Child Trust Funds

Jim Shannon 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?