Child Trust Funds

Jeremy Quin Excerpts

Tuesday 19th March 2024 Westminster Hall

[Sir Jeremy Quin (Horsham) (Con)]

I beg to move,

That this House has considered Child Trust Fund access for people seeking to manage the finances of others.

It is a pleasure to use this debate to highlight the ongoing issue of disabled young people’s access to their child trust funds and to recognise the good will of the Minister and his Department, but to demand changes that would solve issues for the courts, CTF providers and, above all, the disabled young people and their families. We have the means to secure easy access to funds that rightfully belong to those young people—funds that could prove invaluable but which are being denied to them by a lack of information and processes that may be well-meaning in intent, but are Kafkaesque and off-putting in delivery.

It is a pleasure to move the debate under your chairmanship, Ms Elliott. I am delighted to see the Minister in the Chamber, as I know he is focused on the issue, as well as other hon. Members who have taken a real interest in getting a resolution on the issue.

I would like to pay tribute to my constituent Andrew Turner. Back in September 2020, Andrew found that his disabled son, Mikey, was locked out of his child trust fund. He simply wanted to buy an adapted bike with Mikey’s money, and Mikey’s life-limiting condition meant that time was of the essence. The child trust fund was Mikey’s only financial asset. That should have been the start of a simple process in which a loving parent who looks after his disabled son can use that child’s own funds to enhance the wellbeing of the child. Instead, Mr Turner found that he and thousands of others were required to go to court when the account matured. Such is the complexity that Mr Turner was independently advised that it would be easier and cheaper for him—I hate to say this—to wait until Mikey died, when a simpler process existed to reclaim the money. He was naturally deeply upset. He was also determined to do something about it, not just for Mikey, but others in the same predicament.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Gentleman. As I said to him before the debate, I want to give the Northern Ireland perspective. In Northern Ireland, the responsibility for the management of the child trust fund account for a child when there is no person with parental responsibility is transferred to the Share Foundation, which deals with inquiries until the child turns 18. Does he agree it would be a good idea if the responsibility went to relatives in the extended family, such as grandparents, to ensure that they can provide guidance within a familial setting in relation to finances? That would be a simple way of doing it—letting the grandparents or the extended family look after things.

[Sir Jeremy Quin]

I am grateful to the hon. Gentleman for his intervention. I will touch on the circumstances in Northern Ireland, but the fundamental point that unites many people in the Chamber is the desire to get easy access for parents to ensure they do not go through a court process, incurring fees, going through bureaucracy and requiring the support of GPs and social workers, to access what in many cases is an average of about £2,000. It is just too much bureaucracy and work when it is rightfully the asset of their child.

I know many people in the Chamber, not just the hon. Gentleman, take a close interest in the matter and have far more personal experience than me, as parents of children with disabilities. They know that parents of children with disabilities have so much to do. Often that involves struggling to get what is rightfully theirs from Government. That is one area in which Mr Turner felt that progress could be made. The good news is he found a groundswell of support from parents and charities. I would like to thank in particular Contact for its support and Renaissance Legal for its tireless campaigning. There is support from child trust fund providers and, indeed, from the Minister, and yet four years on, we are still nowhere near where we need to be.

I would like to set out the scale of the problem. I will set out what I recognise the Government have attempted to do to mitigate the problem and, lastly, what I believe they should do to go further and largely to resolve it for most families with disabled children. Let us be clear: it is not a new issue. It is very apparent and has been well rehearsed—not only as a result of my constituent’s brilliant campaigning. The Public Accounts Committee looked into the issue last year as part of its analysis of child trust funds. The PAC highlighted a wider problem with CTFs as a whole, but it drew particular attention to access for young people lacking the mental capacity to manage their own savings.

In these circumstances, a family or carer must gain legal authority to access funds that belong to the young person involved. To do so requires an application for a deputyship order to the Court of Protection in England and Wales. For England and Wales, the Ministry of Justice estimates that between 63,000 and 126,000 young people may not have the mental capacity to access and manage their matured CTF when they reach 18. All CTFs will mature between 2020 and 2029. Tens of thousands of young people will therefore be subjected to a prohibitively lengthy, costly and complex process simply to access what is rightfully theirs.

In relation to stand-alone CTF applications, there were just 70 court applications between September 2020 and May 2023, compared with about 27,000 accounts maturing over the same period. The Department, in its Treasury minute responding to the PAC, broadened the scope of applications to include not just stand-alone CTF applications but other assets. However, even on that basis, the number of applications for 16 to 21-year-olds between September 2022 and March 2023 was still only 312. Whichever statistic one chooses to cite, thousands of people are missing out on what is rightfully theirs, because we are not informing them of their rights, and if we do, the process is too complex and too costly for all but a few.

I know that the Minister is a decent man. He put aside time to meet Mr Turner and me on this issue, and I know that he has instructed the Department to engage. I know that he is keen to make it simpler for families and he has ensured that changes have been made. I acknowledge that the MOJ last year moved some of the application online, waiving the fees and creating a toolkit for parents. That is to be welcomed, and I believe it was introduced with excellent intent. However, the process still involves completing 12 forms, including the duplication of a number of forms, and 93 pages. This includes requiring time-pressured GPs or social workers to complete a 21-page mental capacity assessment, which not all are prepared to do. With all the pressures on the families of disabled young people and the associated cost of becoming a deputy, is it surprising that they do not prioritise accessing what are, on average, funds of about £2,000? However, that is £2,000 that could and should be used to the benefit of the disabled child.

I know that the Minister and his team wish to help further, and there is a means to do so readily at hand, already in use and absolutely capable of being advertised and delivered on. It could help to deliver tens of millions of pounds—actuarial analysis suggests up to £73 million—into the hands of those who desperately need it. I thank the chief executives of two child trust funds, OneFamily and Foresters UK, for talking me through their proactive approach, which puts their customers first. Those two funds account for more than half of all CTFs. Very commendably, those providers recognise the problem and are applying a common-sense and pragmatic approach to its resolution. That is in effect using the Department for Work and Pensions appointee scheme—a tried and tested system to enable families to manage their child’s benefit income. It provides adequate protection and is the obvious solution to unlock the savings of disabled young people.

Let us be clear: this is no free-for-all. The providers require evidence that the parent or guardian is a DWP appointee; they require identity checks and confirmation of the child’s capacity. This process is available only in relation to funds under £5,000, and complex cases may still have to go through the courts. However, it has enabled the providers to meet the needs of hundreds of disabled children. There is a problem. Despite following a DWP process, and despite the knowledge that were a DWP appointee to be acting fraudulently there would be far more at stake than a modest child trust fund, this sensible route is frustratingly not officially sanctioned. The financial institutions are commendably going on risk to allow access to the funds. They know that there are far more affected families out there, but as responsible, regulated entities, they do not believe they can advertise their willingness to help in this pragmatic way, which combines existing safeguards with swift access.

Those two leading institutions and others with a similar proactive mindset assist 900 families a year—a significant multiple of the number aided through the court route—but thousands still need support. I therefore have three requests for the Minister that would help to resolve this issue. Will he engage with the DWP to extend the appointee scheme and officially include savings held in CTFs? Will he engage with the finance industry to formalise what is already a successful industry process, and in doing so enable it to advertise that route so that families can take advantage of a simple scheme? Lastly, will he help families to secure basic information about their CTF provider if the account has been lost?

[Mr Philip Hollobone (Kettering) (Con)]

I commend my right hon. Friend for his superb speech. He has approached this debate in an extremely constructive fashion, with a common-sense, straightforward solution to the problem. We do not need to reinvent the wheel; we just need to apply common sense. Child trust funds are a wonderful advantage to many young people, but the most vulnerable are missing out. My right hon. Friend has outlined a way in which the Government can address the biggest part of this problem.

[Sir Jeremy Quin]

I am most grateful to my hon. Friend, who brings me, brilliantly, to my conclusion. I agree with him. Movement on those three issues will prevent thousands of unnecessary court applications, and reduce bureaucracy and cost for the parents of disabled youngsters. Above all, it would put to work funds that could make a real difference to young people who could really do with a little extra help.

[Ed Davey (Kingston and Surbiton) (LD)]

I pay tribute to the right hon. Member for Horsham (Sir Jeremy Quin) for securing this debate. I agree with everything he said. I hope there can be cross-party agreement today that we need to move forward at long last.

I also pay tribute to Andrew Turner and his family—particularly his son, Mikey—for the work they have done, but I am sure Mr Turner will agree that others have played a big role, including lawyers such as Philip Warford, journalists such as Jessie Hewitson, and Martin Lewis. Financial service companies have shown leadership, and Contact, other charities and families, many of whom are here, have campaigned. Their voices have come together, and I hope that the Ministry of Justice will listen.

I should declare an interest: I have a 16-year-old son, John, who has an undiagnosed neurological problem that means he cannot really walk by himself or talk, and has serious learning disabilities. He will never be able to manage his own personal affairs, let alone financial affairs. Although my wife and I, and many wonderful professionals, work to give him as much independence as possible, there is no way, when he reaches the age of 18, that he will be able to get the money from his child trust fund. I declare an interest, but I hope I have an insight into the issues that families face and the problems they have as carers. Just looking after their children on a day-to-day basis can be quite enough, without having to worry about lots of bureaucratic forms and having to go to the court of protection.

I have been involved in this debate for some time. I met Mr Turner in 2020, and I asked a question at Prime Minister’s questions on 21 October 2020. The then Prime Minister said:

“I will do whatever I can to help”—[Official Report, 21 October 2020; Vol. 682, c. 1058.]

He made that promise nearly four years ago, and we are still here. Hopefully we can do a bit better today.

After that, I met the right hon. and learned Member for Cheltenham (Alex Chalk), who was then doing the current Minister’s job but is now Secretary of State at the Ministry of Justice. I think I met him three times, and we discussed all the options. We have seen the work that has been done—the waivers, the so-called simplification of the forms, the digitisation—in an attempt to make this work. Sometimes, particularly when the Ministry of Justice proposed a consultation on the small payments scheme, I supported it. I did not think it was the best solution, but I was trying to be constructive, so I went along with it to try to make it work.

However, I am afraid that all the efforts have failed, demonstratively, by the statistics that the right hon. Member for Horsham and many others have shown. To date, the Ministry of Justice has utterly failed to solve the problem, so we need action. We cannot wait much longer. The number of young people and their families, and the amount of money, will just build up over time. The problem will not go away, unless one Minister—I am sure it will be the Minister present today—actually grasps it properly.

I set out initially believing that the DWP appointee scheme was the right one. Families are aware of it, and it has worked in Government and for much larger funds. The amount of money that a loved one gets through their disability living allowance or personal independence payment far outweighs the average amount from a child trust fund, but apparently it is not possible to use that scheme because of the difference between flows of money from DWP and savings and capital. For the life of me, I have never quite understood that distinction, but perhaps there is something in it. I will come on to what I think is behind the Ministry of Justice’s objections.

In the spirit of being constructive, two solutions seem to be on the table. One is the proposal for a new, one-off order solution, which the right hon. Member for Horsham talked about. A family would still have to fill in a form, but it would be a one-pager. They would still have to go the Court of Protection, but it would be a very simple process. I think it has been well thought through by campaigners, and different fund managers have been involved. I believe that Mr Turner wrote to the Ministry of Justice before Christmas. Unfortunately, he received an email from an official in December 2023, which stated that

“we are not able to consider any proposals for an alternative process for accessing CTFs at this time.”

That is not good enough, Minister. People are working hard to come forward with practical solutions within the remit of the Ministry of Justice, and officials are not even willing to see people who are trying to be constructive.

I think that the one-off order solution would work. The Minister might not be able to answer today, but I would like to ask him: would it require a change to primary or secondary legislation to get that solution working, or would the registrar of the Court of Protection simply have to change the administrative rules? It is probably as simple as that, and it would suddenly unlock the problem both for child trust funds and junior ISAs. That is one solution, which the MOJ would be in control of.

The right hon. Member for Horsham touched on another solution: working through the financial service companies, which have shown huge flexibility and taken risk upon themselves. That would not be an MOJ responsibility; I think the MOJ would have to talk to the Treasury. I think the Government have landed this problem in the lap of the MOJ and said, “You sort it out.” If the Minister went to the Chancellor or another Treasury Minister and said, “Look, we want you to say this, and we are happy for you to say it,” all the Treasury Minister would have to say is, “We are relaxed about fund managers of child trust funds or junior ISAs taking that approach, taking the risk upon themselves if anyone objects, and marketing, giving information and promoting the idea that people with DWP appointee status can use the funds and transact them on behalf of their loved one.” That would be what we might call a market solution, but from my insight into how government works, that would require the MOJ to give the green light to the Treasury to make that statement.

Those are two simple, zero-cost solutions to allow vulnerable people to get their own money. After four years of trying, I urge the Minister to wake up and smell the coffee. Why might the MOJ object? I will put myself in his shoes and the shoes of the officials to work out what on earth is going on. The first issue might be the Mental Capacity Act 2005, the Court of Protection and their underlying principles. When officials and Departments have jurisdiction over an Act of Parliament, they can get jealous about how it has worked and not want to see any change. I get that—we have been there. However, democratically elected politicians must challenge the principle behind the Act, to test whether it has been taken too far, because in law there are other principles that apply, including proportionality and reasonableness. Surely those principles apply here. We are talking about small amounts of money for very vulnerable people whose parents and carers ain’t got the time to go to court. They may phone up one person and ask, “Can you help me?” but if the financial service company or the court says, “Well, it is a bit complicated,” they just give up, because their young person is in pain, needs medical help and needs to go to the hospital. That is the reality of their lives.

[Sir Jeremy Quin]

First, on the specific point of proportionality, does the right hon. Gentleman agree that the financial providers are talking about sums below £5,000, and the average child trust fund here is about £2,000? Secondly, tens of thousands of pounds would to through the DWP appointee scheme, which means that in comparison the child trust fund is a tiny amount of money. On the grounds of proportionality, the right hon. Gentleman is making an extremely good case.

[Ed Davey]

I strongly agree with the right hon. Gentleman. He might be interested to know that, while I am not an expert, I am told that principle 5 of the 2005 Act talks about the least restrictive option to achieve the best interests of the vulnerable adult. Can the MCA apply itself to itself, please?

I wonder whether there is another reason why the Ministry of Justice is sticking to the principle despite all the evidence and pressure. Perhaps it wants to get more people to go to the Court of Protection so that the judges there can help with the deputyships of those vulnerable adults as they turn 18. One can have a discussion about whether more families should ultimately go to the Court of Protection. However, when one reads the guidelines of the Court of Protection, it is clear that it rightly sees itself as a court of last resort for a family dispute about money or, more likely, for how a person should be cared for, who should be caring for them and where they should live.

Sometimes, if there is a dispute in the family, the court is necessary and the Court of Protection is brilliant at that. Sometimes, a vulnerable adult may have no loved one or family member, and then the Court of Protection rightly fills that vacuum. However, if families can come to an agreement among themselves, more often than not that will be better than having to go to the Court of Protection. We should make the Court of Protection available to more people. We could advertise and market it—people may want to think about that in due course.

My wife and I are old parents; my son is 16 and I am 58, so I am quite an old dad. I worry about when my wife and I die. My son does not have a degenerative condition, and he is going to live for quite a few years. Of course, we are thinking in due course of going to the Court of Protection or getting a family member such as his sister or one of his cousins to be there for him. The Court of Protection, as I say, has good reason to be there. No one is against it, but it should be used when it is needed.

Perhaps the Ministry of Justice thinks that it has no court backlogs and loads of judges who are just sitting there twiddling their thumbs, so we should give them more business. Come on! Please take the pressures off the system by adopting something simple. I do not like saying this, but there may be a reason why people in the judiciary and legal profession are keen to force people to go to the Court of Protection even when it is disproportionate. Perhaps it is vested interests. I really hope that that is not what we are dealing with, because it is not acceptable.

We are talking about people who are vulnerable, and parents and carers who are stretched to their limits. We are talking about small amounts of money. I urge the Minister to listen to us, and to go back to his Department and the Secretary of State and say that the officials and some of the judiciary from the Court of Protection need to be overruled on this. We need to act proportionately. We need to act in the best interests of thousands of young people who should have access to their own money.

--- Later in debate ---

[Sir Jeremy Quin]

I am grateful for the Minister’s candour. We have heard what he has to say. Like the right hon. Member for Kingston and Surbiton (Ed Davey), I am keen to work with the Minister, and I know that he has put changes in train to improve the situation. I was pleased to hear what he said about mailing, and we will certainly work with him to see how it can be improved. I know that his intent is absolutely genuine and that he has genuine worries about ensuring that any scheme is safe for all, but this is about proportionality. There is a concern that thousands of young people may miss out because of the Minister’s genuine concern about what could be a very small number indeed.

I come back to the point about the DWP appointee scheme. If fraud is at work, which is always a risk when the Government are distributing or giving access to money in any form, there are far bigger fish to fry than the child trust fund. Trying to avoid that tiny risk prevents access for many thousands of people. We should be able to find a more effective yet secure way through. I urge him to keep reviewing the issue.

I was pleased to hear the Minister say that he will talk to the DWP about the process. I understand his point about primary legislation, but ultimately if primary legislation is required to ensure that we can right a wrong and get fairness, I am sure that it would not be a controversial bit of legislation—and what on earth are we here for? I look forward to ongoing discussions with the Minister and to finding a solution that works for all these disabled young people and their families.

Question put and agreed to.

Resolved,

That this House has considered Child Trust Fund access for people seeking to manage the finances of others.