Savings Accounts and Health in Pregnancy Grant Bill

Kerry McCarthy Excerpts

Tuesday 26th October 2010 Commons Chamber

[Jacob Rees-Mogg]

My hon. Friend is absolutely right and spot on. That is a most helpful intervention. There is no point in giving money late in the day to everybody—those who need it and those who do not need it alike—for an unspecified purpose when other ways of spending money may prove to be more useful.

[Kerry McCarthy (Bristol East) (Lab)]

The hon. Gentleman is saying that benefits should be targeted rather than universal and that they should be for a very specific purpose—that the state should dictate what the benefit money is spent on, which contradicts what he said earlier about the nanny state. Given his support for targeting benefits, how does he justify the Government’s continued support for the winter fuel allowance?

[Jacob Rees-Mogg]

The winter fuel allowance goes to the elderly, many of whom will have paid full national insurance contributions, and it is therefore in some sense a recompense for what they have paid in. I think that to look after the old in society is an important and virtuous thing to do. It is right to give that help so that people can be warm in their homes, but we are talking at present about £250 for children when they are born that will give them a pitiful amount a few years later. We are talking about £190 given to every woman who is going to have a baby for no necessary benefit to her because she may not need the money or it may be received too late for her to address some of the problems referred to earlier. Those two benefits are therefore unnecessary and wrong.

The third benefit is the Government’s matching of personal savings, and there is a misconception here. Saving from a deficit is a dis-saving to the economy because there are costs associated with allocating that saving. To put that more simply, if someone borrows money from one account to put into another account they will pay a higher rate of interest on their borrowings than they will receive on their savings so, net, the country is dis-saving by topping up savings accounts. Opposition Members are therefore wrong to say that this is an encouragement to saving.

We need to look at all that is being done in the broader context. We have this phenomenal deficit—our highest peacetime deficit—which the Government have, in a workmanlike and serious-minded way, decided to tackle. They have decided to bring the deficit down so that we may have the conditions for economic growth. The essence of good government and of a sensible Treasury policy is to ensure that there are the conditions where business can thrive, jobs can be created and money can cascade through the economy. That is what really lifts people out of—

--- Later in debate ---

[Kerry McCarthy (Bristol East) (Lab)]

It is almost obligatory for a Minister or shadow Minister rising at the Dispatch Box to respond to a debate to say that we have had a fascinating discussion, but I can genuinely say that our debate has been very engaging with lots of issues discussed and clear differences expressed between Labour Members and those on the Opposition—or, rather, Government—Benches. If only they were still in opposition; then we would not be in this position of having to try to defend measures such as these against attack from them.

At least the hon. Member for Blackpool North and Cleveleys (Paul Maynard) was brave enough to speak in the debate, unlike many of his Conservative counterparts. I do not think a single Liberal Democrat spoke, and it was very disappointing to see the lack of interest from them.

[John Healey (Wentworth and Dearne) (Lab)]

It was a lack of support.

[Kerry McCarthy]

Yes, we have to wonder whether the absence of so many Members from the Government Benches was due to a lack of interest or the fact that some of them have serious reservations about what is being proposed today. It was particularly noticeable that very few women Members from the coalition parties attended or spoke in the debate. I hope that that shows some concern on their part.

The hon. Member for Blackpool North and Cleveleys suggested that children would be better served by a piggy bank in their bedroom than a child trust fund, which shows a shocking lack of understanding of the issues. The hon. Member for Gloucester (Richard Graham) showed a similar lack of understanding by saying that an individual savings account was a better form of saving at zero cost to the taxpayer than a child trust fund. I gather from his CV that he worked for Baring Asset Management; I suspect that a background of working for Barings is not the best qualification for advising other people on how to manage their assets.

My hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) made an eloquent speech in defence of the child trust fund. I want to congratulate her on becoming a grandmother today—[Interruption.] Has it not arrived yet? Well, I hope mother and baby do very well when it does finally come along. [Interruption.] Yes, there should now be a pregnant pause in my speech, as the shadow Chancellor, my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), says.

The hon. Member for Strangford (Jim Shannon) and his colleagues from Northern Ireland showed how important they thought the child trust fund was for the people of Northern Ireland. He mentioned that it is backed by the credit union movement, which is obviously well developed there, and that it has cross-party support. We very much valued his support on that point.

The hon. Member for Mid Norfolk (George Freeman) described the contributions of Labour Members as “hysterical”. I have to say that that word is often used by a certain type of man when women express strong views. I am sorry if this makes him uncomfortable, but Labour Members are not desiccated calculating machines and we care passionately about defending the measures that the Government are trying to abolish in this Bill. My hon. Friend the Member for Stretford and Urmston (Kate Green) gave, as always, an awe-inspiring speech. She has impeccable credentials on this point and demonstrated the eloquence that comes from truly knowing her subject and caring passionately about it.

My constituency neighbour—in all other senses he is probably from another planet from me—the hon. Member for North East Somerset (Jacob Rees-Mogg), talked about these measures involving “pitiful” amounts that are “too small” to make a difference. It may be that in the world that he inhabits these sums are pitiful, but I ask him to cross the constituency border and come to meet some of the people whom I deal with in Bristol East, because he would then learn some lessons about how much difference these small amounts of money can really make.

That was something that my hon. Friend the Member for Walthamstow (Stella Creasy) showed in a well researched speech full of statistics. She described just how investing small sums can create substantial assets for a child in its future.

[Ian Swales (Redcar) (LD)]

rose—

[Kerry McCarthy]

I am sorry, but I do not have time to give way because we are a bit under the cosh.

My hon. Friend the Member for Rochdale (Simon Danczuk) talked about how scrapping the child trust fund would heighten the contrast between the tax advantages for the wealthiest savers and the poorest and vulnerable slipping further and further behind. My hon. Friend the Member for Stockton North (Alex Cunningham) reminded the House of the old biblical tale of the widow’s mite and the comparison with the poor being made to contribute to deficit reduction at great sacrifice while the very richest in society will not feel the same pain.

My hon. Friend the Member for Kingston upon Hull North (Diana R. Johnson) talked about how the saving gateway had been piloted in Hull. That measure was not mentioned as much during today’s debate, but it is obviously important and it was praised by my hon. Friend the Member for Scunthorpe (Nic Dakin).

My hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont)—I think that I finally pronounced that right after several attempts—talked about how the child trust fund is about freedom and opportunity, and not about the nanny state. That is such an important point to make, because the fund is about creating the ability for young people to go out into the adult world with a little bit behind them that they can put to good use.

My hon. Friend the Member for Bolton South East (Yasmin Qureshi) rightly pointed out that those on the Government Benches have been using specious arguments against universalism all afternoon, yet they are not arguing that the health in pregnancy grant should be targeted, although that would be the logical conclusion of their argument. They are also not using the same argument to say that the winter fuel allowance, for example, should be targeted.

We heard a passionate defence of the health in pregnancy grant and the child trust fund from my hon. Friends the Members for Walsall South (Valerie Vaz), for Newcastle upon Tyne North (Catherine McKinnell) and for Edinburgh East (Sheila Gilmore). The latter described some of the language used or some of the suggestions made by those on the Benches opposite about what the health in pregnancy grant could be used for as quite offensive. The suggestion that ladies, as my neighbour, the hon. Member for North East Somerset, would say, cannot be trusted to spend the money wisely in a way that would benefit their health and their child is quite offensive.

[Jacob Rees-Mogg]

rose—

[Kerry McCarthy]

By way of light relief today—[Hon. Members: “Give way.”] I would love to.

[Jacob Rees-Mogg]

I thank the hon. Lady for giving way, because I want to clarify that I had not made the point that people did not spend their money wisely. It may have been made by somebody else, but I would not like people to be confused.

[Kerry McCarthy]

My reference to the hon. Gentleman related just to the fact that he used the term “ladies” quite frequently during the debate, which is actually charming in its own way.

Earlier today, after a heavy morning spent in the Finance Bill Committee, by way of light relief I watched a video that had been posted on the ConservativeHome website in January this year. It was one of those videos that the Conservative party was very fond of when it was on a mission to convince the British voters that it really had changed and was no longer the nasty party. It featured the then Leader of the Opposition, now the Prime Minister, of course, in his shirt sleeves talking with well-rehearsed spontaneity to an audience carefully chosen to seem like a random cross-section of the general public. He said that he wanted this Government

“to be the most family friendly Government we’ve ever had in this country and that is about everything we do to support families and it’s about supporting every sort of family.”

What have this Government, in collusion with their friends from the Liberal Democrat party, done to support families? For a start, what have they done to support children? The so-called emergency Budget and the spending review take away almost £7 billion from funds to support children, three times the amount the bank levy is estimated to raise. According to the Institute for Fiscal Studies, families with children will lose the most from what this Government plan to do by 2014-15. The poorest 10% of families will lose 7% of their income. The Government are freezing child benefit, cutting child care tax credits, restricting the Sure Start maternity grant to just the first child and, of course, axing the child trust fund and the health in pregnancy grant under the Bill that we have considered today.

What about when the children get a bit older? Education maintenance allowances are being abolished, school spending per pupil is being cut in real terms and the IFS has said that the pupil premium could widen funding inequalities. As the End Child Poverty campaign said after the comprehensive spending review, it was

“a dark day for any family struggling to stay out of poverty, or deep in it already and fearing things will get worse still.”

[Guy Opperman (Hexham) (Con)]

Will the hon. Lady give way?

[Kerry McCarthy]

I am afraid I do not have time.

What about the impact on women? Our research has shown—we have had to do our own research, because this Government seem to have abandoned any notion of doing real and meaningful equality impact assessments, and I pay tribute to my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) for her work on it—that the cuts hit women twice as hard as men, without considering the impact of cuts to public services. We know that 65% of public sector workers are women and that two thirds of the public sector redundancies arising from the spending review are expected to be women.

Of the £16 billion cuts in total, £11 billion comes from women. Some 72% of the emergency Budget cuts will be met from women’s income, and in the CSR cuts £5.7 billion will be taken from women compared with just £2.7 billion from men. A million more women claim housing benefit than men, 70% of tax credits are paid to mothers, 94% of child benefit is paid to mothers and 90% of lone parents are women. So much for being family friendly. So much for looking after every sort of family. So much for doing everything they can to support the family.

My hon. Friend the Member for Chesterfield (Toby Perkins) stole my line earlier when he talked about the Government believing in women and children being first when it came to cuts. The phrase “women and children first” comes from a mariners’ saying when a ship is doomed to sink, and what we are discussing today is just the tip of the iceberg.

The Bill might be tiny in terms of written content—it is just three pages and four clauses—but it does a huge amount of damage. It scraps the support that we have given to families to help them save through the saving gateway. It scraps the chance a child from a poor family had to enter adult life with a little pot of money to help them fulfil their dreams and ambitions, something that hon. Members on the Government Benches, with their multi-million pound trust funds, could never hope to understand. It snatches away money from pregnant women—money that was designed to help them have healthy, happy pregnancies and healthy, happy babies.

We on the Labour Benches will carry on fighting for those families and for children who were not born with a silver spoon in their mouth, and we will oppose the Bill tonight.