Finance Bill

George Freeman Excerpts

Tuesday 20th July 2010 Commons Chamber

[Mary Creagh]

I thank the hon. Gentleman for that clarification.

I now want to discuss the child trust fund, which is also being cut. When I visited Greenhill school in my constituency to talk about financial education, I asked 10 and 11-year-olds how much money they had saved up in their bank accounts and the answers given by those little 10-year-olds ranged from £50 to £80; that was their life savings. But those children knew that their little brothers and sisters had got £250, and in some cases £500, from the Government through the child trust fund.

[George Freeman (Mid Norfolk) (Con)]

Will the hon. Lady give way?

[Mary Creagh]

I will make my point first. I bet that there is not a single Member sitting on those green Government Benches whose children’s life savings amount to £50. I shall happily give way to any hon. Member for whom that is the case.

--- Later in debate ---

[Mary Creagh]

Interestingly, when the Red Book refers to the effects on child poverty it talks about the next couple of years but does not mention 2013 and 2014. Thanks to the work being done by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), the shadow Secretary of State for Work and Pensions, we are finding that this Budget’s impact on women—in particular on poor women, low-paid women and public sector worker women, and therefore on their children—is likely to hit disproportionately hard. I leave the hon. Gentleman with that thought.

What is absent from the Budget and the Finance Bill is any mention of the poor. The changes to the disability living allowance gateway are to save £1 billion by 2014, but we need clarity about which groups of disabled people are going to be affected. The housing benefit move to the 30th percentile of average housing will have an impact on families across the country. Stringent changes are being made to the housing benefit rules to say that anyone who has been on jobseeker’s allowance for more than a year will automatically lose 10% of their housing benefit.

If that is done to people, there are three possible outcomes. The first is that the people involved find jobs—and good luck to them. I am sure that that is the stated aim of the Government’s policy. The second possible outcome is that those people cannot find jobs because a further 1.3 million people are on the dole as the public sector and private sector job losses kick in, so they are forced to borrow the money. However, we are talking about people with a low income or no income, so they will, in effect, be forced into the arms of loan sharks and will fall into debt. The third possible outcome is that these people will spend £10 a week less feeding their children, so their children will be pushed back into poverty. The arguments being made about child poverty will not wash with Labour Members, because both the second and the third possible outcomes will tip those families back into poverty.

[George Freeman]

The hon. Lady mentioned the child trust fund, and I think that all hon. Members would agree that establishing a culture of saving is a commendable thing. In principle, does she think it is better for children to learn to work and to save, or to learn that the way to acquire money is to be given it by the Government?

[Mary Creagh]

The beauty of the child trust fund is that both those things happened; this involved people who would never have thought of opening a trust fund. I count myself among them, because I had no idea what a trust fund was until I was “given it by the Government” when my son was born, but now that I understand what it is and I understand the secrets of how people save for their children in a tax-efficient way, it has enabled me to think carefully about how I plan for my children’s future. It enables families to do both those things.

Most families are using the child trust funds to put a little bit extra by. The parents who scrimp and save to put into the child trust fund will not let their children waste the money. The straw man that has been held up is that they will blow it all on their 18th birthday party, on buying fast cars and all the other things that 18-year-olds do—[Interruption.] That is certainly what has been stated by some Government Members as a reason for cutting the child trust fund; they have said, “You can’t give it to 18-year-olds because they won’t know what to do with it.” When their parents have paid into the fund they will make absolutely sure that that money, which for them is a life-changing sum, will be used wisely by their children.