HC Deb 13 November 2003 vol 413 cc407-8
9. Ms Meg Munn (Sheffield, Heeley)

To ask the Chancellor of the Exchequer whether building societies and other financial mutual organisations will be providers for the new child trust funds. [138332]

The Financial Secretary to the Treasury (Ruth Kelly)

Any firm with a relevant Financial Services Authority authorisation will be able to enter the market subject to meeting the requirements of the child trust fund regulations. We expect a wide range of providers to offer accounts.

Ms Munn

When setting any price cap for child trust funds, will the Government take account of the cost of administering savings for children and the need to raise awareness of the importance of saving? In particular, will they encourage providers to ensure that all families, particularly those with low incomes, benefit from the opportunity to save for their children?

Ruth Kelly

I agree with my hon. Friend. When I decided to allow all FSA-authorised firms to enter the market, I paid careful attention to the impact on financial mutuals and building societies and decided to allow them to participate as well.

My hon. Friend is right to mention the price cap. In view of the factors she cites, I have commissioned independent research from Deloitte Touche on the impact of the cap and its interaction with the target market. I shall publish it in due course.

Mr. David Laws (Yeovil)

How much consultation is going on with other Departments? Is it true that the Home Secretary is even less enthusiastic about the Chancellor's proposals than the Chancellor is about his proposals for identity cards?

Ruth Kelly

I think the hon. Gentleman has completely misinterpreted the Home Secretary's position. He is a firm advocate of child trust funds. Indeed, I shared a platform with him in Downing street to discuss the merits of the proposal. We have a once-ina-generation chance to open up opportunities for poor children as well as those from wealthier backgrounds.

Mr. Nigel Beard (Bexleyheath and Crayford)

Would my hon. Friend consider allowing parents who are eligible for the savings gateway to pay top-up amounts into the trust funds on the same terms?

Ruth Kelly

We have considered how to maximise the benefits for children from poorer families. We have decided both to make the policy universal—every child born after a certain date will have access to an endowment—and to concentrate Government resources on those who need them most. We have introduced a two-level endowment, which will apply at birth and when the child reaches the age of seven. Up to 40 per cent. of children will be able to benefit.

Tim Loughton (East Worthing and Shoreham)

Can the Minister answer a question that seems to be causing some confusion among her officials? Will the trust funds be taken into account in the calculation of benefits, and will they affect those benefits?

Ruth Kelly

We have made it absolutely clear that in the assessment of family benefits for the purpose of calculation, child trust funds will be disallowed.