need to get women to come for their antenatal care early so that they can get the information that they need to make decisions about screening, and so on. There is benefit to tying that in, so long as it is an early tie-in and that is when you are going to start providing the money. Later on, as Louise says, it can be more of a hindrance than a help.
There is no one around this table who would not agree with the aspirations behind the measures, or with what you have said about the importance of maternal health and the impact on babies and future generations. The issue concerns the best way to target the limited resources that we have to deliver the best possible outcomes. That is especially important for mothers and babies, and families, on particularly low incomes.
I want to follow up on some of the things that Belinda has discussed about Healthy Start. That seems to have been a good programme, which is starting to tackle a lot of the issues to which you referred about pre-conception—right from the earliest stage of conception—and ensuring that mums-to-be, especially those on low incomes, are supported through a range of services. As you have said, that has to be linked to some sort of health professional, be it a community midwife, a health visitor, or somebody at a Sure Start centre. A whole range of services must support mums, and their partners and families, who are on low incomes, giving them benefit advice, for example. Much of that care goes on for years after the baby has been born.
I am interested in ideas about how we can build on what is a good programme, linked into the new investments that the Government are making in primary care, in Sure Start centres and in health visiting, to reach the objectives that were identified, but in a different way.
Belinda Phipps: Based on the evidence, we think that the most important thing would be to put child benefit in early, starting at, say, 12 weeks. That would reach the greatest number of people who need it. It is not only very poor women who have poor nutrition; it is the next level up—those who are not on the poorest benefits. That measure would give women about £6 or £7 a week.
The next best option would be to extend Healthy Start. It would be extremely helpful to add between £10 and £12 to that. The infrastructure is already in place to make that work and we know that it works well. Although it is a benefit that has to be claimed, there are a lot of points at which that claim can be made, and a lot of attention is given to getting the claim done.
Thirdly, to address the point that Louise has made: how do you deal with pre-conception care? It is extremely difficult for the first child and it requires whole society change. By extending the benefits to the mother for a good couple of years after her baby is born, you can improve her nutrition and, essentially, provide preconception nutritional care, which benefits the second baby. There has been some work in America that has shown that a programme, which started in pregnancy and supported the mother’s nutrition, extending into the two years after the baby was born, gave a major benefit to the second baby born. They had better birth weights, with fewer problems and were therefore much less costly in terms of care. That is the other thing that we would like to see done.
At the moment, the vouchers are targeted at nutrition—vitamin supplements, milk, fresh fruit and vegetables—to supplement very low incomes, where women cannot afford the cost of a healthy diet, if we accept the Joseph Rowntree Foundation report, which I think is accurate. You were talking about voucher extensions into some other areas—you could look at equipment. Instead of a cash lump sum, there could be vouchers for people to meet the, as you say, very high cost of a pram, a cot or clothing.
Belinda Phipps: Early in pregnancy people tend not to have those big spends, because they can just extend the use of their own clothes. That expenditure comes later. Our magic wand would be to use the second-hand market in a similar way to NCT nearly new sales, because that saves everybody money and it is ecologically friendly. You could, however, give vouchers as well.
Katherine Rake: I just wanted to make a point about your aspiration, which I absolutely share, about making sure that the poorest families have the most, but I also want to raise some issues around targeting versus universality. I would say that poverty is a dynamic phenomenon; it does not have a fixed population. Often, Westminster people think, “As long as we can get that in our sights, we will be able to sort out poverty.” One of the things that creates poverty, however, is pregnancy and the entrance into motherhood. You cannot necessarily predict, pre-pregnancy, who is going to end up in your at risk population. It is also sometimes hidden, because, in wealthier households, each partner does not necessarily have equal access to the income. Poor behaviour is not only a phenomenon of households in poverty—it stretches across the income bands and we need to recognise that. On appearance, targeting saves you money, but universality is incredibly cheap to administer and much loved by those who receive it, because the process from the recipient’s end is so simple and you do not have that problem of non-take up. Those are my general points about what appears to be a very attractive proposal, but which is actually, in reality, much more complex and costlier than one might imagine.
I have two questions. They are probably for Katherine, but I am not entirely sure. I wanted to get a sense of the scale of cost increases. What would be the typical costs of prams, maternity clothes, equipment, medicines, that sort of thing? Katherine, you said that pregnancy can bring about poverty. Could you say a little about the scale of that?
My second question was for Louise. You mentioned a French model. Are there are any other examples from the rest of Europe or the world of how they do this differently? Where will we be putting ourselves if we pass the Bill, in terms of the aspiration that we all share of supporting families in Britain? Will we be ahead of or behind the pack after the Bill?
Katherine Rake: There are two costs associated with pregnancy and parenthood. One is the physical cost of purchases. We estimate that, between the ages of nought and 18, you are looking at £200,000 to £220,000 to raise the average child. The other cost, which is more hidden, is forgone earnings. Because we are not a family-friendly society and we do not have family-shaped jobs in the labour market, the reality for many families is that somebody has to exit the labour market to look after those children. I did some work that is now 10 to 12 years old, which looked at the average cost to a woman of forgone earnings because of motherhood. Those came out as another £250,000, and that was back in 1999. You are looking at very substantial sums, and that relates to my earlier point that once we recognise that, there is a strong argument for the state to do more to support families at what can be a very positive, but also incredibly vulnerable, point, not only because they have more up-front costs, but because they are losing a wage.
Lou i se Silverton: The only model that I am aware of is the French model, and I do not know whether it is still current. It used to be the case that you needed to have had a certain number of antenatal assessments in order to get your benefits, and if you fell short, you did not receive them. But we can have a trawl round and send you what we find on European models. It is worth saying that we have a particularly unequal population in the UK. The gap between the poorest and wealthiest is quite wide. Scandinavian countries, which have a more even population mix, do not seem to have the issues that we do.
Belinda Phipps: The Scandinavian countries are far ahead of us. You get a whole year of paid leave in countries such as Norway. It recognises that the baby’s brain is still developing in its first year of life, and it particularly recognises the crunch that Katherine referred to, which is that when you have a baby, you are torn between earning money to keep your head above water and spending time with your child. Your child needs both—you and financial support. Many families find that they cannot cope because they are working opposite shifts to be able to bring in the money. They are shattered, and that feeds through into not having the time to cook and shop and do all those things that you would want to do well. If we could relieve that huge pressure on families struggling with the emotional journey of being a parent, we would see fantastic, much improved results further down the line, and we would make big savings.
If you have empirical evidence from other countries that might benefit the Committee, it would be helpful to send it to the Clerks so that it can be properly circulated.
Following on from the discussion about the positive and targeted work of the Healthy Start scheme, which meets the needs of the most vulnerable and those on the lowest incomes, at a time of scarce public resources, how does paying a health in pregnancy grant to families on higher incomes help?
Belinda Phipps: It is hard to get across how having a baby impacts on everybody. When you have a baby, your chance of being poor—as measured on a poverty index—dramatically increases, but everybody takes a step down. By “everybody”, I mean other than the extremely rich CEOs who run banks. Everybody suffers from the time-money dilemma and struggles to keep their life together. We know that universal benefits have the enormous advantage of being easy—everybody gets them and you do not feel stigmatised by getting them, so the first-line preference overall is to do things universally.
It is not only the very poor who suffer from bad nutrition in pregnancy. A surprisingly large proportion of the female population is not fully and properly provided for nutritionally. That has a knock-on effect for a big range of babies, so we would much rather see a universal benefit. However, if that is not possible, Healthy Start would be a good way to do it in the short term. In terms of paying for it, this is a true investment that has returns—according to some of the studies that we have looked at—of two, three, four, five, perhaps even 17 times what you put in in pregnancy. It has a multiplier effect. A baby whose brain development is effective during the pregnancy and first year of life will not at a later stage be treated for depression and mental health issues and end up in prison. There is an absolute link and it makes so much sense to do it now, even though it requires spend and we are in a recession, because it will make the future much cheaper.
I understand many of your points. Because we do not have a magic wand, as you said earlier, we are having to make difficult decisions, and the importance of targeting limited funds on those who most need help is surely just and right.
Belinda Phipps: If that is all we can do for the moment, targeting is obviously one way to do it. But you will then miss out the next tranche of people in work who do not have proper nutrition, but who do not come into the category of “poor.” Their babies, too, will be expensive later on. As soon as we can move to universality in pregnancy—or stay there if we can—the better.
Katherine Rake: I think it was Richard Titmuss who famously said that services for the poor become poor services. There is a difference between saying that, over this period of extreme economic difficulty—the next three or four years—we will move to targeting, but that the principle of universality holds, and saying that we are unpicking the principle of universality. Families are looking for a strong signal from the Government about their offer in future. If they are going to take families with them through these incredibly difficult times, they have to paint a vision of what is on the other side. From current Government policy, I do not understand whether we are dismantling the universality principle or saying that during the three or four years of difficult times, we will go down the targeting route, while standing by universality in the longer term. The question of the time period is critical.
I want to return to the use of the voucher. What evidence do you have of the percentage of people who use the voucher, as opposed to the percentage of people who would use the cash? I am concerned about stigmatising mothers and pregnant women when we do not do that with any other benefits.
Belinda Phipps: The take-up is not 100%, but Healthy Start is a really good scheme. There are lots of entry points. The midwifery profession works hard to get people to claim the vouchers. Universality would be much better, but among such schemes, this scheme is very good. It has been put together well and people can get a broad range of healthy foods for the vouchers. If you spend time in the supermarket in Acton, as I do, you will see people using those vouchers.
I would like to declare an interest, having had three children—two in America and one here. I have an interesting perspective on both health systems.
I would like to return to the evidence base. I agree with Fiona that the idea of supporting mothers and foetal nutrition is incredibly important. I also accept Katherine Rake’s point about the long-term benefits of ensuring that we have healthy conceptions and healthy pregnancies. What evidence is there about which nutrients have the most benefit for the foetus and the mother? What evidence is there that this grant is being spent on delivering those appropriate things?
Alternatively, is this grant effectively a bribe to encourage people to seek health advice at a point when they might need it for reasons other than their pregnancy? I have always been concerned that 25 weeks is far too late to start talking about foetal nutrition—things are pretty much done and dusted at that point. Perhaps it is not just about the money. As we have heard this morning, there are concerns about what we can spend our limited public resources on. What other interventions might make a difference? Are health visitors the best people to deliver this advice, and should we be supporting them to get access to the poorest families? In a world where money is constrained, what is the best way to get help to the women who really need it to improve their nutrition?
Belinda Phipps: Micronutrients are associated with the food that you know is healthy, such as vegetables, fruit and fish. They include B vitamins such as vitamin B12, folic acid, all the minor minerals and omega 3 that comes from fish, not vegetables. That kind of omega 3 makes an enormous difference to brain development, which is crucial in pregnancy. Those particular foods are not easily available and are not eaten by people on low incomes.
Loui s e Silverton: Yes, but these micronutrients are not in the most common multivitamins. Multivitamins are just that. You need to get the extremely expensive ones to get selenium, magnesium, zinc and other micronutrients. We are learning more and more about the importance of quite uncommon minerals in the development of the foetus. Such minerals are also very important to breastfeeding, because brain growth in the first year is tremendous. Breastfeeding, as we know, is the best way to foster the rest of that growth. It is also worth saying that the reports on perinatal and childhood deaths by the Centre for Maternal and Child Enquiries show that deprived women are much more likely to report late for antenatal care. Anything that can be done to encourage them to get into the system early, and to give them the right sort of advice, is important.
Health visitors are a bit of a red herring, because most families only come into contact with health visitors once they have had a baby, which is far too late. You have to focus primarily on midwives, and ensure that women have enough time with them, and that there are targeted approaches to bring into care women who tend to exclude themselves from it.
Katherine Rake: One of the things I would flag is that you risk missing a trick if you try to boil this down to base nutrients, because what we want is a change in long-term behaviour. It is not a question of a poor diet that should be supplemented by nutrients packaged for the individual. This should be seen as a time at which to nudge people into the right behaviour. That has all sorts of knock-on consequences for their own health, but we also know that good eating is catching and that it catches across generations. Given what we know about the tide of obesity that we are facing in this country, which is an enormous behavioural issue to have to face, we must take every opportunity to change behaviour. One risk is that if you try to boil this down to a set of micronutrients that will somehow be issued to pregnant women, you miss that much bigger goal of shifting behaviour. I concur absolutely with the point about health visitors. Increasing the number of them and increasing access to them are essential, but that fulfils a different function.
Given that I think we all support the idea that this is not just about dishing out pills, is there evidence that the health in pregnancy grant is spent on achieving a healthier diet? Have you seen any evidence that people who receive the £190 spend it on healthy food and/or radically change their diet or lifestyle as a result of that intervention?
Katherine Rake: We just have not had the time. The grant has only just been introduced, with the women who first received it only now having given birth. There has been no time to assess what broader impact it has had, although we know about child benefit and what women do with that. For many years, the argument was made about child benefit that it was frittered away on unnecessary luxuries, which is absolutely not upheld by the evidence. Child benefit is one of the most effective ways of ensuring that spending goes in the right direction—on the child and their future. We do not have the evidence and we will never have it, if the Bill passes as it is.
Belinda Phipps: This is only anecdotal, but the 25th week, when people receive the £190, is often the point at which they will come to a National Childbirth Trust nearly-new sale and have a lump sum of money to spend on goods. That means that they are not having to put an amount aside each week from their small income to try to save for big items. They tend to spend the money on such items, which relieves the pressure on their daily income. As Katherine said, it is too early to know, because the grant has only been there a little while, but that is what we think is actually happening. It is likely that the grant is having an effect, so it is a good thing to have, but that effect happens quite late in pregnancy.
Louise Silverton: It is also worth saying that this is a grant paid to women. We see many women who do not have access to money. Cultural norms mean that for some women it is much harder to work outside the home. Those women have to ask their husbands and partners for money, but the grant actually goes to those women. We cannot play down the importance of that.
Just one question for any witnesses who wish to answer: I recognise that it is early days, but have you any anecdotal evidence about the take-up of health advice by for women prior to the grant at the 25th week, and about the take-up of such advice at the 25th week now that the grant is in place, as a result of it being linked to healthy advice?
Louise Silverton: The short answer is probably no. However, over the past few years, alongside the introduction of the grant, there has been a reduction in the amount of time that midwives have been able to spend with women. Since 2002, there has been a 19% increase in the birth rate, and in London it has gone up by more than 25%. The complexity and make-up of the child-bearing population has increased, with there being more women for whom English is their second language, women with pre-existing health conditions and women in very poor social circumstances. The number of midwives has not kept pace with the number of births, so midwives have less time to spend with women.
It is interesting that the Liberal Democrats said at their party conference that they would remove the grant and put the money towards the additional 3,000 midwives that were needed. I am not here to say that we are going to take the food out of the mouths of pregnant women, but we need to look at both sides of the equation. We need to facilitate midwives to be able to do much more than simply the mechanics of blood pressure and urine testing and abdominal examination. Midwives must be able to have time to sit down with women, talk to them, relate to them, possibly engage interpreters, and show good behaviours. There are hugely good examples of midwives who have run cookery classes and shopping classes to teach young women how to make the best of a limited income, and how to cook and provide nutritious food.
Perhaps I can turn the question around and into a different direction. If clause 3 is agreed to and the grant is abolished, do you expect pregnant women’s contact, at the 25th week, with the health service and with health advice to increase or decrease over the next few years?
Lou is e Silverton: It might decrease, because midwives will say to women: “When I see you next time, at 25 weeks, we will be giving you this form and signing it off—make sure you’re here.” There is always the thought that women who are less likely to attend for antenatal care may feel deterred from doing so because there is nothing around that attention. However, that is only my surmise—you would need to look into it for proof. We do know that women from deprived backgrounds are far more likely not to attend for antenatal care.
Katherine began to touch on the issues of long-termism. A criticism of all Governments is the failure to build in the long term. Are you aware of the cross-party report that was produced by Graham Allen and Iain Duncan Smith on early intervention? Do you feel that the health in pregnancy grant, or any of the provisions that we are dealing with today—you mentioned the child fund trust—would help to contribute to that long-term preventive agenda?
Katherine Rake: Absolutely. That is an important point. The intervention process cannot start early enough, and all the evidence suggests that the earlier you start, the more longer-term return you have on that investment. Invest-to-save arguments are being made—indeed, Iain Duncan Smith appears to have made and won one such argument. I would like to see more of that conversation happen as this Government come through the comprehensive spending review and we start to think about the country’s long-term, challenging issues. Those issues—such as a low savings rate, an increase in obesity, and very high levels of social inequality— are not going to disappear.
Belinda Phipps: How we handle pregnancy sets up the total life chances of that child. Being able to put money aside to save for the future of the child is part of that. It helps the parent to think long term for the child and be able to provide the nutrition, equipment, time, and savings attitude for that child’s future. We expect children to be paying high university fees and moving into debt in their teenage years, and it would be much better if there were an attitude of saving and long-term thinking from all parents right from the start.
I will start with you, Katherine. Can you outline your understanding of the objectives of the child trust fund? Do you think, with the evidence to date, that those objectives are being met and are valuable?
Katherine Rake: There is a twin set of objectives. One was to try to find a mechanism that addressed rates of saving in the UK, and the other was to try to narrow inequalities in assets at age 18, to enable children to have a launch pad for later life with some flexibility—no flexibility about when they could access it, but some flexibility in terms of its use. On the first of those, I have a background in pensions and I know very, very well how difficult it is to change people’s savings behaviour. My goodness, we have tried all sorts of different mechanisms for pensions, none of which has delivered the kind of results that we have seen with the child trust fund. The level of take-up is very encouraging, as is the level of contribution. A lot of people assume that it is the wealthier households that are going to take advantage of it, but that is not held up by the evidence that we have seen.
Katherine Rake: I do. The figure that I have—and I can provide more if that would be helpful—is that families with a family income of £16,000 or less have been saving an average of £15 a month in their child trust funds. Children living within a family who have a family income of £19,000 or less were saving an average monthly figure of £19.
Katherine Rake: We do not know that, because there was no controlled experiment. The child trust fund was of universal access so we do not know what would have happened to people’s savings behaviour otherwise. But those rates would have been very unexpected, given the overall rates of savings for children. One of the reasons behind the success of the child trust fund is that it was a very successful nudge for people, with regard to the inertia over people’ savings.
We all know that we should exercise more, and we all know that inertia wins 99% of the time, and what you need is someone to take you over the threshold so that you begin to see the benefits of exercise. We can all have a conversation about the benefits of going to the gym, but it is only actually when you are in the gym and you begin to see the benefits that you reinforce that behaviour. Likewise with savings, we all have information. Many people know that they are not saving adequately for their retirement, or that they are not saving adequately for their children, but to have a mechanism that puts them in a saving pattern means that they change their behaviour and can gain more benefit.
Katherine Rake: Absolutely it was. It was both the automatic enrolment and the fact that there was a lump sum given and a recognition in that of the actual circumstances of those families. So many families in poverty want to save for their children. There is not a lack of will on their part; it is a lack of means, and the fact that the Government were making that contribution enabled those families—as we have seen from the figures—to top up in later life.
Clause 1 of the Bill proposes the abolition of the child trust fund contributions from 3 January. The Government announced on Second Reading that they were going to introduce a junior ISA, which they expect to bring in some time between July and October next year. Do you have any understanding yet of what the junior ISA involves—its mechanisms, its contributions and how it would operate? Have you had to make an assessment to date of whether it will fulfil the functions that the child trust fund, which is being abolished by the Bill, did?
Katherine Rake: I do not think we have much in the way of detail yet as to what that junior ISA will look like. Can I table one concern? If it is part of the ISA family, the ISA family is tax-incentivised, so it will only incentivise those who are actually paying income tax. As we know, many of the poorest families are not actually going to receive that benefit. If it is tax-incentivised in the way that other ISAs are—in other words, the more tax you pay, the more benefit you get by saving in the ISA—I would fear that, if it is a strict part of that ISA family, you end up rewarding the richer families more, because they are paying a higher tax rate than the lower-income families. That is also assuming that we have a mechanism to enrol people into it.
There are a number of factors that made the child trust fund successful. One was that you were given an entitlement; you were given that account. Even if you did not actively subscribe, the Government gave it to you. That was the initial hand over the barrier of inertia that enabled those families to start saving. I wonder whether there is going to be an equivalent hand over that barrier, and I also wonder, if the junior ISA is truly part of the ISA family, whether we will actually end up with a regressive rather than a progressive vehicle.
Katherine Rake: I do. I think that—we are hearing this from families out there—the speed of change is dizzying. The risk that you lose cohorts of individuals, just because you have not got your new system in place in time for your old system to wind down, is too big to take, if it is simply a question of timing. What I would not like to see is a year’s-worth of babies for whom there is no mechanism, just because of a timing issue. A bit of slowness in this process would be very welcome.
Earlier you were saying that it was very important when somebody has just given birth to feed well and make sure you are healthy. The Institute for Fiscal Studies was saying that it would be better for low-income families to spend that money on their health at that time, rather than putting it in savings that are locked away until the child is 18 years old. What would your comment be on that?
Belinda Phipps: Ideally, you do both. The advantage of the child trust fund was the way that it was received by families—it was a way of valuing what they were doing and it was a way of triggering families to think long term. When you are not that well off, you have a tendency to have short time horizons, because you are thinking about getting through the next week. It was a way of getting families to recognise that their child has a future—18 years, 30 years hence. It helped to trigger not only savings behaviour, but other behaviours that took into account the long-term nature of that family. While it was not for food, which we know is enormously valuable and would be helpful, it created the thinking that helped you make use of the money that you were getting in pregnancy to support healthy eating. We have not got the evidence, because the time has not been there to collect it, but from anecdotal conversations with people who have had this money, the two things acted together and, as Katherine said, it was a real nudge to push people into that long-term thinking, which is necessary to be an effective parent.
Obviously, it is well known that grandparents sometimes put money aside for their children, but I asked what you would do, given that you do not have the money to do both. Would you spend the money on healthy eating or saving?
What the IFS said about families is that if they have spare cash and they are on very low incomes, they would be better spending that money on day-to-day living and healthy eating, rather than saving it. Do you agree or disagree?
Belinda Phipps: Overall, if your aim is to improve the physical and mental health of babies, the most effective thing that you could do—after supporting breast feeding, which is more effective than anything, and after the next most effective thing, which would be to cease smoking—would be to improve the nutrition of women in pregnancy. That would have the biggest impact on the health of babies.
Katherine Rake: There is an element of intergenerational transmission of advantage and disadvantage, which we are now beginning to pick up in this country. Clearly, there are short-term needs that families have and we absolutely understand the need for those families to respond to those short-term needs. If, however, we are going to have a longer-term perspective, if we are asking people to invest more in their education, we are not going to address inequalities in the longer term without addressing assets as a part of intergenerational transmission of advantage and disadvantage. The two things are not a clear trade off.
Louise Silverton: The very existence of the child trust fund has allowed midwives to open the conversation about financial planning with prospective mothers and fathers. Midwives are not advisers in financial planning, although many of them are very good at helping women to negotiate the benefit systems. But what we have done, and what came out at the same time through the financial education initiatives, was the parents’ guide to money, produced at that time by the Financial Services Authority, now by its hived-off education arm. That has been a huge guide for and a help to pregnant women in working their way through the changes and in starting the thinking. The child trust fund has been something on to which you have able to hook this advice and say, “When your baby is born you will get this. Think about saving, think about speaking to relatives and about the whole issue of financial planning.” Across the nation we are quite poor at that, and the level of financial understanding is poor. We are talking, in many cases, about poor families who are the victims of loan sharks because they do not understand the implications of their actions. That will sound horribly patronising, but if they were more financially aware it would be blindingly obvious to them that they should not go there.
I want to come back to the point raised with us by the IFS, and specifically to direct it at you, Katherine. It was asserted that the child trust fund was not the most beneficial policy for the Government to have, because in the circumstances of having a low income the most rational thing to do is not to save. But you seem to be saying, “Well, hang on a minute, that’s not necessarily the case, because saving, like exercise, is habit forming,” and that the best policy for the Government might be to encourage low-income families to save. What evidence do we have of the effectiveness of the child trust fund policy? Is the IFS right that what the Government ought to do to support low-income families is to improve services rather than to promote saving, which, it asserts, is “irrational behaviour” in those circumstances?
Katherine Rake: One thing to make clear about the child trust fund is that no one was forced to save into it. If those families made that choice, that was absolutely sustainable within the child trust fund model. A lump-sum contribution was made by the Government, and you could access that regardless of your own saving behaviour. It also extended over a very long period, over which one would hope that welfare-to-work policies would activate so that families on very low incomes could start to make that contribution and would have, in the back of their mind, that that was a potential for when they were no longer on low income. So, I contest the point on that basis, in the sense that those families were able to make those decisions for themselves; no one was forcing them to make savings that they felt were inappropriate.
I also echo the point that you made about the savings habit. We have tried various mechanisms to start creating a savings habit in this country, and have failed consistently. This was one model that appeared to work. One of the things that families liked was what the IFS would term, actually, “economic irrationality”—the fact that that money was locked up. They liked and responded to that very fact because they wanted to make an investment that they could not touch. Yes, there is a model of economic rationality. Does everyone live by that standard? Absolutely not. We know that.
Belinda Phipps: We are starting from a situation in this country in which a significant proportion of pregnant women are, to be stark, malnourished. In particular, they do not have sufficient micronutrients and omegas in their diet to produce a healthy baby. That is where we start from, so we clearly have to address that problem. We should not even be in that position at all.
We also need to make sure that for the children who are born there is a long-term view of their future and that money is set aside for them. We need to make sure that the family starts with those habits, not just habits of cooking well and eating properly, but habits of thinking long term, looking to the future, planning, saving, and expecting the future to be bright. That is what families need. They need to see a bright future and work towards it, instead of living day to day on an income that means that they cannot have proper nutrition and gives them no hope of looking for a bright future.
One of my concerns about the child trust fund’s effectiveness is that although, as you said, a key aim was to trigger better saving behaviour, one in four of the children who are eligible for the funds has no active contact with the benefit of improved education. Is that a success, bearing in mind my concern that a large proportion of that quarter are probably those families who need advice, help and support the most?
Katherine Rake: I think you are right. On the face of it, one in four looks like a poor rate, but when you compare that with other savings products and their take-up, it is incredibly effective. It depends on your point of comparison. One of the things about the child trust fund market was that the providers were effectively able to do some cross subsidisation and chase after a broader range of clients, not necessarily just the richer clients who would be able to make a contribution. With the new proposals, and without a Government contribution, one wonders whether the market will be appropriately incentivised in order to attract what are, as you say, very difficult groups to reach.
At a cost of £0.5 billion a year, I wonder whether that money is being spent most effectively, particularly as it is tied up for 18 years. Perhaps we could look at focusing some funds more effectively on better financial education in schools, where we would capture a broader range of young people.
Katherine Rake: Of course I am in favour of financial education in schools, but it has to be an and/and approach. One must be realistic about how far such education will take us, and about the information that we give to 15 and 16-year-olds and how much they will activate that once they become parents themselves, given that there may well be some significant delay. Of course there must be improved financial education, but we also need to have products that work for people and work with the reality of family lives and human nature. We all know what healthy behaviour is, but we do not necessarily all engage in it.
Absolutely; I do not disagree with that. It is about the enormous amount of money—the billions and billions of pounds—that are put into this scheme. Some of those young people will have an expectation of some money, and we need to look at helping the most needy and most vulnerable with the limited resources that we have.
Katherine Rake: We do not yet know what the alternative costs of the junior ISA now on the table are likely to be. We need to make a serious comparison between the apparent savings from closing down the child trust fund, and the cost of the new vehicles, to see whether true gains are going to be made, especially given the concerns about the tax incentive and its potential regressive nature.
One of the principles of the child trust fund was that it was universal. However, it was a progressive form of universalism in that poorer people got more, and disabled children also received a higher payment from the Government. There has been considerable discussion during earlier evidence sessions about the way that a lump sum could be delivered to looked-after children, who obviously have no family of their own to save for them.
Given all that we have heard about the straitened financial times that we are in, do you think that the vehicle is flexible enough to be tweaked for the short term to focus money more on the most disadvantaged children, without destroying the whole structure? Or, do you think that it has to stay as it is, and cannot have rearrangements within it?
Katherine Rake: If it is working, let us keep it in principle. Given the straitened financial times we are in, I would favour a system of keeping the structure of the child trust fund. When we are not in such straitened financial times, since we know that it worked, we can restart it and work on it. 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.
I think that the Government need to consider seriously before scrapping one of the most effective vehicles to stimulate savings, given what we know about the savings rate and the need for individuals to be more self-reliant and invest in their own education. If, for example, the pupil premium works and we get a new generation of poorer children entering university, we must give them the assets to take up that opportunity. It would be a tragedy for them, 18 years down the line, to get to the point where they have access to university places but feel unable to take them up. The sense of pride and of belonging to mainstream society that even a small amount of savings can bring is hugely important.
On a point of order, Mr Streeter. Can I ask your advice on an important matter that you and Mr Howarth might wish to consider? This is the third evidence session that we have had to date in this Committee, and in none of those evidence sessions has the Minister attended either to listen to the evidence or ask questions of the witnesses.
As a Minister myself during the previous Government, I sat through such sessions for a number of Bills, listened to the evidence and asked questions of the witnesses on behalf of the Government. Will you and Mr Howarth consider—although I know that the Minister is entitled not to attend—whether we could raise with Mr Speaker the general principle whether, as a courtesy to you as the Chair, the witnesses who attend and the Committee members, Ministers should attend these sessions and listen to the evidence?
Today in particular, we have heard some extremely good evidence that will not be printed in Hansard until after we have considered some of the relevant clauses this afternoon. Will you and Mr Howarth consider those points, and perhaps also reflect whether we should give the Minister the courtesy of listening to his evidence when he will not listen to the evidence of other people who are putting valid points about the policies that he is pursuing in the Bill?
I thank Mr Hanson for his point of order. As he probably knows, attendance at these sessions is for individual Members to decide, as long as we are quorate, and we have been quorate throughout. He has put his point on the record. My advice is that it is not something for me to take up with Mr Speaker. He might want to find other ways of raising the point in this place. However, I am grateful to him for placing his point on the record.