Child Trust Fund

Earl of Listowel Excerpts

Monday 28th February 2011 Lords Chamber

Asked By

[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.