Child Trust Fund
(13 years, 2 months ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
The Earl of Listowel
To ask Her Majesty’s Government what plans they have to replace the child trust fund, abolished in the Savings Accounts and Health in Pregnancy Grant Act 2010, for children in the care of local authorities.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, the Government announced in October that we will create a new tax-free children’s savings account, which is likely to be known as a junior ISA. We expect the new accounts to be available later this year. It will be possible for local authorities to open junior ISA accounts for eligible children in their care. We are also exploring the possibility of facilitating a voluntary scheme for financial institutions and the third sector to contribute to the junior ISAs of children in care.
The Earl of Listowel
My Lords, I thank the Minister for his reply and indeed, the meeting with Mark Hoban, the Financial Secretary to the Treasury, and Tim Loughton, the Minister for children, to discuss this matter. Does the Minister agree that for our own children we would seek wherever possible to ensure that they have a capital asset so that when they move on to independent living they have money for a deposit on a flat or a car to assist them? Does he not further agree that we should ensure that children leaving care have a capital asset to put down for a car or to buy a new suit to get a job? Does he recall the strength of feeling around the House at Second Reading about the need for these young people to have such a capital asset? Given that, will he understand and consider the need to put on a statutory basis the funds that he has described, so that children can be assured of a capital asset as they leave care?
Lord Sassoon
My Lords, I very much appreciate that the noble Earl, Lord Listowel, keeps these important issues under discussion and alive in our thinking. It is important for all children to understand how to handle money, to be able to make the decisions that they need to start making as soon as they leave school and move on. This is not just a matter of amounts of money that are put aside, but of making sure that the mechanisms are there for all children to learn how to handle their finances as they progress through life.
As to the question of a statutory basis, as and when we come up with the detailed plans for the junior ISA, of course draft regulations will be issued for comment. I cannot confirm that there will be special provision other than in the terms that I mentioned whereby accounts can be set up for children in care to which local authorities and others can contribute.
Lord Soley
Does the Minister accept that one reason for having the child trust fund was to encourage the culture of saving? It affects not just children in care but children from families which are poor or where the parents are not that competent, and who may leave school without any savings or culture of savings. Will the Minister get all the Ministers who are dealing with this to think how much money they have given to their own children to make sure that they survive in future life, and then to ask themselves how a child coming from such a background as described is expected to survive without the help of the child trust fund or the savings culture that it inspired?
Lord Sassoon
My Lords, very difficult choices have to be made at a time when we have been left with the biggest deficit in our peacetime history.
Noble Lords
Lord Sassoon
Noble Lords opposite may groan and make all sorts of noises, but those are the facts of the situation. Regrettably, the child trust fund cost £500 million in a full year, and it is one of those things that we as a nation simply cannot, in these difficult times, afford. There are indeed questions about the efficacy of the scheme, but even on the assumption that it was doing all that it set out to do, that is a very large sum which unfortunately the nation cannot afford.
Baroness Walmsley
My Lords, while welcoming what the Minister has said about the junior ISA, I encourage him to go just a little further in relation to looked-after children. It strikes me that there is an opportunity here for philanthropists, charities and the third sector, as well as local authorities, to put money into savings accounts for looked-after children. Will the Government consider developing a scheme to encourage that sort of big society giving?
Lord Sassoon
I am grateful to my noble friend, because we are working on that. We have been talking, for example, to potential junior ISA providers. They have been showing some interest, I am pleased to say, in contributing to a scheme in that way. We need to continue to work on that, but if any financial institutions, charities or other groups are interested in being part of that, we would be very pleased to discuss it with them.
Lord Low of Dalston
The Minister will be aware of local authorities’ inconsistent fulfilment of their duties under the Children (Leaving Care) Act and the inconsistent provision, particularly as regards accommodation, made for children and young people leaving care. What will the Government now do to make good the deficiency in provision for that particularly vulnerable group, whose vulnerability is at its greatest at the point of leaving local authority care?
Lord Sassoon
My Lords, we are straying a bit from the Question and from my area of responsibility, but I appreciate that difficult issues are involved with those who are leaving care, which is why additional funding in the “children in care” line of the new local government formula is there to encourage local authorities to use the staying-put models of practice. From April 2011, we will be implementing provision in the Children and Young Persons Act 2008 that allows young people to resume entitlements to leaving care support up to the age of 25, where they take up education or training.