Child Trust Funds

Tonia Antoniazzi Excerpts

Wednesday 13th March 2019 Westminster Hall

[Helen Goodman]

I simply think that the Treasury has taken its eye off the ball completely on this matter. It thinks that it can contract the administration out to a small, well-intentioned charity that is doing its best, but it is fundamentally a Government responsibility, and Government Ministers must take their share of the responsibility.

As I was saying, children from wealthy families started off with £250. Children from poor families started off with £920. However, the valuation of the accounts now shows that that position has completely reversed. The accounts of the wealthiest children are now worth, on average, £4,000, but the accounts of the children from the poorest families are worth £1,600. That is partly because wealthy families were able to keep topping them up, which poor families cannot afford to do. Wealthy families have also been managing them more actively.

In essence, the Government have overturned the whole purpose of the scheme. Moreover, as my hon. Friend the Member for Vale of Clwyd (Chris Ruane) said, the Government seem to be hiding the funds from those for whom they are intended. Information is printed in tiny typeface on the letter that goes to 16-year-olds giving them their national insurance number. All it says is: “When you turn 16, take control of your child trust fund. Ask your parents for more information. Go to www.gov.uk/child-trust-funds”. If someone does not know that they have a child trust fund, or what a child trust fund is, they will not notice or follow that. It ought to say: “You have an asset. It is probably £1,000. If you want to get hold of it, you need to do this.” It should be in big red typeface, like the national insurance number itself, on the letter that is sent out.

Furthermore, most young people, once they have clicked through to the Government website, will not be able to access the fund, even if they follow the instructions in the letter that they get with their national insurance number, because the Government website requires them to have a Government gateway user ID—I do not know whether you are familiar with those, Sir Christopher. It means that, as well as their national insurance number, young people need a passport, a P60 or a payslip. Obviously, 16-year-olds are at school; they do not have P60s and payslips. We are particularly concerned about people in low-income families. Many of them do not have passports, which are very expensive. More to the point, young people are not really very financially sophisticated: 62% of 14 to 17-year-olds cannot read a payslip, while only 52% of seven to 17-year-olds say that they have received any financial education in school, at home or in other settings.

The Government contracted out the administration of the scheme to the Share Foundation, a charity that has been administering it for the 45,000 children in care and which has managed to track down 60% of them via local authority records. That is very commendable, but I put it to the Minister that it is completely irresponsible to contract out the administration of a database of 6 million people to a voluntary sector organisation for a fee of £300,000 a year and expect 1.5 million people to be tracked down on a voluntary basis.

HMRC writes to every mother whose child is soon to be 18, stating that entitlement to child benefit is about to end. I suggest that that is the perfect opportunity to signpost them to the child trust fund. Mothers could be told, “Your child benefit is coming to an end, but your child will then be entitled to this money.” I hope that the Minister will take that idea away and implement it with HMRC, which is a department under the Treasury’s responsibility.

[Tonia Antoniazzi (Gower) (Lab)]

Is my hon. Friend aware of the possibility that accounts that have not been activated may be deemed dormant and may therefore be subject to the Dormant Bank and Building Society Accounts Act 2008? Does she agree that that is an issue?

[Helen Goodman]

That is exactly right. If the account is dormant for 15 years, the person will no longer be able to access it.

The results of a YouGov survey, published at lunchtime today, underscore the lack of signposting:

“One in six parents of children aged 8 to 16 were not aware of Child Trust Funds… This figure rises to one in five (21%) among families who were receiving child tax credit at the time”—

families that would thus have been eligible for the larger voucher from the Government.

This is a scandalous and secret maladministration of public money on a vast scale. Unless the 1 million children and young people are tracked down and the £1.5 billion is given to those for whom it was set aside, that money will go back to the Treasury, as my hon. Friend the Member for Gower (Tonia Antoniazzi) said, to be redistributed by a bureaucrat. That would be a terrible waste—not just of the money, but of the life chances of the young people for whom it was intended.

--- Later in debate ---

[Tonia Antoniazzi]

What plans does the Minister have to encourage eligible parents, and children when they turn 16, to access this money? Is it not the responsibility of the Government to do some kind of public awareness campaign to say, “Hey, look—here’s your investment that the Government made for you. This is how you access it.” Let us make this a can-do exercise.

[John Glen]

The key point is that children have access to this money when they are 18, but can influence decisions about it from the age of 16, when they are paying tax and have a national insurance number. They will gain that access mechanism when they secure their national insurance number. The hon. Member for Bishop Auckland made a point about how this issue should be depicted on the form when 16-year-olds get their NI number, but that number provides the key to unlock awareness of, and access to, the fund that has been invested for them.