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.
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.
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.
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.
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?
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.
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.”
“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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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—
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.
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.”
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.
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.
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?
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.
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.
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.
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.
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.
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?
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.
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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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.
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.