Savings Accounts and Health in Pregnancy Grant Bill

Kate Green Excerpts

Monday 22nd November 2010 Commons Chamber

[John Hemming]

At this point, I should declare my interest, which is on the Register of Members’ Financial Interests, as the chair of a company, John Hemming and Co., which provides software to ISA providers. I understand how ISAs operate and that the value of ISAs that are exposed to the stock market can go up as well as down. The difficulty with the child trust fund is that it is relatively small and that there is a great challenge in managing small funds. As a proportion of the fund, the 1.5% charges rate is higher than that for many other funds.

[Kate Green (Stretford and Urmston) (Lab)]

Is the hon. Gentleman confident that the junior ISA will be more cost-effective for the local authorities that are the corporate parents of children in care than the child trust fund?

[John Hemming]

There is no reason why a junior ISA should be any less effective for the corporate parents. The issue is that running the computer systems for the child trust fund costs £5 million a year. That cost would not affect local authorities but would mean central Government incurring an extra £5 million in administrative costs now to give children in care £2 million in 18 years’ time.

[Kate Green]

Rather than this being about whether there will be more or less cost, is it not simply about whether the cost will be borne by central or local government? In the scheme of things, that makes very little difference when we are talking about overall cost to the public purse.

[John Hemming]

The Opposition’s proposal to maintain the child trust fund and give £2 million to children would cost £7 million, so they would waste £5 million on the process. In the sphere of the massive deficit, £5 million might not seem like much, but it is the responsibility of Government to be effective and efficient in their use of public funds.

--- Later in debate ---

[Paul Maynard]

I agree entirely, and I wish that during the evidence taking in Committee and in the debate, we had had an either/or discussion, rather than an “and, and, and, and yet another idea” discussion. We had far too many shopping lists and not enough recognition that hard choices had to be made. It is important to recognise, as Marc Bush from Scope did when he gave evidence to us, that delivering an asset at age 18 is not the solution to the problems faced by families engaging in the transition of their child from childhood to adulthood, when faced with a complex disability. That starts at age 14 and can continue to age 30. The hon. Member for Stretford and Urmston (Kate Green) recognised that when I intervened on her, and that was a useful move forward.

When we are discussing the future of child ISAs, I hope it is taken into account that families who are particularly vulnerable may need access before the age of 18. Locking the ISA away until age 18 is not always the best solution.

[Kate Green]

rose—

[Paul Maynard]

I will give way, for the last time.

[Kate Green]

I am grateful to the hon. Gentleman. He is right to say that if the junior ISA can offer that flexibility to disabled children, it would be a useful enhancement—I look forward to hearing the Minister’s response on that—but does he accept that another advantage of the child trust fund, which he and I would welcome in the junior ISA, was that it delivered extra money to more vulnerable children in the double payments that were available to children from low-income households or with disabilities, for example?

--- Later in debate ---

[Yvonne Fovargue (Makerfield) (Lab)]

The child trust fund has a dual purpose—not only to give the young person a lump sum, but to nurture in them a savings habit for life. Some 74% of those eligible have taken up the responsibility of the child trust fund account. It is the most successful savings product on the market; ISAs and pensions fall well behind that figure. It is simple—much simpler than opening a deposit account—and it gives people a nudge to save.

Nearly a third of parents and grandparents have added to the fund, and the poorest 20% have added a higher proportion of their income to it. However, even for young people whose families do not contribute, the practical demonstration of saving in the account is invaluable. Organisations such as the Personal Finance Education Group, which works in schools, structure their lessons around it, certain in the knowledge that all pupils will have received a statement annually on their birthday, and that all pupils have such an account.

The very universality of the scheme provides a useful and practical foundation for learning and for influencing behaviour. In addition, it is especially useful for looked-after children and children with disabilities, who receive extra premiums. For looked-after children, it is a practical example of the state acting as parent and attempting to improve their prospects at 18—an ambition that all parents have for their children—by providing a lump sum at one of the most difficult periods of their lives, a time of transition that is difficult for any teenager, but especially for those leaving care.

For children with disabilities, the scheme provides an asset that allows them to take advantage of life opportunities or to invest in whatever they see as their priority. It is unfair to remove the scheme without a full impact assessment of groups who may be disproportionately affected, such as families with disabled children and people with disabilities, especially as the Demos report showed that the emergency Budget had a substantial financial impact on families with disabled children.

It has been suggested that a junior ISA may replace the child trust fund, but I cannot believe that it will provide an adequate replacement, even if a seamless transition in January 2011were possible, which has been disputed by a number of experts in the savings field. An ISA primarily benefits taxpayers and higher-rate taxpayers in particular, so what advantage does an ISA offer to a non-taxpaying family? Equally, the simplicity of the child trust fund product has been praised.

I have worked with people to whom ISAs and other financial products have little relevance, with people who need support to open a basic bank account and with people who have no notion of opening a deposit account. I urge Members, therefore, to retain the scheme in some form—even if only for looked-after children, children with disabilities and the poorest third of families—and not to scrap it completely. I urge Members to support the amendments.

[Kate Green]

I shall speak strongly in support of amendments 51 and 52, which my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) has tabled. As he says, Members from all parties share a deep concern about the continuing very poor outcomes that we, as corporate parents, deliver for children in the care of the state. Those children suffer difficult childhoods, often arriving in care in traumatic and traumatising circumstances. They are therefore significantly unsettled and disadvantaged in their childhoods, and that disadvantage continues, to our shame, into their adult lives.

Such children all too often achieve poorer outcomes in education and health: in adult life they are less likely to move into sustainable employment or further or higher education, and they are more at risk of poverty. I know all hon. Members feel deeply that that is wrong, so I shall speak strongly in support of my right hon. Friend’s amendments, because they open-mindedly ask us to address that endemic disadvantage. If Opposition Members are offered assurances that other financial instruments can meet those concerns, we will of course consider them, but we are clear about what those alternative instruments must deliver if they are to receive our approval tonight. They must deliver some of the advantages that the child trust fund was able to deliver for looked-after children—advantages that sought to some degree to adjust and compensate for the disadvantages that such children face as they embark on adult life.

The first important thing about a payment mechanism specifically designated to meet the needs of looked-after children is that it represents a signal from us as a community that we care about such children—that they are valued, and as precious as any child living with his or her family is to his or her parents. Too often, looked-after children feel that our society does not value or recognise them and that nobody has an interest in them, so a financial contribution to a savings fund for them is one of a number of steps that we can take to show that those children and their futures are important and matter to us all.

The child trust fund, in its design, also delivered much more hard-edged benefits to looked-after children. As Members have said, it put extra money aside for children through double payments, and in responding to my right hon. Friend’s questions it is important that the Minister should address how we ensure that those children do not suffer further financial disadvantage and inequality in adulthood by embarking on adult life with a significantly smaller asset than many other children. Adjusting wealth and asset inequality was one of the intended bonuses of the child trust fund—one that was particularly important for looked-after children, and one that I hope the Minister will address.

My hon. Friend the Member for Makerfield (Yvonne Fovargue) pointed out that the fund sought to meet costs at a time of transition, and reaching 18 is a particularly difficult time for children leaving care, because we leave them at the mercy of adult life as no familial parent would with her or his child. No mum or dad would throw their child out of the family home without so much as a kettle or an offer to underwrite the gas bill if they struggle as they set up home, but that is what we do to too many children who leave the state’s care. By providing those children with a financial asset, the child trust fund helped to smooth some of the extra costs that they faced at transition points, with which no other family member might have been available to help them. The fund therefore enabled those young people to embark on their adult life with the confidence, certainty and stability that other young people often draw from family support.

I hope the Minister will reassure me that any alternative financial model will replicate two other in-built advantages of the fund, one of which is the product’s relative simplicity. It was fairly clear what sums were going in, and it was fairly clear when they could be drawn out. Junior ISAs might offer more flexibility and allow more contributions and different points of withdrawal, and that might bring some advantages, but we must not set up a product that is too complex for corporate parents and others who might wish to donate to the funds of looked-after children to access readily and save within. I look forward, therefore, to the Minister’s assurances about how the product will prove accessible to anyone who wishes to save for a looked-after child or young person, and in particular how a corporate parent will be able, without unnecessary bureaucracy and expense, to make contributions for children in their care.

Right hon. and hon. Friends have mentioned how the child trust fund offered consistency throughout the country, between local authorities and in all four parts of the United Kingdom, ensuring that every looked-after child left care with the same opportunity of an asset with which to start adult life. Can the Minister assure us that the alternative mechanisms and products that he might bring forward will deliver such consistency? We do not need to perpetrate inequalities among children leaving care as we do between children leaving care and other young people as they start out on adult life.

My hon. Friend the Member for Makerfield rightly pointed out that the junior ISA offers little that is intrinsically attractive to savers who do not benefit from a tax break. By definition, that includes corporate savers who invest for the future of children leaving care. I very much want to hear how the Minister will at least incentivise, more than that exhort, and—preferably—insist that corporate parents save adequately and equally for every child who falls within their care. If those assurances are forthcoming this evening, like my right hon. Friend the Member for Wythenshawe and Sale East, I will be able to look again at his amendments. If we do not receive satisfactory assurances, however, every young person and every child who has been in care will expect the House to support the amendments, and I for one certainly will.

--- Later in debate ---

[Paul Maynard]

I agree entirely. That is a very fair point. It was never clear whether the Opposition believed in universality or targeting. It seemed to depend on which amendment they happened to be pressing at any moment in time. It was part of the incoherent approach that they seemed to have to the debate.

The previous Government never tackled the issue of how it took up to eight weeks merely to process a health in pregnancy grant claim. The money often came through not in the 25th week but in the 33rd week—well beyond the time at which there was any hope of achieving real dietary change.

I specifically tackled the hon. Member for Bristol East on the issue of usefulness versus effectiveness. When she said in Committee that this was a useful grant, I asked her how she defined useful. She mentioned access, which I have dealt with, but never really dealt with the issue of effectiveness. That was my concern with the Opposition’s argument. At no point did they try to evaluate properly how effective the scheme was. I know that many amendments were tabled asking for such an evaluation, but all along the Opposition’s rhetoric was to use the word “useful” rather than “effective”. At no time did they argue that the scheme was effective, so we were left with not very much more than the shadow Minister trying to argue that it was nice to hand out other people’s money to other people. It might well be, but that is not a firm or solid foundation on which to build a health in pregnancy grant.

I support the abolition of the grant for the simple reason that we have a number of alternative mechanisms to support families who need assistance during pregnancy. The grant was not paid out at the right time in pregnancy, in my view, and I do not believe that it has achieved its goal. I do not believe that we would even be able to provide the evidence if that were the case. I wholly support the Government in what they are trying to do.

[Kate Green]

I am very sad that the Government have brought forward proposals to cancel the health in pregnancy grant. We have heard this evening and during the Bill’s earlier stages a number of criticisms of its structure. We have heard that it is paid at the wrong time—too late to have a significant impact on maternal nutrition and well-being—and that the money could have made more difference, even pre-conception, to low-income women of child-bearing age. We have heard that it misses the point and that women fritter it away on shoes and going to the spa. That might be true of a minority, but for many others the grant makes a crucial difference at a time when family finances become tight.

The Opposition have been asked whether we are not confused about wanting the grant to be universal or targeted at low-income and more vulnerable women. We are not confused. We are clear that we want a universal grant for all the reasons that we believe in universality: it is more effective at reaching the most disadvantaged, more cost-effective and simpler to administer, and it is easier to know when one is entitled to claim. We accept, however, that if we have to settle for a reduction in spending on pregnant women then, for a time at least, a targeted payment would have enabled us to keep the structure of the grant until it became affordable to offer it again on a universal basis.

--- Later in debate ---

[Fiona Bruce]

The hon. Lady makes a valid point: we are continuing the Sure Start maternity grant and the healthy start vouchers because their benefit is that they really hit their target, which is some half a million mothers in difficult circumstances who obtain vouchers from the 10th week of pregnancy to buy vegetables, vitamins, fruit and other healthy foods.

[Kate Green]

Does the hon. Lady not also accept that those women will at the same time suffer a loss of £190 that would also help them with those good outcomes? What steps would she take to ensure that those women were protected and did not find that they had less overall than they had before?

[Fiona Bruce]

I thank the hon. Lady for that intervention. I made the point at the start of my speech that unless we look at the bigger picture and reduce the deficit that the country is bearing, the generation that those mothers are now bringing up will have to bear the burden of interest on interest for years to come, and their life chances will be far lower than £190 could compensate for.

The healthy start vouchers were described in evidence by Belinda Phipps of the National Childbirth Trust as

“a really good scheme… It has been put together well and people can get a broad range of healthy foods for the vouchers.”

The health in pregnancy grant is poorly timed. Belinda Phipps said in evidence:

“If you are setting out primarily to improve the… health of the baby”

the payment of the health in pregnancy grant

“needs to be earlier. If you… really want to change the future of the baby, it needs to be as early as possible.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 4 November 2010; c. 79-89, Q205-224.]

The 25th week is simply too late.

Although there is no doubt that the grant does some good for a number of families, that certainly does not justify the expenditure of £150 million per annum. Indeed, it is a rich irony that, throughout the evening, Labour Members have been exhorting sound financial management, yet now, in the same debate, persist in pursuing what is an example of a seriously ineffective use of public funds—precious public funds of £150 million a year.

--- Later in debate ---

[Dr Poulter]

No, I will not.

The pregnancy grant would be much better directed if it was used to improve care at the time of delivery, when we know that maternity care matters most in reducing the number of foetal deaths and in reducing poor outcomes in pregnancy and delivery.

The hon. Member for Bristol East (Kerry McCarthy) made the point that we need to be able to measure the effectiveness of the grant, and that it should be a nudge in the direction of good behaviour. I accept that any intervention should encourage good behaviour. Unfortunately, what I saw in my clinical practice, and I speak also as the chair of the all-party parliamentary group on maternity, is that unfortunately many mothers from vulnerable backgrounds were spending the grant on, among other things, cigarettes, which we know have a detrimental effect in pregnancy. There is also a high though often unseen rate of drug and alcohol misuse in pregnancy. The grant is potentially spent on those harmful things as well. Giving an intervention, such as the grant, 25 weeks into pregnancy is far too late to help women deal effectively with those substance misuse problems.

[Kate Green]

I am sure the hon. Gentleman will agree that the majority of mothers are not substance misusers or alcoholics. Indeed, there is considerable evidence over many years, including from the Policy Studies Institute, that shows that if women are given more money, what they do, as my hon. Friend the Member for Bristol East (Kerry McCarthy) said, is spend it on their kids.

[Dr Poulter]

That is a fair point. Nevertheless, many women smoke during pregnancy and do not necessarily give up smoking. The hon. Lady made the point in her speech earlier about low birthweight babies, a factor which we know is linked to smoking. The grant can be used by mothers to support their smoking habit. To be used effectively, a grant must be tied in with results and effect. We all want mothers to have better nutrition, but unfortunately the grant was often spent on harmful substances. The main problem with the grant is that it was not targeted, it was not effective, and it was not making a difference at the time that we know matters to mothers, which is at birth and delivery.

--- Later in debate ---

[John Hemming]

What we are talking about is putting some money in a fund and leaving it there for 18 years. That is not going to affect any woman or child for 18 years. What we should be doing is looking after people now. Our priorities have to be the vulnerable people now. We have to give priority to protecting the poorer, the less well off, the vulnerable and those with learning difficulties now, rather than putting some money away for 18 years.

[Kate Green]

Can the hon. Gentleman give me one single instance of where the incomes of the poorest are being increased by this Government?

[John Hemming]

Well—[Interruption.] Sorry? [Interruption.] Yes, that is a good one. The tax threshold is a good example. One area we are focusing on is low-paid people in work, so there is the first stage of gradually increasing the tax thresholds up to £10,000 a year, and the universal credit itself should be particularly helpful to those on benefits and low pay, such as many people who come to my advice bureau. On Saturday, I did some calculations with somebody who had worked out that when we took into account all the rules the Labour party had produced over the years, it was not worth his while to work. Interestingly, in that instance that was because of a Child Support Agency deduction. We need to focus on the low-paid and make sure that people get into work and through that route get themselves out of poverty. That is a good example of our putting money into the hands of low-paid families.

There is no evidence that the child trust fund produced extra saving, there is no evidence that the saving gateway produced extra savings—and there is only some evidence that, perhaps, it reduced spending on food outside the home—and there is no evidence that the health in pregnancy grant did any good for health in pregnancy. On that basis, if we are not going to cut these measures, what are we going to cut?

--- Later in debate ---

[Kate Green]

In the short time remaining I will address one or two of the points that were raised in the last part of the debate. Is it right to give people cash? Absolutely. There is much evidence of the fundamental difference that an adequate family income makes to a range of good outcomes. Do people squander that cash? Absolutely not. There is a wealth of evidence to show that when low-income families, particularly mothers, are given more money, they spend it on their families and they spend it on their kids. Is it right that we cannot afford that? Only if we look narrowly at the short term. Government Members have rightly challenged us on the long-term savings to be made by addressing inequalities, but savings achieved tomorrow by investing in families today must be taken account of, and that is something to which Government Members have given no thought.

The child trust fund, in offering the poorest young people the opportunity to start their adult lives with an asset behind them, makes a significant difference to those young people, and I am distressed that that is to be taken from them as a result of the Bill. We have offered the Government so many ways in these difficult circumstances to manage those policies through. We have offered them the opportunity to set a target for a time or to cease paying into those funds for a time. We have pleaded with the Government not to scrap them entirely, not least because they have nothing better to put in their place.

The Government are taking £18 billion out of the incomes of low-income households and half a million jobs out of the public sector, many of them for the lowest-paid workers, and then they have the temerity to say that, in addition, they will remove the £190 health in pregnancy grant because, they claim, there are other things to support pregnant women. That is indecent and ungenerous, and I am distressed that so many Government Members consider it acceptable, necessary or even desirable. I very much hope that when the Bill moves to another place, there will be an opportunity to amend the clauses in a way that we have regrettably not been able to do. I regret that the Bill is going forward in its current form, despite the best efforts of my right hon. and hon. Friends.

Question put, That the Bill be now read the Third time.