Commons Sitting of 3 February 2004

Preamble
The House met at half-past Eleven o'clock
PRAYERS
[MR. SPEAKER in the Chair]

CONTINGENCIES FUND 2002–03
Ordered,
That there be laid before this House the Accounts of the Contingencies Fund, 2002–03, showing:—

The receipts and payments in connection with the Fund in the year ended 31st March 2003,

the distribution of the capital of the Fund at the commencement and close of the year; together with the Report of the Comptroller and Auditor General thereon.—[Gillian Merron.]

Oral Answers to Questions
  TRANSPORT
  The Secretary of State was asked—
  TRANSPORT

    Railways
    Martin Linton(Lab): What plans he has to open new stations on the west London line. [152271]
    The Parliamentary Under-Secretary of State for Transport (Mr. Tony McNulty): The Strategic Rail Authority has approved the construction of two new stations on the west London line—one at Imperial Wharf in Chelsea and one at Shepherds Bush. The earliest date currently envisaged for their opening is February 2005.
    Martin Linton: I thank the Minister for his reply, but press the case for reopening Battersea High Street station and other stations on the south and west London orbital lines, such as Brixton, Battersea, Stamford Bridge and North Pole. Is the Minister aware that since privatisation, only two new stations have been opened in the entire south-east of England, because there is absolutely no incentive in the system for Network Rail or the train operating companies to invest in new stations? Indeed, those two new stations had no railway money put into them.
    Is the Minister further aware that there is so much freight on the west London line that it will be almost impossible for trains to stop there—
    Mr. Speaker: Order. The hon. Gentleman should try for an Adjournment debate on this matter.
    Mr. McNulty: Thank you, Mr. Speaker. I reiterate that I have no plans for any more new stations on the
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    west London line. As it is one of the most congested in the country, adding another station would have significant performance implications, and it is highly unlikely that it would be feasible, given the current levels of traffic. As a London MP, I caution my hon. Friend not to equate new stations with the amount of investment that is being made. The London end of the channel tunnel rail link, the Jubilee line extension, the Docklands light railway and all the extensions to it, and the £17 billion of investment in the tube show that investment in transport in London is a key priority for the Government.
    Matthew Green(LD): What steps his Department is taking to ensure that there is a direct train service from Shropshire to London. [152272]
    The Minister of State, Department for Transport (Dr. Kim Howells): I am sure that the hon. Gentleman knows that the Strategic Rail Authority, not the Government, has responsibility for specifying minimum service levels in each train operating company's franchise agreement. I understand that the authority's current view is that there is not a sufficiently strong business case for maintaining direct services between Shropshire and London.
    Matthew Green: I hesitate to thank the Minister for that answer. He may be aware that Shropshire is the only county that from May will not have a direct rail link to London. Indeed, the largest towns in Shropshire—Shrewsbury and Telford—will be the largest towns in the country without such a link. The last route that passes through Ludlow and goes on to Waterloo will be closed from May 2004, thanks to the Strategic Rail Authority. Does the Minister think that he is doing enough to ensure that Shropshire has a direct link to London—or does he have something against the county?
    Dr. Howells: That was a very Liberal question. The one train a day that used to run from Shrewsbury via Telford to London Euston was withdrawn from the winter 2000–01 timetable because it did not attract sufficient passengers to make it commercially viable. I do not know if the hon. Gentleman is hinting that that will be yet another addition to the Liberals' spending plans, but it would not surprise me if he was.

    Pollution Offences
    Mr. Edward Leigh(Con): What steps have been taken to ensure that pollution offences may be prosecuted on the same terms wherever they occur within the UK pollution control zone, as recommended by the Public Accounts Committee in its second report of the Session 2002–03. [152273]
    The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson): We need to bring the statutory defences under the Merchant Shipping Act 1995 into line with those in the Merchant Shipping (Prevention of Oil Pollution) Regulations 1996. My Department has investigated the scope for achieving that through a regulatory reform order, but has established that it is not possible. We will therefore seek to amend the 1995 Act when a legislative opportunity is available.
    Mr. Leigh: As the Minister knows, polluters seek to avoid their liabilities by resorting to the "pay to be paid"

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    device in their insurance policies. The International Maritime Organisation has asked for those practices to be banned. Are the Government going to ban them; if not, why not?
    Mr. Jamieson: We take pollution from ships around our coast very seriously in this country. The hon. Gentleman will know from the National Audit Office report of June 2002 that between 1997 and 2002 we reduced the amount of oil spilled in the UK pollution control zone by more than 90 per cent. He will also know from a letter sent to him by the Maritime and Coastguard Agency in January this year that we are making good progress in implementing not only the National Audit Office recommendations, but those of his own Committee.
    Mr. Alistair Carmichael(LD): When the Minister revisits the legislation with a view to bringing forward amendments, will he seriously consider making such offences strict liability offences?
    Mr. Jamieson: Yes, indeed. The hon. Gentleman will know that some of those offences can already attract very heavy fines—in fact, the heaviest fines that magistrates can impose for oil pollution. Certain areas around the Scottish coast, including the Shetlands, are particularly sensitive. We are mindful of the need to protect the coast—that is why, I am glad to say, the number of pollution incidents and the number of gallons of oil spilled have reduced very substantially over the past five years.

    Alternative Transport
    Huw Irranca-Davies: If he will make a statement on the impact on health of his Department's policies on encouraging alternative modes of transport. [152274]
    The Minister of State, Department for Transport (Dr. Kim Howells): We are trying, in a number of different ways, to encourage people to walk and cycle more often and to raise levels of physical activity generally. We are working with a number of Departments, such as the Department of Health, and we hope to publish in the spring a number of the joint measures that we intend to take to encourage increased levels of cycling and walking, especially to schools and workplaces.
    Huw Irranca-Davies: The purpose of my question is to try to tease out the cross-cutting nature of the Government's agenda on health, and how transport can fit into that. May I also ask my hon. Friend what discussions he will have with colleagues in the Welsh Assembly Government to make sure that best practice on both sides of Offa's dyke is disseminated, to the benefit of the health of our youngsters?
    Dr. Howells: My hon. Friend will be glad to hear that we are in close, regular contact with the Welsh Assembly Government, and we are certainly interested in their development of a walking and cycling strategy for Wales. We will consider it carefully in drawing up our strategy.
    Mr. Archie Norman(Con): Can the Minister comment on the enormous proliferation across
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    the country of little blue signs with bicycle and pedestrian symbols on them? Is he aware that they are being put up in many areas where there is absolutely no prospect of increasing the amount of cycling or walking? What steps will the Department take to assess the value to the taxpayer of this exercise, which seems to smack more of political correctness than of delivering results?
    Dr. Howells: I was not aware that the hon. Gentleman was concerned about this proliferation of little blue signs. I had not noticed them, but I will look out for them in future and try to make a subjective judgment on their effectiveness.
    Mr. Greg Knight(Con): Health is an important issue, and if the Minister really shares our view that the use of less polluting forms of transport should be encouraged, will he join me in condemning the Chancellor of the Exchequer, Mr. Stealth Tax himself, for announcing the withdrawal of the excise duty concession on liquefied petroleum gas fuel? Is not that a severe setback to persuading more motorists to do something about improving air quality?
    Dr. Howells: I certainly will not join the right hon. Gentleman in doing that, and I do not believe that the Chancellor has announced that. That will be a matter for him when he comes to make his Budget statement.

    Railways
    Mr. Desmond Swayne(Con): What the role is of the Strategic Rail Authority in the rail review. [152275]
    Bob Spink(Con): What recent representations he has received on the role of the Strategic Rail Authority. [152281]
    The Secretary of State for Transport (Mr. Alistair Darling): The Strategic Rail Authority's role is set out in the Transport Act 2000. On 19 January, I announced a review of the organisation and structure of the railway industry. I expect to receive many representations in relation to every part of the industry.
    Mr. Swayne: The right hon. Gentleman told us on 19 January:
    "Of course, no Government Department can or should attempt to operate the railways'.—[Official Report, 19 January 2004; Vol. 416, c. 1077.]
    Can he tell us why No. 10 is sending in a hit team to four of the operating companies, apparently to do just that?
    Mr. Darling: The hon. Gentleman should not believe everything that he reads in the newspapers. The particular article to which he refers is simply wrong. What is true is that the Department of Transport is rightly concerned about the low level of performance in some train operating companies, because we are spending substantial sums of public money on that. In conjunction with one or perhaps two members of the Prime Minister's delivery unit, we are working with train operating companies to see why it is that while

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    some companies are improving their performance, others are not. I caution the hon. Gentleman not to believe everything that he reads in The Independent.
    Bob Spink: I want to be generous, but this is yet another area in which the Government appear to be both muddled and confused, while public services and passengers in particular continue to suffer. Can the right hon. Gentleman tell me to whom or to which body I should put the case for increased capacity for the Fenchurch Street line, which is much needed, and for the terminus station on Canvey island?
    Mr. Darling: The hon. Gentleman must know the answer to this question because he has already been making representations to the SRA about that. The Fenchurch Street line, on which, by sheer coincidence, I travelled yesterday, has had new rolling stock, which was made possible only because of the investment made available by this Government, every penny of which was opposed by the Conservatives. The reliability of that line has improved to just under 90 per cent. —it is the second best performing train operating company in the south-east. If he wishes to make representations about additional stations, he should do it to the SRA. I am bound to say, however, that he cannot at the same time call on us to reduce substantially the amount of money spent on the railways.
    Mrs. Gwyneth Dunwoody(Lab): My right hon. Friend knows that most passengers simply want the services to improve and that there is currently a top-heavy bureaucracy in the railway industry. Will he give us an idea of the timetable for his review and some guarantees that, at the end of it, passengers will have a better service and certainly not a more expensive one?
    Mr. Darling: I agree with my hon. Friend. I made it clear on 19 January that I believe that the organisation and structure of the railways need to be substantially simplified so that there is far greater clarity about who is responsible for operating the trains. I do not believe that all the current organisations are necessary; they can be rationalised. However, it is worth remembering that, despite all the industry's difficulties, last year it carried 1 billion passengers—the highest total for 40 years. Train performance traditionally dipped in the autumn, but it has improved because of the better performance of Network Rail.
    My hon. Friend may have noticed an article in The Guardian, which is accurate, today. It states that performance in areas where Network Rail has taken the maintenance in-house has improved far more than elsewhere. That shows that the changes are making a difference.
    Mr. Paul Truswell(Lab): Will the SRA and the review deal with the chronic overcrowding in west Yorkshire, including in my constituency? It is greater than in most parts of the country, including London and the south-east. Will he especially tackle the need for competitively priced rolling stock to meet current shortfalls and future demand?
    Mr. Darling: The SRA is examining that. It has spent considerable sums of money in west Yorkshire in the past few years to try to improve capacity. However, as my hon. Friend knows, nearly one third of all the rolling stock in the country is being replaced and there will be new trains, including in Yorkshire. That will tackle some of the capacity problems as well as providing more comfortable and reliable trains.
    I should have said in reply to my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) that we expect the review to be completed in the summer, as I stated on 19 January.
    John Thurso(LD): Would the Secretary of State agree that although solutions to the immediate problems are important, it is critical for the review to identify and set out clearly a concept for the long-term structure and management of the railways? To achieve that, what is he doing to end the current confusion about who does what in the review—for example, train operating companies that wish to submit not to the SRA but to the Department? How can the SRA co-ordinate a review when its role is central to that review?
    Mr. Darling: I agree that it is necessary to establish a structure that will take the industry forward for the next 10 or 20 years. There is near unanimity that the current structure is not suited for that.
    Mr. James Gray(Con): You did it.
    Mr. Darling: Who privatised the railways? Have we already forgotten?
    The Government will determine the appropriate structure for the review. We have asked Richard Bowker at the SRA to evaluate the industry's representations, but we have always made it clear that people are free— and should even be encouraged—to make representations directly to the Department, and they are already doing that. The key point is to get a structure and an organisation that can run the railway efficiently and properly and which will last for the next 20 to 30 years. I am determined that that will happen.
    Mr. Mark Lazarowicz(Lab/Co-op): Does my right hon. Friend agree that one of the SRA's roles should be to ensure quality rail links between all the major cities of Great Britain? Does he therefore share my hope that the SRA will make a contribution to upgrading Edinburgh Waverley in his constituency? It is an important station for rail links from many parts of Scotland to many parts of England.
    Mr. Darling: As my hon. Friend knows, the SRA, Network Rail, the Scottish Executive and the city of Edinburgh council are all considering the best way in which to make improvements at Waverley station. Substantial sums have been invested in Waverley station on signalling, which improves several pathways in and out of the station. He and I know that the station needs investment and we are considering the best way to achieve that. My hon. Friend will also know that part of my review will examine ways of devolving more responsibility for railways to the Scottish Executive, among others.
    Mr. Damian Green(Con): The Secretary of State talks about simplification, but he will know that the way in which the review has been conducted so far seems designed to undermine the SRA. Some train operating companies received a letter from the SRA asking them to send it their submissions to the review, then received a letter from the Department saying, "No, you don't need to do that, please make your submissions to the Department." Is that just day-to-day, run of the mill incompetence, or can the Secretary of State confirm that there is now a full-time power struggle between parts of his Department and the SRA?
    Mr. Darling: I think that the hon. Gentleman is confusing himself. In relation to the review, as I said just a moment ago in reply to the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), it is the Government who will decide at the end of the day what proposals to make before they invite the House to consider the appropriate legislation that will no doubt follow. In relation to the SRA, I have made it clear on many occasions that it has done an extremely good job of bringing a great deal of order to the chaos left by the privatisation that the hon. Member for Ashford (Mr. Green) supported.
    Mr. Green: I am glad that the Secretary of State has now admitted, as he failed to a few minutes ago, that the current structure, to which he objects so much, was created by his Government when they set up the various bodies. At the last count, those who wanted complete, detailed control over the railways included Network Rail, the rail regulator, the Strategic Rail Authority, the Secretary of State and now, we hear, the Prime Minister. Does the Secretary of State understand why one senior rail figure said, at the weekend:
    "We are being audited to death…I want to get on with my day job of running the railways"?
    Does he understand why passengers get angry when, as the services suffer delays and cancellations, the Government's response is more interference, more centralisation and more bureaucracy, none of which helps a single train to run on time?
    Mr. Darling: If the hon. Gentleman himself had a policy, he might speak from a stronger position. The only policy that his party has is to hanker after the days of Railtrack, which were, of course, an absolute disaster for the railways.
    There are two separate strands to what the hon. Gentleman says. First, on the structure and organisation of the railways, the increasingly common ground is that the present structure, which stems from the privatisation of 10 years ago, is simply not sustainable. We need to have a far more streamlined organisation that can run the railways effectively. Secondly, on train performance, I have said on many occasions—including just about every Question Time— that although performance is improving, it still has a long way to go.
    The fundamental problems of our railways, however, are, first, that they did not have enough money invested in them over decades, for which the hon. Gentleman's party, which was in power for 18 years, must take its share of the blame. Secondly, the management of the railways needs to be improved. The review on which we
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    have embarked is designed, among other things, to ensure that there is a more sensible management so that it is easier to make decisions. For example—I leave the hon. Gentleman with this thought—it cannot be right that following privatisation, the agreement of four separate organisations is needed to make a change to the timetable. That does not make any sense at all, and it is a direct consequence of the botched privatisation 10 years ago.
    Mr. Clive Betts(Lab): Will my right hon. Friend look at the practice of the SRA in coming to initial agreements with train operators over service improvements as part of their franchise, then removing the requirement for such improvements without any apparent quid pro quo from the operators? In particular, would he look at the case of Midland Mainline? The SRA has now removed a requirement for that operator to improve journey times to London, and it is now about to defer a requirement for the operator to provide an hourly quick train service between Sheffield and Leeds. Both those decisions have been taken with no quid pro quo being required from Midland Mainline, with no thought for passengers' interests and with no reference to elected representatives.
    Mr. Darling: I shall look at that. There are two problems with Midland Mainline at the moment. One is the undoubted disruption being caused by the works at St. Pancras station, although the first phase, to provide new platform facilities for Midland Mainline, will be completed later this year. The second is fleet reliability. It is not clear to me why this particular train company is having so much difficulty operating a fleet that is used by other train companies that have a higher standard of reliability. No train company should be let off the drive to improve standards, and I shall look at that particular case and come back to my hon. Friend on it.

    Roads
    Mr. Anthony Steen(Con): If he will give guidance to local authorities on the percentage of expenditure in their transport budget that is appropriate to be spent on (a) road maintenance and (b) traffic-calming measures. [152276]
    The Parliamentary Under-Secretary of State for Transport (Mr. Tony McNulty): It is a matter for each local authority to decide how to allocate its funding in order to meet the transport needs of its communities and to deliver the targets and objectives set out in its five-year local transport plan. It is not for the Government centrally to dictate to local authorities, although we work with them. We will resist going back to the heavy-handed centralisation that the Conservatives employed when they were in government.
    Mr. Steen: While it is true that all local authorities have an awful lot of roads to maintain, and that Devon has more than the entire road system of Belgium, would the Minister agree that it is sheer madness for Devon and the many other counties like it to spend millions of pounds on road maintenance and, particularly, on widening roads sot hat traffic can go faster, and then to spend millions on putting in traffic-calming measures

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    such as road humps and rumble strips to slow it down again? That is an enormous waste of public money and council tax payers' money.
    Mr. McNulty: That is an interesting characterisation. Many of the villages in Devon are crying out for those humps for road safety reasons. This is a matter of balance for Devon county council. I had thought that the hon. Gentleman might congratulate the Government on increasing by 15 per cent. the amount of capital given to Devon in the local transport plan settlement before Christmas—it is now close to £28 million. When he mentioned madness, I thought he might be about to say that the Tories and Liberals who run Devon were mad to propose, as I understand it, the transfer of £1 million away from road maintenance to other priorities in the forthcoming budget. If there is madness, he should take the matter up with his colleagues on the county council.
    Mr. Ken Purchase(Lab/Co-op): While the Minister is keeping these matters under close scrutiny, will he also recognise that, in terms of value for money and good spending practice, data need to be gathered on such matters as proposed red routes, so that we can check the data from before the introduction of the red route against the outcome and see whether the value for money that we are all looking for is actually being obtained? I would remind my hon. Friend that my borough is about to spend £750,000 on a red route and associated works, but we are not yet sure whether we shall be able to check the data against the current evidence.
    Mr. McNulty: I am grateful to my hon. Friend for raising this matter with me by correspondence before today. He knows that I am looking into it. It is important that bus priority measures should be implemented in an efficient and effective way. I know that he will be enormously grateful that altogether the west midlands are getting more than £80 million in the local transport settlement, a 9.3 per cent. increase on previous years. I will, however, investigate this specific matter and get back to him on it.
    Mr. Eric Forth(Con): Does the Minister share my doubts about the efficacy of road humps? Is he at the very least able to pledge that he and his Department will be neutral on the subject? Ideally, I would like the Department to give some guidance to local authorities, because road humps can, in certain circumstances, delay emergency vehicles, damage the vehicles of ordinary citizens and create pollution. They are generally a menace.
    Mr. McNulty: All those issues and more are fully taken into account before any scheme is put into place. There is full consultation on each scheme. Do I share the right hon. Gentleman's doubts? No. Do I share his perverse libertarianism? No.
    Mrs. Anne Campbell(Lab): Will my hon. Friend ensure that, when speed bumps are considered by local authorities, guidance is given as to
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    the needs of cyclists? It is comparatively simple to put a small dip in a road bump to accommodate cyclists, and doing so certainly makes it much safer for them.
    Mr. McNulty: As and when it is appropriate, for road safety reasons, to install table platforms that cover the whole road, that will be done and cyclists will need to be aware of them. As and when it is appropriate for there to be gaps between the humps, for the benefit of both emergency vehicles and cyclists, that will also happen. Cyclists are fully taken into account, but the overwhelming priority must be to determine what the traffic calming measure can do for road safety. That consideration must remain paramount. My hon. Friend will be enormously grateful that Cambridgeshire has secured a 22 per cent. increase for its local transport plan.

    Road and Rail Safety
    Dr. Evan Harris(LD): What assessment he has made of the relative cost-effectiveness in expenditure per life saved of investment in rail safety compared with investment in road safety. [152277]
    The Minister of State, Department for Transport (Dr. Kim Howells): Rail is a safe mode of transport, and is six times safer than travelling by car. That difference means that additional public investment in road safety measures is usually much more effective, as measured by lives saved per pound spent, than additional investment in rail safety measures such as new signalling systems. Such investment does not seem to be as effective as additional expenditure on roads.
    Dr. Harris: In the light of that answer, does the Minister agree that it is regrettable that there is so much pressure from the media and possibly even the public on politicians to do something about rail safety, when investing that money in road safety could save 10 times as many lives? Does he regard it as a Government responsibility to try to change the balance of the debate to make it clear that rail transport is relatively much safer and that we need to do much more in road safety to save lives?
    Dr. Howells: Yes, I agree, and we are trying to change that balance. We know, for example, that the cost of saving a life—if one can ever put a cost on such a thing—on the railways is about £10 million per life saved, whereas on the roads it is about £100,000. Small incremental improvements in road safety can indeed save many lives. It is worth reminding the House that in 2001–02, the last year for which complete figures are available, 3,431 lives were lost on the roads and 307 on the railways. If we take out from those statistics the 275 deaths that were the result of suicide or trespass and 17 other deaths, that leaves just 15 passengers and rail staff who were killed on the railways. It is therefore a very safe mode of transport, but we want it to be much safer so that it is as safe as possible. However, we recognise the validity of the hon. Gentleman's question.
    Mr. Patrick McLoughlin(Con): One way in which we could improve road safety that would not cost any money at all, is, if we do not keep

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    British summer time throughout the year, at least to extend its duration. Will the Minister look at that, call for investigations to be made—and not be influenced by the Secretary of State for Scotland?
    Dr. Howells: My right hon. Friend will know that the position is not without difficulties in the north and north-west of the country, but we should keep it under review, and shall do so.

    Air Transport (Scotland)
    John Barrett(LD): What representations he has received on the expansion of air transport in Scotland since the publication of the aviation White Paper. [152278]
    The Secretary of State for Transport (Mr. Alistair Darling): Since the publication of the White Paper I have received a number of representations on air transport in Scotland.
    John Barrett: I thank the Secretary of State for his answer. Since the publication of the White Paper, many people who live close to Edinburgh airport in my constituency believe that their lives have been put on hold. What message does he have for people who are planning for the future, whether that involves the schooling of their children or their homes, and believe that they are suffering from planning blight?
    Mr. Darling: As for a second runway at Edinburgh airport, the hon. Gentleman will know that the Government believe that that may be necessary in about 20 years' time. It is not going to happen immediately. In the White Paper, we set out the ground that we thought would be affected, as well as the houses that could be affected. The hon. Gentleman has tabled a number of questions about that. As for blight and planning, there are settled procedures that are primarily the responsibility of the Scottish Executive, but I draw the hon. Gentleman's attention to the fact that a second runway at Edinburgh would reduce the noise that many of his constituents in Cramond suffer, because the aircraft would make their approach from a slightly different direction.
    Mr. Iain Luke(Lab): I am sure that the Secretary of State accepts that the main thrust of the argument about aviation expansion in Scotland has centred on Edinburgh and Glasgow airports. Does he acknowledge the relevance of representations by Dundee city council and me about the importance of small regional airports to their hinterlands and cities such as Dundee? What more can he do to sustain the growth of such airports?
    Mr. Darling: We made it clear in the White Paper that we supported the development of smaller airports such as Dundee. With due respect, I do not think that a second runway is contemplated at Dundee just yet, but my hon. Friend is right that, in the past year or so, ScotAirways, for example, has provided much appreciated services from Dundee. The Government and the Scottish Executive will do everything that they can to encourage the use of regional airports, which can greatly help the local economy.

    Network Rail
    Mr. Richard Bacon(Con): If he will make a statement about the financing of Network Rail. [152279]
    The Secretary of State for Transport (Mr. Alistair Darling): Network Rail is a private sector company, and raises its finance from commercial markets. The company's borrowing is supported by up to £21 billion of standby credit facilities provided by the Strategic Rail Authority, but that support will be reduced as Network Rail launches its long-term debt issuances, which we expect later this year.
    Mr. Bacon: Does the Secretary of State think it right that under the terms of the new Greater Anglia rail franchise £500 million will be siphoned away from East Anglia so that Network Rail can pay for improvements elsewhere, while people in East Anglia must make do with second-hand rolling stock, and while many infrastructural improvements are still needed locally? If he does not think it right, what will he do about it?
    Mr. Darling:The hon. Gentleman has asked about Network Rail, but the franchise is awarded by the SRA. As the hon. Gentleman will know, a tender was entered into, and the SRA has a duty to protect public funds. As well as making improvements, the new operator—which brings together the three franchises operating from Liverpool Street—offered a lower price.
    I am sure the hon. Gentleman will accept that the SRA, and the Government for that matter, have a duty to make the best possible use of public funds. Moreover, as a result of the new franchises there will be improvements, not just services but in rolling stock.
    Kevin Brennan(Lab): Is not the main point about the financing of Network Rail that, as a public interest company, it will be able to raise money more cheaply than it would by issuing shares, as the old Railtrack had to? Moreover, it does not face the perverse incentives that were faced by Railtrack, as a privatised shareholder-owned company, in terms of safety.
    Mr. Darling: I think the most important thing about Network Rail is that, first and foremost, it is there to operate in the interests of the railways. I have mentioned its decision to bring maintenance back in house. One of Railtrack's many mistakes was to farm out not just maintenance but decision making on maintenance. Network Rail estimates that this move will save some £300 million a year. Its priority is to ensure that any money it makes goes back into the railways, and over the last year or so many improvements have been made that would probably not have been possible under Railtrack because, in my view, its priorities were completely wrong. I am sorry to return to this theme, but that was a direct consequence of the way in which the industry was privatised 10 years ago.

    Speed Cameras
    Mr. David Amess(Con): If he will make a statement on the use of revenue derived from speed cameras. [152280]
    The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson): A portion of the fixed-penalty receipts deriving from offences detected on speed cameras is available to partnerships made up of police forces, local highway authorities and magistrates courts committees to cover their approved costs for purchasing, placing and operating cameras to enforce speed limits. I am sure the hon. Gentleman has noticed the reduction in the number of deaths and injuries at camera sites in Southend.
    Mr. Amess: Does the Minister realise that there is a growing crisis of public confidence in the fairness of speed cameras and speed traps? People feel that they can be criminalised for being caught doing 31 mph, but that if they are burgled or mugged it is unlikely that the criminal will be caught. Will the Minister take this opportunity to reassure the public in Essex, and in Southend in particular, that this is not just a revenue-raising exercise and that the money is genuinely being reinvested in our roads and in road safety generally?
    Mr. Jamieson: I can tell the hon. Gentleman that in recent years we have spent much more on roads in his area than the Government he supported ever did. I can also tell him that during the three years before a camera was fitted at Puttlewell Chase—which is in his area—there were 17 personal injury accidents, three of which involved people being killed or seriously injured. During the last three years there have been only nine personal injury accidents, and no one has been killed or seriously injured. I also have figures relating to Basildon, in case the hon. Gentleman retains a lasting interest in it.
    We know from evidence that, on average, there are 35 per cent. fewer deaths and serious injuries at camera sites. It would surely be irresponsible to suggest that we should remove cameras or not install them on sites where casualties are being caused.
    Jeremy Corbyn: May I invite the Minister to stand resolutely firm against the speeding motorists lobby? We are all subjected to a barrage of nonsense from people who think that it is somehow all right to speed through residential areas, past primary schools, and to increase the terrible rate of death on our roads. Will the Minister ensure that the speed cameras stay, that 25 mph limits are applied in urban areas, and that we do not give in to this dangerous lobby in favour of an activity that is just as unacceptable as drunken driving?
    Mr. Jamieson: All our policies on road safety must be proportionate and sensible. Cameras are located at sites where there is clearly a relationship between speeding and people being killed or seriously injured. If casualties are sustained for other reasons, it is up to the local authority to consider other solutions by using the generous amounts of money that we have made available through the local transport plans. Such solutions may mean re-engineering, changing the road
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    layout or considering road humps, which we discussed earlier. We must examine proportionately and sensibly what is right for the particular circumstances. Speed cameras have a role to play in areas in which speeding is clearly the problem.
    Mr. Christopher Chope(Con): Has the Minister seen the figures published today that show that in 1999 the revenue from speed cameras in London was £500,000, and that in 2004 it is expected to be no less than £10 million? A twenty-fold increase in income in five years is extraordinary. Does that not prove our point that they are not so much speed cameras as greed cameras?
    Mr. Jamieson: I remind the House that the hon. Gentleman introduced speed cameras when he was Minister for Roads and Traffic. Who am I to take the credit away from him for doing that? At the time, he predicted that 2 million people would get fixed-penalty tickets, but it has taken 10 years to reach that point. He should reflect on my challenge to the hon. Member for Ashford (Mr. Green) to come forward with the 4,000 sites that he says do not meet the criteria. One month has gone by and as yet we have had no response.
    The hon. Member for Christchurch (Mr. Chope) may want to take note of the 18 per cent. reduction in the number of people killed or seriously injured at sites where there are cameras in his constituency. Last year, he called for a camera site in Golf Links road in his constituency to be reactivated.
    Mr. David Kidney(Lab): Will my hon. Friend resist calls by lawbreakers to reduce the effectiveness of detecting their lawbreaking? Will he confirm that no one who keeps to legal speed limits must pay a fine?
    Mr. Jamieson: That is, of course, true, and my hon. Friend knows that the speed thresholds are set well above the speed limit. If the hon. Member for Southend, West (Mr. Amess) can show me a notification of proposed prosecution for a person who has been charged with doing 31 mph or 32 mph in a 30 mph zone, I would be interested to see it. I have put that challenge out and as yet nobody has shown me such a notification.

    Potters Bar Rail Crash
    Mr. Henry Bellingham(Con): When he next expects to meet the Health and Safety Executive to discuss the Potters Bar rail disaster. [152282]
    The Parliamentary Under-Secretary of State for Transport (Mr. Tony McNulty): The Secretary of State and other Transport Ministers have regular meetings with the Health and Safety Executive. In relation to Potters Bar, we are now awaiting a decision on potential manslaughter charges from the Crown Prosecution Service, which the hon. Gentleman knows is independent of Ministers.
    Mr. Bellingham: The Minister and the Secretary of State know that the train that crashed at Potters Bar was on its way to King's Lynn in my constituency. The crash

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    was a tragedy for many families and a disaster for the railways. The HSE report made it clear that the crash was caused by poor maintenance. Have lessons been learned and what new procedures have been implemented? Can the Minister give me a categorical assurance that further accidents or crashes will not occur as a result of shoddy maintenance?
    Mr. McNulty: The hon. Gentleman knows that the HSE investigation board reported in May 2003 and issued 26 recommendations, which are designed to make a positive difference to rail safety and, as he says, to prevent a similar accident from happening again. The investigation board has invited Her Majesty's railway inspectorate and Network Rail to a meeting on 11 February to discuss progress on implementing those recommendations, and the board will write to the bereaved and survivors after that meeting.

    Speed Cameras
    Tony Wright(Lab): What assessment he has made of the casualty reduction associated with speed cameras. [152283]
    The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson): On 11 February 2003, my Department published an independently produced evaluation report of the two-year trial of the safety camera cost recovery system. That showed a 35 per cent. reduction in those killed or seriously injured at camera sites, equating to some 280 people, and a 4 per cent. reduction in those killed and seriously injured across the pilot areas, equating to some 530 people. The report of the scheme's third year of operation will be published shortly.
    Tony Wright: I thank my hon. Friend for that reply. He mentioned a figure of 35 per cent., but he will know that in Staffordshire the figure is 65 per cent., which is an extraordinary achievement in reducing the numbers of people killed or injured. I remind those people who think that cameras are a great infringement of human liberties that lives are being saved.
    Mr. Jamieson: I congratulate the Staffordshire partnership on its success, which is way above average. For example, my hon. Friend will know the A460. In the three years before a camera was introduced on that road, five people were killed or seriously injured: in the three years since, nobody has been killed or seriously injured. I commend the partnership on the work that it does and we look forward to further success in the future.
    Mr. Andrew Mackay(Con): As someone who shares the view of the majority of motorists that all too often speed cameras are introduced to increase revenue rather than to improve safety, I have a specific example, as requested by the Secretary of State. I would appreciate the Minister's comments on the speed camera on the dual carriageway in and out of Heathrow airport, which is completely safe. The camera is unnecessary and must be there purely for revenue purposes, and that is a bad example to show to people who have just entered the country.
    Mr. Jamieson: As with all fines, the revenue comes back to the Government, except in the case of cameras
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    run by a partnership, where a large proportion of the money goes into keeping the cameras running and to the police. That money supplants what the police would have used to support the cameras in any case. The Heathrow area is sensitive and sometimes congested. People may be fatigued after flights—[Interruption.] If the right hon. Gentleman would stop chuntering and listen for a moment, it would help. The area is especially sensitive and I hope that the right hon. Gentleman would not condone people breaking the law and using excess speed in that area.

    West Coast Main Line
    Ms Sally Keeble(Lab): What consultation will be carried out with rail user groups on the new timetables for services using the west coast main line. [152285]
    The Parliamentary Under-Secretary of State for Transport (Mr. Tony McNulty): The Strategic Rail Authority aims this month to provide detailed timetable proposals for comment. Consultees will include rail user groups such as the Northampton rail user group.
    Ms Keeble: I thank my hon. Friend for that reply. The Northampton rail user group, which I chair, looks forward to receiving the timetable proposals. Will he ensure that all the rail user groups receive copies, because—at a difficult time, with work being done and much concern about timetables—it is important that those with an interest in the success of the industry have a chance to see and comment on the proposed timetables?
    Mr. McNulty: I fully accept the points that my hon. Friend makes and I know that she has worked keenly with the SRA and the Northampton rail user group to ensure reform. The consultation meeting with that rail user group will be held in the Guildhall later this month, and I will ensure that my hon. Friend's comments are passed on to the SRA.
    Mr. Peter Pike(Lab): Does my hon. Friend agree that when the users of the west coast main line are consulted on the timetable, it will be important to take into account links with local services at stations such as Preston, which feed the west coast main line?
    Mr. McNulty: The timetables that emerge will be rooted in the overall strategy for the west coast main line, and part of that strategy includes how local services interface with the main line. However, I will ensure that my hon. Friend's comments are passed on to the SRA in terms.

    Bus Regulation
    Andy Burnham(Lab): If he will make a statement on the regulation of bus services. [152287]
    The Parliamentary Under-Secretary of State for Transport (Mr. Tony McNulty): While we have no plans for major changes to the regulatory system for buses, we

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    continue to consider key aspects of the regime established by the Transport Act 2000 and will report shortly, especially on issues such as quality contracts.
    Andy Burnham: I am grateful for that reply. Bus services are vital to my constituents because, as I may have said once or twice before, Leigh is the largest town in the UK without a railway station. The current regime does not serve my constituents well, especially elderly people who do not have access to private transport. Recently, a bus service between Leigh and Warrington was unilaterally withdrawn, at very short notice. I urge my hon. Friend to give serious consideration to representations made by Greater Manchester passenger transport authority and others for a more effective regulatory regime that better protects the travelling public.
    Mr. McNulty: As I have said, we are keeping these matters under constant review. Many local authorities have not perhaps explored as fully as they might the total breadth and depth of the regulatory regime in the Transport Act 2000. We shall shortly examine the issue of quality contracts and how they prevail under the system. My hon. Friend's observations are not unique to Leigh or to the north-west, but if he considers all that we have recently reported on—such as the urban bus challenge, the rural bus challenge and the local transport plan settlement, which was reached just before Christmas—he will see that for this Government, the bus is absolutely central to an integrated transport system.

  CABINET OFFICE
  The Minister was asked—
  CABINET OFFICE

    Alcohol Consumption
    David Taylor(Lab/ Co-op): What work the strategy unit has carried out on the social aspects of alcohol consumption. [152263]
    The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Mr. Douglas Alexander): The Prime Minister's strategy unit published art interim analytical report on the harms associated with alcohol misuse on 19 September last year. The findings of the report are being used to inform the development of the Government's alcohol harm reduction strategy, which will be published shortly.
    David Taylor: Given that the recent youth lifestyles survey revealed that only one in three under 18-year-olds who try to buy alcohol is refused, and that in 2002 just 162 people were convicted or cautioned in respect of under-age sales, should not our national alcohol harm reduction strategy involve a more rigorous approach to law enforcement and the provision of more alcohol-free places in which younger teenagers can enjoy themselves? I am thinking, for example, of the Hub, in Ashby de la Zouch, of which I am a patron. It was officially opened last Friday and it would benefit from a ministerial visit.
    Mr. Alexander: I shall certainly bear in mind that invitation and pass it on directly to the sponsor Minister
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    who is developing this project. My hon. Friend raises a very important point. One reason why we wanted to undertake this study is the correlation between alcohol use and violent crime; indeed, criminal justice is one of the areas that are being explored. The study has not been published so I cannot go into detail, but I can assure my hon. Friend that it will address education and communication—issues of particular interest to younger people—health and treatment, supply and pricing, delivery, and the issues of community safety and criminal justice that he raises.
    Miss Anne McIntosh(Con): Will the Minister undertake to place a copy of the study in the House of Commons Library once it is published, and will he consider authorising a similar study on the social aspects of cannabis use and its potential for causing road accidents?
    Mr. Alexander: Of course the study will be published, and I shall pass on the hon. Lady's views directly to the Minister in charge of sponsoring it. Consideration will be given to what studies should be undertaken by the strategy unit in due course, but I have certainly noted the point that the hon. Lady raises.

    Public Appointments
    Mr. Wayne David(Lab): What action the Government are taking to ensure there are more people from the ethnic minorities appointed to public bodies. [152264]
    The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Mr. Douglas Alexander): This Government are committed to achieving greater diversity in public appointments. As of 31 March 2003, people from ethnic minorities held 5.3 per cent. of appointments—an increase from the 3.6 per cent. Figure of 1997. Individual Departments have developed action plans to ensure that even more progress is made in this important area.
    Mr. David: I thank the Minister for his reply, but can he tell the House to what extent the Race Relations (Amendment) Act 2000, which gives authorities a new statutory duty to promote race equality, is assisting the work of his Department and of other public bodies?
    Mr. Alexander: My hon. Friend's point about the 2000 Act is an important one. It came about as a result of a very important public inquiry into racism affecting a group across society. In that sense, the legislation is already forming a key part of the thinking not just of one Government Department—my right hon. Friend the Secretary of State for Trade and Industry has made a recent announcement in this regard—but of a range of Departments, including the Cabinet Office.
    Mr. Richard Allan(LD): The Government deserve some credit for the progress made since the 2000 report, "Quangos: Opening up Public Appointments", but does the Minister recognise that there are still some very weak Departments, particularly the Department for Environment, Food and Rural

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    Affairs, and the Ministry of Defence? Can he say whether progress has been made on including tribunals in the diversity programme that he oversees?
    Mr. Alexander: There are certain restriction—sage restrictions, for example—for tribunals, which do not apply to other public bodies. However, I acknowledge the point that Departments are at different stages in moving forward the diversity agendas and I am happy to communicate the points raised today and ensure that the hon. Member receives a direct reply.
    Brian White(Lab): The Minister will be aware that the Public Administration Committee's report suggested innovative ways of appointing people to various bodies. Will he assure the House that Departments will examine those innovative ways forward rather than carry on appointing in the same old way?
    Mr. Alexander: I understand my hon. Friend's point about the Publication Administration Committee's report "Government by Appointment", which was published on 10 July 2003. The Government responded to the proposals on 17 December last year, but I understand that only this morning the Chairman of the Select Committee made further comment, so these matters continue to be a feature of public debate.

    Civil Contingency Planning
    Bob Spink(Con): What recent representations he has received on civil contingency planning. [152265]
    The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Mr. Douglas Alexander): The Government maintain a close dialogue with a wide range of stakeholders in their civil contingency planning work. The Government consulted publicly on the draft Civil Contingencies Bill between June and September 2003 and received 379 responses from civil protection professionals, representative organisations, lobby groups and interested individuals. We published a report of the results of the public consultation on 7 January this year. Engagement with a wide range of stakeholders continues with the development of the regulations and guidance under the Bill.
    Bob Spink: Is the Minister aware that the Thames gateway area is a flood risk area? Will he explain it to his right hon. Friend the Deputy Prime Minister, who wants to build on ground there that is at risk from flooding? That will cause serious difficulties for civil contingency planning in that region.
    Mr. Alexander: I will certainly pass on the hon. Gentleman's concerns directly to the Office of the Deputy Prime Minister. I would, however, point out that he raises an important point in recognising that the Civil Contingencies Bill before the House at this stage does address the issue of flooding and will afford greater security to those affected by flooding in future by putting in place an appropriate framework of civil protection in this country.
    Mr. Barry Gardiner(Lab): Has my hon. Friend identified the need for an isolation unit in
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    the region of Heathrow airport and the Greater London area to deal with a potential outbreak of, say, severe acute respiratory syndrome, or a bio-terrorist alert? Will he specifically consider the case for the Lister unit at the Northwick Park site as a suitable place for dealing such contingencies?
    Mr. Alexander: I recognise my hon. Friend as a fearless champion of local interests in his own constituency. I can assure him that, consistent with the lead Government Department principle, the Department of Health continues to review the Government's approach to exactly the sort of issues that he has identified. I will ensure that my hon. Friend's comments are passed directly to the Department of Health.
    Mr. Oliver Heald(Con): Does the Minister realise that the police are so stretched that they have hail to reach a gentleman's agreement with Group 4 to back them up in an emergency? Why does he continue to reject our idea of setting up an emergency volunteer reserve to call on the skills of our people, and when will the Government take civil contingencies seriously?
    Mr. Alexander: I would, of course, point out that there are more police on the streets of Britain now than under the previous Administration. I would also point out that, if we look back to the last Budget of April 2003, we will find that an additional £330 million was awarded over three years for counter-terrorism projects in the Office of the Deputy Prime Minister, the Cabinet Office and the Home Office. The Government clearly take civil contingencies planning seriously, which is why we introduced the Bill and why the extra resources were committed.

    Fishing Industry
    Mir. Alistair Carmichael(LD): When the Strategy Unit will publish its report on the UK fishing industry. [152267]
    The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Mr. Douglas Alexander): The strategy unit's fisheries project was announced on 27 March 2003. The aim is to develop a long-term strategy for the sustainable future of the UK marine fishing industry. The report will be published shortly.
    Mr. Carmichael: I must tell the Minister that I am disappointed—as are many of my constituents—that we still have no date for the publication of this overdue report. If he or the researchers preparing the report listened to people in fishing communities, they would know that those communities are in crisis. We need a strategy that goes beyond tinkering around the edges of the common fisheries policy—and we need it soon. Can we have the report soon?
    Mr. Alexander: That is exactly why the strategy unit has taken that long-term view. As the hon. Gentleman is interested in the unit's emerging thinking on the matter, I remind him that a conference was held in Newcastle on 1 October last year. The results were

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    published on the website. With great respect to the hon. Gentleman, however, I suggest that he address his concerns to one of the members of the steering board—the Scottish Executive's Liberal Democrat Minister for Environment and Rural Development, who has responsibility for fisheries.
    Mr. Michael Jabez Foster(Lab): I congratulate my hon. Friend on his work with the strategy unit, which is so important for fishermen on the south coast. The unit has not yet reported, so will my
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    hon. Friend look at what is happening on the south coast? Cod numbers are enormous there, but the fish cannot be caught because they are considered to belong to the North sea.
    Mr. Alexander: The fishing industry supports about 11,200 people in England, so it is not a matter of concern only to hon. Members with Scottish constituencies. I shall be happy to pass on my hon. Friend's remarks to my hon. Friend the Member for Exeter (Mr. Bradshaw), the Under-Secretary of State for Environment, Food and Rural Affairs.

WMD Intelligence Review Committee
12.30 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): With permission, Mr. Speaker, I should like to make a statement. First, I apologise to the shadow Foreign Secretary, the right hon. and learned Member for Devizes (Mr. Ancram), and to the Liberal Democrat foreign affairs spokesman, the right hon. and learned Member for North-East Fife (Sir Menzies Campbell), as the notice of the text of this statement that I was able to give them was slightly shorter than usual, for reasons that I think that they will understand.
My right hon. Friend the Prime Minister has decided to establish a committee to review intelligence on weapons of mass destruction. This committee will be composed of Privy Councillors. It will have the following terms of reference: to investigate the intelligence coverage available in respect of WMD programmes in countries of concern and on the global trade in WMD, taking into account what is now known about these programmes; as part of this work, to investigate the accuracy of intelligence on Iraqi WMD up to March 2003, and to examine any discrepancies between the intelligence gathered, evaluated and used by the Government before the conflict, and between that intelligence and what has been discovered by the Iraq survey group since the end of the conflict; and to make recommendations to the Prime Minister for the future on the gathering, evaluation and use of intelligence on WMD, in the light of the difficulties of operating in countries of concern.
My right hon. Friend the Prime Minister has asked the committee to report before the summer recess.
The committee will follow the precedent in terms of procedures of the Franks committee. It will have access to all intelligence reports and assessments and other relevant Government papers, and will be able to call witnesses to give oral evidence in private. The committee will work closely with the US inquiry and the Iraq survey group.
The committee will submit its final conclusions to my right hon. Friend the Prime Minister in a form for publication, along with any classified recommendations and material. The Government will, of course, co-operate fully with the committee.
The members of the committee will be Lord Butler of Brockwell, who will be the chairman, Sir John Chilcot, and Field Marshal Lord Inge. It will also include two senior Members of this House, my right hon. Friend the Member for Dewsbury (Ann Taylor), and the hon. Member for East Hampshire (Mr. Mates), who will be made a Privy Councillor [HON. MEMBERS: "Hear, hear."].
In settling the terms of the inquiry and its membership, there have of course been discussions with the leaders of the two main Opposition parties. I regret, however, that the leader of the Liberal Democrat party has declined to support the inquiry. That, and that alone, explains why no senior member of the Liberal Democrats is a member of the committee.
As the House will be well aware, there have already been three inquiries into aspects of the Iraq war. The first, established in early May last year, was conducted
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by the Intelligence and Security Committee. It considered in some detail the intelligence received in London, and its assessment and use, including in the dossier. It reported to Parliament on 9 September.
The second report, by the Foreign Affairs Committee, was established on 3 June last year, against the background of the controversy surrounding the Andrew Gilligan report on the "Today" programme on 29 May. It made its report to this House on 7 July. The third report was the judicial inquiry by Lord Hutton, which was established following the death of Dr. David Kelly. It, of course, reported last Wednesday. Although the terms of reference of the three inquiries varied, a central theme of each was whether the Government had acted improperly or dishonestly in using the intelligence available to them. Echoing the conclusions of the earlier reports and in categorical terms, Lord Hutton was emphatic last week that such allegations were unfounded. The new inquiry, obviously, will not revisit the issues so comprehensively covered by Lord Hutton.
While those inquiries were under way, three proposals were put before the House in June, July and late October on Opposition motions calling for wider inquiries into aspects of the Government's handling of events in the run-up to the Iraq war. At the time, the Government resisted those calls, including on the ground that the inquiries already under way should be allowed to complete their work. Later, both the Prime Minister and I also referred to the continuing activities of the Iraq survey group.
Over the past week, we have seen the publication of the Hutton report and the evidence of Dr. David Kay, former head of the Iraq survey group, to a US congressional committee. It has also emerged that the Iraq survey group may take longer to produce a final report than we had all originally envisaged. All that has led the Government now to judge that it is appropriate to establish this new inquiry of Privy Councillors. [HON. MEMBERS: "Oh!"] Lord Hutton dealt conclusively with the grave charge against the Government that we had in some way acted improperly or dishonestly in the preparation of intelligence put before the House and the public. The Government recognise—and always have—that there are wider and entirely legitimate concerns about the reliability of the original intelligence, which have been heightened by Dr. Kay's evidence. When he gave evidence before the US Congress last week, on 28 January, he repeatedly emphasised his continued support for the decision to take military action against Iraq and his belief still today that Iraq was in clear and material violation of United Nations Security Council resolution 1441. He stated also:
"Prior to the war, my view was that the best evidence that I had seen was that Iraq indeed had weapons of mass destruction. I would also point out that many governments that chose not to support this war—certainly the French President Chirac—referred to Iraq's possession of WMD. The German intelligence certainly believed that there was WMD."
Dr. Kay added:
"It turns out we were all wrong probably, in my judgement, and that is most disturbing."
In the intervening period since the Iraq war began, events elsewhere have greatly increased anxieties about the proliferation of weapons of mass destruction and of

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the need for reliable intelligence and effective international action. According to reports over the weekend, an individual has sold nuclear secrets to North Korea. Iran, for a long time, did not report all that it should have reported to the International Atomic Energy Agency under its safeguards agreement. Libya was in breach of its obligations under the nonproliferation treaty—and both countries are now subject to considerable activity by the IAEA.
There are other concerns too, so we have judged it prudent for this inquiry to consider those wider issues—as set out in its terms of reference. But of course a great focus of the committee's work will he on Iraq—rightly so. It is, however, important to remind ourselves of the significance and limits of the use of intelligence in relation to Iraq. The September dossier made a powerful case for the world to take notice of Iraq. It did not make a case for military action. As the record shows, the case for military action was fundamentally based upon Iraq's breach of UNSCR 1441. [Interruption.] Iraq had used WMD against its own people and against its neighbour, Iran. Saddam Hussein had invaded two of Iraq's neighbours, leading to the deaths of 1 million people. For 12 years after the Iraqi army was expelled from Kuwait, Saddam Hussein defied repeated United Nations resolutions calling for him to co-operate with UN weapons inspectors to dismantle WMD programmes. Resolution 1441 unanimously found Iraq in material breach of previous resolutions and offered it a final opportunity to comply fully and immediately with UN inspectors, or to face "serious consequences". The head of the UN inspectors, Dr. Hans Blix, published on 7 March last year a 173-page document listing the unresolved issues in respect of Iraq's WMD programmes—a document that I placed before the House in a Command Paper some days later.
All that painted a compelling picture. As the Prime Minister and I have said repeatedly, it would have been gravely irresponsible not to have acted against this. We took the right decision in agreeing to military action against Iraq and it is still, in my judgment, the right decision today.
For the sake of completeness, it may be helpful to give a more rounded picture of Dr. Kay's evidence to Congress last week. These are some of the things that he said:
"I think when we have the complete record you're going to discover that after 1998 it"—
the Iraqi regime—
"became a regime that was totally corrupt. Individuals were out for their own protection. And in a world where we know others are seeking WMD, the likelihood at some point in the future of a seller and a buyer meeting up would haw made that a far more dangerous country than even we anticipated with what may turn out not to be a fully accurate estimate."
Dr. Kay went on:
"All I can say is if you read the total body of intelligence in the last 12 to 15 years that flowed on Iraq, I quite frankly think it would be hard to come to a conclusion other than that Iraq was a gathering, serious threat to the world with a regard to weapons of mass destruction."
He continued:
"I think you will have, when you get the final Iraq Survey Group report, pretty compelling evidence that Saddam had the intention of continuing the pursuit of weapons of mass destruction when the opportunity arose."
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I will place in the Library of the House a full copy of Dr Kay's evidence.
Let me take this opportunity to pay tribute to the outstanding work of the British intelligence agencies around the world, often in difficult and hostile conditions. This inquiry is emphatically not a challenge to that vital work, nor to the dedication and professionalism of the people who work in those agencies; but what the inquiry should do is to help the Government better to evaluate and assess the information that they provide.
The decision that the House took 10 months ago to go to war was justified given the defiance of a regime that uniquely had used weapons of mass destruction and had refused for so long to comply with obligations unanimously imposed upon it by the United Nations Security Council. That is a decision for which we, as elected representatives in this House, took responsibility and for which we will continue to take responsibility. We cannot subcontract that responsibility to any inquiry, however distinguished, but I believe that Lord Butler and his colleagues will be able to perform a most valuable service to the House and to the country and I express my appreciation to them.
Mr. Michael Ancram(Con): May I thank the Foreign Secretary for what I can only call his astonishingly defensive statement, and for advance sight of it? I congratulate my hon. Friend the Member for East Hampshire (Mr. Mates) on his appointment to the Privy Council.
We on the Conservative Benches welcome the announcement of the inquiry. We could hardly do otherwise because we have been calling since last June for an inquiry into intelligence on weapons of mass destruction in Iraq and into the use made of such intelligence by the Government. Indeed, over the last few days, my right hon. Friend the Leader of the Opposition has deployed a powerful case for an inquiry, much along the lines of the one that the Foreign Secretary has announced, so we would be churlish not to show our appreciation when our advice is heeded.
It is particularly gratifying in this instance to see that the Prime Minister, who has no reverse gear, can still execute impressive U-turns—there can be few more spectacular examples than this one. Our frequent calls for an inquiry were met with the response from last June onwards that it was unnecessary, that the Foreign Affairs Committee and the Intelligence and Security Committee were enough and that anyway we should wait for the final report of the Iraq survey group.
Even after Lord Hutton reported last week, senior Ministers, including the Lord Chancellor on Sunday, were still insisting that an inquiry was not needed and that we should await the outcome of the ISG, whenever that might come. Then, suddenly, the damascene conversion, which we welcome, even if I am not totally convinced by the Foreign Secretary's explanation. Perish the thought that it had anything to do with the decision of President Bush to hold a similar inquiry. I like to think that it was because the Government have at last seen the light—the light that kicking for the long grass would not make the very serious questions relating to the intelligence on WMD and the Government's use of it go away; the light that the longer a full inquiry into

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those issues was refused, the more the credibility of both the Government and the intelligence services would be undermined; and the light that the public have a right to have those serious questions answered, not least in view of Dr. Kay's recent evidence to Congress.
So we welcome the announcement of this important inquiry. I am sorry that it will hold its hearings in private. Can the Foreign Secretary assure the House that, when it reports, not only will that report be published in full, subject only to genuine security considerations, but that the evidence that it considered will be published as well? If it is to reassure, the outcome must be as open as possible, even if it is critical of the Government and their agencies.
We accept the terms of reference. However, some fear has been expressed that the inquiry is designed solely to focus the spotlight on our intelligence services, not on the Government. That would be not only unfair, but wrong. Can the Foreign Secretary confirm whether the committee will be able, within those terms of reference, to examine the discrepancies not only between the prewar intelligence and the outcome of the ISG, but between that intelligence and the use made of it by the Government?
Will the committee be able to evaluate the intelligence made available to the Government against the statements and publications from the Government that purported to be based on it—in particular, the two dossiers of 24 September 2002 and 3 February 2003, the Prime Minister's statement at St. Petersburg on 31 May, the Prime Minister's evidence about WMD programmes to the Liaison Committee on 8 July and his spokesman's reference to WMD product on the very next day? Will the inquiry be able to consider whether there was any cherry-picking, or selective or partial use of evaluated intelligence by the Government that might have cast a somewhat different gloss from that which was intended by the intelligence services?
It is an irony of history that, if the Government had set up such an inquiry when we first pressed them in June last year, many difficulties, accusations and counter-accusations might have been avoided and the serious questions might have been already answered. A considerable price has been paid for the Government's obstinacy on this matter, not only with their own reputation, but with that of the dedicated intelligence personnel who serve our country with commitment and distinction. In this age of pre-emption, the inquiry is vital to restore confidence in our intelligence services, which themselves are so central to meeting the challenges of terrorism and weapons of mass destruction that face us all today.
Mr. Straw: May I say first that I am glad to know that the Leader of the Opposition agrees with what I told the House earlier today? I am very happy to take his compliment and that of the right hon. and learned Member for Devizes (Mr. Ancram) in the spirit in which it was offered.
The right hon. and learned Gentleman asks about the timing of the establishment of the inquiry. Of course the evidence from Dr. Kay and the interim conclusions for which he gave evidence before a congressional committee have been a critical trigger in the
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establishment of the committee. It was the case that, if we had sought to set up such an inquiry last summer, a large part of the inquiry could not have taken place until after the ISG's work had been completed because everything would have been on a contingent basis— "Well, what is there?" —and, at the time, the question was that we did not know what was there. Since then, we have had an interim report from the ISG, after very considerable inquiries by the ISG that are still not complete. The fact that the time scale will continue for the ISG means that, in our judgment, we should not wait to establish the inquiry. If we had established a committee last summer, I doubt that it could have done its work properly until the ISG had at least reached this interim conclusion.
The right hon. and learned Gentleman asks whether the committee will hold its hearings in private. As the terms of reference indicate, the committee of Privy Councillors will model its work on the review of the Falklands Islands conflict, which was published in January in 1983—Command Paper 8787, which I have here—and which itself met in private.
The right hon. and learned Gentleman asked me about the terms of reference. They are as they state, and say, among other things:
"as part of this work, to investigate the accuracy of intelligence on Iraqi WMD up to March 2003, and to examine any discrepancies between the intelligence gathered, evaluated and used by the Government before the conflict, and between that intelligence and what has been discovered by the Iraq survey group since the end of the conflict."
How those terms of reference are precisely interpreted is a matter for the committee, not for us.
The right hon. and learned Gentleman asked whether the committee's report will be published—I made it clear that it will be published—and asked a question about evidence. That must be a judgment for the committee and the agencies because just as with the Franks inquiry into the Falklands, by definition, a huge amount of evidence is bound to be highly classified. It is my hope, as it always has been with all such inquiries, that the maximum amount that can be made public should be made public.
The right hon. and learned Gentleman went on to make a poor point by suggesting that if the committee has any criticism of the Government, it will be suppressed on the grounds that it is classified. That is utter nonsense. If the committee has criticisms to make of the Government, of course it will make them, and make them public. No member of the inquiry—either Members of the House or distinguished individuals from outside the House—would dream of putting their name to the report unless their criticisms, if they had them, were made public.
Sir Menzies Campbell(LD): Perhaps I, too, may add my congratulations to the hon. Member for East Hampshire (Mr. Mates) on his forthcoming appointment to the Privy Council. May I also be allowed a moment's scepticism about the enthusiasm of the right hon. and learned Member for Devizes (Mr. Ancram) for an investigation into the reasons why we went to war, given that prior to the publication of the dossier on 24 September 2002, the then leader of the Conservative party told the country that military action was the only option when dealing with Saddam Hussein?

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Let me make it clear that I make no criticism of the members of the proposed committee—not of their integrity, competence or independence. However, it is a matter of profound regret that my right hon. and hon. Friends feel unable to endorse the remit announced by the Foreign Secretary or to support the nomination of my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) as a member of the committee. That was not an easy decision and nor is it likely, as events have demonstrated, to be universally popular. However, our objections relate to the remit that the Foreign Secretary announced.
As the Foreign Secretary said in response to the right hon. and learned Member for Devizes, the remit is confined to intelligence and weapons of mass destruction. It deals neither with the workings of government, nor with political decision making based on intelligence. Does the Foreign Secretary understand that following the public response to the Hutton report, an inquiry that excludes politicians from scrutiny is unlikely to command public confidence? Let me put on record once again that we have never doubted the Prime Minister's sincerity in these matters. However, should not the Prime Minister and others, given the special circumstances of this case, be willing to submit to scrutiny of their competence and judgment in the discharge of their responsibilities?
The Foreign Secretary mentioned the Franks report. Does he remember the remit of the Franks committee? It was to
"review the way in which the responsibilities of Government…were discharged…taking account of all such factors…as are relevant".
Why can we not have a remit of that breadth to deal with the matters with which we are concerned? Indeed, why can we not have a remit with sufficient breadth to allow the members of the committee to examine the whole of the Attorney-General's advice?
The Government have performed a welcome volte-face on the principle of an inquiry, for which we must give President Bush some small credit. However, there is still time to give the inquiry a remit that would truly satisfy the public interest, and the Government should take that opportunity.
Mr. Straw: It was the right hon. and learned Gentleman who said that it was not an easy decision—I suspect that it was also a controversial decision among the Liberal Democrats. I believe that it is a decision that the wiser counsels inside the party, especially, will come to regret greatly.
The right hon. and learned Gentleman refers to earlier calls for inquiries. When he spoke in the House on 22 October in support of a motion moved by the shadow Foreign Secretary, he said:
"The central question remains: did we go to war with Iraq on a prospectus that was flawed, either because the intelligence behind it was inadequate, or because that intelligence was mishandled once it had been obtained?" —[Official Report, 22 October 2003; Vol. 411, c. 686.]
As for the latter point, the question of whether intelligence was mishandled in terms of propriety or dishonesty was dealt with comprehensively by Lord Hutton. On the other issue, I fail to see the difference between what he was telling the House in October and what is now apparent in the terms of reference of the inquiry.
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As for the precise terms of reference of the Franks inquiry, the right hon. and learned Gentleman knows that the history of what led to the Argentinian invasion was, by definition, different from the history of what led to the war in the Iraq. He somehow believes that the decision that the elected House of Commons made on whether to take military action on 18 March should be subcontracted to a committee of distinguished persons so that they can adjudicate on it, but that is frankly a ludicrous and undemocratic proposition. I draw to his attention the fact that the terms of reference of the Franks committee stopped at the Argentine invasion of the Falkland Islands and did not include the decision, which was broadly endorsed by the House of Commons, albeit not on a substantive motion, to take military action in respect of the invasion. That was properly a decision for Her Majesty's Government and the House of Commons of that day. People on both sides of the House would have thoroughly objected if Lord Franks had sat in judgment on whether the House of Commons and Her Majesty's Government, on the key issue before any democracy. of war or peace, had got it right or wrong.
Mr. George Howarth: I welcome my right hon. Friend's announcement. Will he confirm that all of us in this country have every reason to be grateful for the information provided by the intelligence services? It all adds to our greater safety. Will he also give a commitment that those who gather that intelligence material, whether at home or abroad, will be properly protected throughout the process?
Mr. Straw: I am grateful for what my hon. Friend says. It is essential that those who provide intelligence, those who work directly for our intelligence agencies and those with whom we co-operate are fully and properly protected. I merely say to the House about many of the crucial issues on which we have made progress in recent months, which have been absolutely critical to the peace of the world—literally—that that could not have happened without the courage and professionalism of members of our intelligence agencies and those with whom they co-operate.
Sir John Stanley: Was not the right hon. Gentleman wrong by implying in his statement that Lord Hutton passed any verdict whatsoever in the course of his inquiry on whether Ministers properly and fully evaluated the intelligence placed before them before going to war in Iraq? Should not that matter be clearly and firmly within the remit of Lord Butler's committee?
Mr. Straw: I think that the right hon. Gentleman might have misheard me. Lord Hutton, in his extremely comprehensive and weighty report, dealt with his terms of reference and especially the "very grave allegation", as he described it, that there had been improper conduct by Ministers. He said that such allegations were "unfounded". I repeat to the House and the right hon. Gentleman that the terms of reference are as they are:
"to examine any discrepancies between the intelligence gathered, evaluated and used by the Government before the conflict"—
as well as other matters that are set out.
Mr. Ernie Ross: I welcome my right hon. Friend's statement. I should like to re-emphasise the point made by my hon. Friend the Member for Knowsley, North and Sefton, East (Mr. Howarth), that the protection of those who give evidence is essential, particularly if they come from the middle east. We still have major problems there. There are different ways to gather intelligence, and those who supply it must be assured of absolute protection.
Mr. Straw: I agree entirely with my hon. Friend.
Mr. Peter Lilley: Do the Government accept the traditional doctrine that Ministers are responsible, including for the advice they take, and so have a duty to probe, question and evaluate that advice and reach the right conclusion, as his right hon. Friend the Member for Livingston (Mr. Cook), his predecessor, did? Or are they replacing it with a new doctrine that when things go right Ministers take the credit and when they go wrong they set up a narrowly based inquiry to blame officials for a political decision?
Mr. Straw: Neither I nor my right hon. Friend have ever sought to shy away from our responsibilities, and our responsibilities are to this House. Let that not be forgotten.
Mr. Robin Cook: My right hon. Friend is a very intelligent Minister, who has seen a great deal of intelligence in the course of holding his two Cabinet posts. Does he really believe that even such a highly distinguished membership as he has announced today can separate out the intelligence judgment on the threat from the political judgment to go to war on the basis of that threat? Does it not logically follow that if we now have no evidence of an immediate threat from Saddam Hussein we had time to let Hans Blix finish the job and tell us, without any war, that there were no weapons of mass destruction?
Mr. Straw: That distinction is essential. I also point out to my right hon. Friend that, albeit it was in February 2001 and not a few days before we went to war, he wrote in an article in the The Daily Telegraph:
"UN measures remain in place because of Saddam's determination to retain and rebuild his weapons of mass destruction and threaten the region".
So at that date my right hon. Friend believed, and told the public that he believed, that Saddam had retained his weapons of mass destruction.
I have never suggested to my right hon. Friend that it followed, as night follows day, from the view he took then that military action against Iraq was either necessary at that time or subsequently. That is not the case. However, it is the case that my right hon. Friend as at 20 February 2001, along with, as Dr. Kay pointed out, intelligence agencies from around the world as at March 2003, took the view that Iraq had weapons of mass destruction as well as weapons programmes. I believe that even today people would be hard put to it to deny that Saddam was and remained in categorical breach of his obligations under resolution 1441.
Mr. Kenneth Clarke: Is the Foreign Secretary prepared to accept that while Lord Butler will no doubt do as good a job as Lord Hutton did on the question addressed to him, the terms of reference given to the two inquiries are so narrow as to make them completely irrelevant to the main subject of public interest? Does he accept that many people in the diplomatic and security world, as well as politicians, think that the invasion of Iraq was decided on by the American Administration long before the events we are considering, and that the arguments about weapons of mass destruction and United Nations resolutions were introduced to enable the British Government to try to provide a legal basis for the decision that had already been taken to support the Americans in the invasion?
Does the right hon. Gentleman accept that this House cannot debate that adequately, and fulfil the obligation he keeps laying on us, until we have more factual access to the diplomatic exchanges with the Americans and the political workings of the Government, of a kind that a Franks-type public inquiry with broad terms of reference into the origins of the war would undoubtedly provide, but which we obviously shall not have unless President Bush is forced into a similar inquiry on the other side of the Atlantic?
Mr. Straw: I do not accept the basis of what the right hon. and learned Gentleman has said. The case for military action was well rehearsed before the House. It is not a question of whether the House endorsed the decision, because the House made the decision by a substantial majority of all parties on 18 March last year. It did so based on the argument in the motion before the House and the arguments that my right hon. Friend the Prime Minister and I then advanced, as well as the arguments that I and colleagues like Secretary Colin Powell of the United States advanced in repeated Security Council hearings in the weeks leading up to 18 March. Those arguments were about the fact that the whole world—not just President Bush in his closet—had declared Saddam Hussein to be in clear material breach of his obligations. The whole world in November 2002 said that Saddam Hussein posed a threat to international peace and security by reason of Iraq's proliferation of weapons of mass destruction and long-range missile systems and its defiance of the United Nations, and that Saddam Hussein had refused to put himself into compliance with the UN.
There was an issue, which my right hon. Friend the Member for Livingston (Mr. Cook) raised, as to whether it was the right time to take military action. Of course that was an issue. However, what I have described was the heart of the argument. My argument then—and it is still my argument—was that had we, in the middle of March, simply walked away, which was essentially what was on offer from the French, the Russians, the Chinese and others, with just a slap on the wrist for Iraq, the world would have become a far more dangerous place. That is also the view of Dr. David Kay.
Mr. Andrew Miller: Will the inquiry extend to examining the points made by the leader of the Liberal Democrats on 18

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March last year, when he said of the previous Administration:
"They provided him"—
Hussein—
"with anthrax and other chemical weapons, and they approved the construction of dual-use factories in Iraq." —[Official Report, 18 March 2003; Vol. 401, c. 783.]—
or are we just to accept the Liberal party's opportunism?
Mr. Straw: That would be entirely a matter for the inquiry, but the right hon. Member for Hitchin and Harpenden (Mr. Lilley) quite properly put on the record of the House the fact that such a claim was without foundation.
Sir Peter Tapsell: Do the Prime Minister and the Foreign Secretary feel no shame or even regret that as a consequence of their ignoring the advice of many of us on both sides of the House—we expressed grave doubts by voice and vote in the months before the war, suggesting that Iraq no longer possessed weapons of mass destruction, and urged that Hans Blix and the UN inspectors should be given more time before military action—their faulty political judgment caused the deaths of more than 50 British servicemen and thousands of innocent Iraqi citizens?
Mr. Straw: I respect the view that the hon. Gentleman took before military action and subsequently. The advice, as he describes it, was not taken by the overwhelming majority of his own party, still less by us. Many people will want to quote Dr. David Kay. The hon. Gentleman must weigh up the fact that there is overwhelming evidence about the violation of resolution 1441 by Iraq, and I ask him to consider—this is a difficult calculation, but it is one that we must all consider—what would have happened had we allowed Saddam to continue. My judgment is that had we simply sat on our hands, which is all that was on offer from other countries in the Security Council, Saddam would have been re-emboldened and re-empowered. He would have posed an even greater threat to his own people and the whole region, and those mass graves being filled up weekly by Saddam's thugs would have become even fuller.
Sir Stuart Bell: Does my right hon. Friend agree that the entire House feels pleased that Saddam Hussein is no longer able to develop his deadly poison, ricin, his rudimentary nuclear programme and all those weapons of mass destruction programmes that were concealed from Dr. Hans Blix? Given that my right hon. Friend will place in the House of Commons Library the full text of Dr. Kay's statements to the Senate armed services committee, would a proper reading of that not show that it would have been the grossest dereliction of duty of this Government or any Government to have taken any decision other than the one we took in the House on 18 March?
Mr. Straw: I agree with my hon. Friend. Dr. Kay used almost exactly those words in his evidence to the Senate armed services committee.
Mr. Alex Salmond: Was it not Lord Butler who, when still Cabinet Secretary in
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1997, approved Alastair Campbell's right to issue instructions to civil servants? Might that issue not be germane to the inquiry that Lord Butler has now been asked to chair? How could the Prime Minister this morning and the Foreign Secretary this afternoon claim that Lord Hutton had cleared the Government of any misuse of intelligence material, when Lord Hutton did not even examine the February 2003 dossier—the dodgy dossier, the fabricated dossier, the load of Horlicks, as the Foreign Secretary once described it? How can that possibly be? Finally, given that the minority parties were not consulted about the remit and did not even get the chance to decline to serve, may I say that we certainly would not have served on an inquiry with such a dodgy, restrictive and cover-up remit.
Mr. Straw: The issue of the 7 February dossier—whose process I described in that way, but not its content—was comprehensively dealt with by both the Foreign Affairs Committee and the Intelligence and Security Committee. As to the announcement by the hon. Gentleman that no Scottish nationalist would have served on the Committee, I am sure the House will be deeply shocked and upset by that news.
Mr. Malcolm Savidge: Does my right hon. Friend recognise that whatever controversies, there may have been about some of the conclusions, there was overwhelming approval of the openness with which the Hutton inquiry was conducted, including the publication of written evidence? Can we consider the possibility of allowing this new inquiry to follow that example, subject to national security considerations?
Mr. Straw: The problem is in what my hon. Friend said right at the end—subject to national security considerations. This inquiry is significantly about intelligence. The Intelligence and Security Committee of the House does its work in private, but makes its report in public. That is the appropriate way for the inquiry to proceed, as well.
Sir Patrick Cormack: Is it not regrettably clear that the minority who on 18 March last year voted, in effect, to keep Saddam Hussein in power will not be pleased by anything that is said by any committee?
Mr. Straw: That is true. Although none of those who voted for that had that intention, I am in no doubt that that would have been the consequence if their advice had been accepted.
Donald Anderson: Surely the question of the Government's competence and judgment is a matter for the House and ultimately for the electorate. With regard to timing, the inquiry is asked to report before the summer recess. That means in less than six months, whereas the US inquiry, with somewhat narrower terms of reference, may take more than a year. Should not the inquiry be given whatever time the committee deems necessary for its task?
Mr. Straw: My right hon. Friend is correct in what he first says. The House must be the judge of whether we

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made the right or wrong decisions, and must be as well informed as it can be, including by the committee's report. As regards time, my right hon. Friend the Prime Minister has expressed his hope and intention about the time scale, but ultimately it will be a matter for the inquiry.
Mrs. Patsy Calton: When can we expect the Government's response to the report that the Foreign Secretary has mentioned twice in his answers today—the report from the Intelligence and Security Committee entitled "Iraqi Weapons of Mass Destruction—Intelligence and Assessments"? It was published in September 2003. We have yet to hear from the Government.
Mr. Straw: I think the response is due to be published today, but I will make sure.
Ann Clwyd: My right hon. Friend is right when he says that if Saddam had not been checked, he would have continued to kill. He was responsible for genocide. The United Nations has a responsibility to act in the case of genocide. The House and the Government have a responsibility to act. We signed the genocide convention and we are bound by its terms. It is a disgrace that the United Nations did not act to check Saddam's genocide.
My right hon. Friend speaks of WMD, but it was not my argument that WMD was the ground for toppling the regime of Saddam Hussein. I have made that case many times in the House. A year ago when I was in Kurdistan, before the start of the war, the Kurds were convinced that chemical and biological weapons would be used against them. The Kurds are Iraqis. They too must have had their own intelligence. Will my right hon. Friend bear that in mind when the committee investigates the intelligence that was available before the start of the war?
Mr. Straw: My hon. Friend, who has seen the brutality of Saddam and his regime at starker and closer quarters than ever have I, speaks with huge and poignant authority on the matter. The House needs to take note of what would have happened, had Saddam stayed. That would unquestionably have been the consequence of a decision on 18 March not to take military action.
Mr. Bernard Jenkin: May I remind the Foreign Secretary of exactly what the conclusions of the Hutton inquiry were? He stated:
"The term 'sexed-up' is a slang expression …capable of two … meanings"
and he concluded about the September dossier that
"because of the drafting suggestions made by 10 Downing Street for the purpose of making a strong case against Saddam Hussein, it could be said that the Government 'sexed-up' the dossier."
Does the right hon. Gentleman understand that that remains a matter of public concern, and of public confidence in the intelligence service? Will he return to the question put by my right hon. and learned Friend the shadow Foreign Secretary, who asked him whether the
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committee would judge the discrepancies between the intelligence presented to the Government and the way the Government used that intelligence—yes or no?
Mr. Straw: The hon. Gentleman has done himself no service whatever by a shameful parody of the contents of the Hutton report. He knows very well what the conclusion of the Hutton inquiry was in respect of the so-called sexing-up of the dossier: that the allegations were completely unfounded.
Tony Lloyd: One of the purposes of an inquiry is surely to restore confidence to a sceptical public who are anxious about, among other things, the competence of our intelligence and security services. My right hon. Friend is right to focus on that, but does he accept that the public still wants answers as to whether there was a clear threat to this country and to international security from Saddam at that time, and whether there was a legal basis for going to war? The inquiry does not seem to address those important questions.
Mr. Straw: It would be hard for any inquiry, however distinguished, to inquire into the state of mind not just of the Governments of the United Kingdom and of the United States, but the Governments of the 13 other members of the Security Council, each of whom, quite independently—and not only on the basis of their own intelligence, but on the basis of what they could see in front of their nose, as could their public—had come to the conclusion that Saddam Hussein and his regime posed a threat to international peace and security by reason of its proliferation of weapons of mass destruction, its long-range missile systems and its defiance of the United Nations. That was the basis on which the UN made its decision about 1441 and it was also a fundamental part of the case for military action put before the House.
Ultimately, the United Nations Security Council has to accept responsibility for the decisions that it took in November 2002, which plainly cannot be the subject of an inquiry by a single Government. We as Ministers, and we as the House of Commons, have to accept our responsibilities before the high court of Parliament—better informed, wherever possible, by such inquiries.
Mr. William Cash: Will the Foreign Secretary confirm that it would not effectively have been possible for the Government to have gone to war without the opinion of the Attorney-General on the matter? The Foreign Secretary may recall that it was I who asked the Prime Minister to make available that opinion, and that that was done in a truncated form. Of course, the opinion must have been based on certain facts and the evaluation of intelligence questions. Will he make certain that it is made available to the committee?
Mr. Straw: It is for the inquiry to decide whether it wishes to see that opinion. The hon. Gentleman knows very well that, for extremely good reasons, it has been the practice of successive Governments that the detailed legal advice of Law Officers is not made public.
Mr. Doug Henderson: I know that my right hon. Friend always has his

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ear to the ground in terms of the questions that people are asking. At the moment, their question is: "Did the Government act properly when we went to war with Iraq?" In order to answer it, is it not necessary to examine not only what the intelligence was, but how the Government responded to it, and whether sufficient checks and balances and investigations took place before a judgment was reached?
Mr. Straw: One of the central issues before the Hutton inquiry was whether we acted properly in respect of the intelligence that was the subject of the Gilligan report of 29 May. To underline how unreliable was the ability of the hon. Member for North Essex (Mr. Jenkin) to read Hutton, he says on page 321 of his report:
"I consider that the allegation"—
of sexing up—
"was unfounded as it would have been understood by those who heard the broadcasts to mean that the dossier had been embellished with intelligence known or believed to be false or unreliable, which was not the case."
The wider issues that my hon. Friend raises may indeed come with the committee's terms of reference, which include the examination of
"any discrepancies between the intelligence gathered. evaluated and used by the Government before the conflict, and between that intelligence and what has been discovered by the Iraq Survey Group"
and the making of
"recommendations to the Prime Minister for the future on the gathering, evaluation and use of intelligence on WMD, in the light of the difficulties of operating in countries of concern."
My hon. Friend has been familiar with some of these matters. Speaking as someone who, as Home Secretary, was responsible for the Security Service for four years, and has been responsible for GCHQ and the Secret Intelligence Service for the past two and a half years, it is in everybody's interest that we have the most accurate and reliable intelligence and the best systems for assessing it. That is in the interests of the agencies, of Ministers and of Parliament. I anticipate that if flaws are found in the systems for assessment, the Butler committee will wish to address that [Interruption.]
Mrs. Angela Browning: It hardly instils confidence in one when the right hon. Member for Dewsbury (Ann Taylor), who is to be part of the Butler committee, is making her own audible responses to questions.
The Foreign Secretary says that the UK inquiry will work closely with the American inquiry, but will the net be cast further afield, not least to Australia, where Andrew Wilkie of the Australian intelligence service resigned a week before the war commenced because of what he called the blatant exaggeration in the UK and United States Governments' use of their intelligence?
Mr. Straw: It is a matter for the committee to decide from whom it seeks evidence. The hon. Lady's suggestion is totally without foundation. I pay tribute to my right hon. Friend the Member for Dewsbury (Ann Taylor), to the hon. Member for East Hampshire (Mr. Mates), and to all the members of the Intelligence and Security Committee, of all parties, for their
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professionalism in the work that they do. Had it been possible, I would have hoped that the ISC would be able to conduct the inquiry, but following discussions with the usual channels, this inquiry, with its distinguished outsiders, has been established to do the job.
Jeremy Corbyn: As the public greeted Lord Hutton's inquiry with deep scepticism, despite its being conducted in a very open atmosphere, does my right hon. Friend honestly think that this inquiry will be anything more than an establishment stitch-up designed to protect the political judgments that told this House, the world and everybody else that the basis of the war was the existence of weapons of mass destruction? Does he not recognise that the public will accept only an open, public judicial inquiry, not one conducted largely in secret by the Privy Council?
Mr. Straw: I say with great affection to my hon. Friend that if we had the Archangel Gabriel running the inquiry and sitting in public, he would pour cold water on it and say that it was an establishment stitch-up if he disagreed with its findings.
Sir Robert Smith: The Foreign Secretary noted that other countries had access to similar intelligence and concluded that there were concerns to be addressed. However, as the right hon. and learned Member for Rushcliffe (Mr. Clarke) suggested, the public want an inquiry that investigates why this country alone, with America, chose to take the action that it did, instead of listening to Hans Blix and taking the time to ensure that the case for war had been made?
Mr. Straw: We were far from alone in the decision that we took. A very large number of countries, in addition to the UK and the US—half the member states of the European Union and many other countries around the world—supported the military action on which we were embarked, and many participated in it.
As for Dr. Blix, he never had the role of telling the Security Council what to do—he laid evidence before it. The evidence that Dr. Blix laid before the Security Council confirmed me in my opinion that we had to take action against Saddam.
Mrs. Louise Ellman: I welcome the Foreign Secretary's statement, and I am glad to see the end of Saddam's brutal and genocidal regime. However, can he tell us how the inquiry can link up with intelligence information that is available to other countries, as it was not this country alone, or even with the USA, which decided that Iraq had weapons of mass destruction, but the general view throughout the United Nations and Europe?
Mr. Straw: I am grateful to my hon. Friend. That is a matter on which the Butler committee will seek co-operation from the United States Government and other intelligence partners. To underline my hon. Friend's final point, Dr. Kay pointed out that President Chirac believed, even as late as March last year, that Saddam possessed weapons of mass destruction—a belief that was reflected by German intelligence.
Mr. Edward Leigh: May I press the Foreign Secretary further on the point made by

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my right hon. Friend the Member for Tonbridge and Mailing (Sir John Stanley) and many others? Before we reach the end of these exchanges, it is right that the inquiry's terms of reference should be made absolutely explicit. Will the Foreign Secretary confirm that members of the committee will be in charge of their own work, and that they will therefore not be required narrowly to consider what intelligence was delivered up by MI6 to the Government, but will be able to examine the relationship between civil servants and Ministers and how Ministers evaluated that intelligence?
Mr. Straw: The terms of reference are clear, and it is for the inquiry, within those terms of reference, to interpret how they should be followed.
Mr. Jon Owen Jones: Will the inquiry be able to consider the doctrine of pre-emption, which depends upon there being reliable information and intelligence and rational and unprejudiced selection from it?
Mr. Straw: I had not anticipated that the inquiry would wish to spend its time looking at the doctrine of pre-emption, and nor was pre-emption the issue before the Security Council or the House last March. As far as I can recall, it was never suggested that we should enter into some kind of gratuitously pre-emptive strike. I point out to my hon. Friend that it is not a matter of intelligence that is open to doubt but a matter of historical fact that no other country but Saddam's Iraq has been in such horrendous and continuing breach of chapter VII obligations under the United Nations Security Council for a period of 12 years. He had invaded Iran, he had invaded Kuwait, he had unleashed missiles on three other neighbouring countries, he had gassed 5,000 people in Halabja in a couple of days alone, he had used chemical and biological weapons, he had covertly hidden a nuclear programme and other programmes—and even as late as 7 March last year, Dr. Blix published a 173-page document of unanswered disarmament questions, which I put before the House in Command Paper 5785. If Saddam at any stage, knowing the deadline given to him and the obligations imposed on him by resolution 1441, had wished to answer those 173 pages of questions, he could have done so, and war could have been avoided. He chose not to do so.
Gregory Barker: The Foreign Secretary has drawn certain fair comparisons with the Franks committee in 1982. There is one stark difference, however: before that committee even sat, following the failure of the intelligence services to warn adequately of the threat to British interests, the Foreign Secretary and his entire Foreign Office ministerial team resigned. At what point can we expect ministerial responsibility to apply, and on what basis would the present Foreign Secretary accept responsibility?
Mr. Straw: I have always made clear my responsibility to the House and to my Privy Council oath. Whatever people may disagree with me about, I have never sought to shirk those responsibilities. I regretted greatly, at the time and subsequently, that Lord Carrington chose to
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resign. I also say, however, that the circumstances of the Falklands were different from those under consideration today.
Mr. Tam Dalyell: On Friday 22 October 1982, I was summoned by Lord Franks to appear in front of his committee for one and three quarter hours. Since then I have expressed a great deal of unease, which was endorsed on 16 July, as is recorded in column 302 of Hansard, by the Foreign Secretary, and again endorsed by him on 22 October, in column 682. Does he share a view that the Franks committee may not be a good precedent? Would it not be better for a few straight questions to be answered, such as when did the Prime Minister commit himself to President Bush, on what terms did he commit himself, and when did he tell his Cabinet colleagues that he had done so?
Mr. Straw: I—[Interruption.] I am advised by an Opposition Member from a sedentary position that my answer should be. "I shall write to my hon. Friend shortly." The decision and the lead-up to the decision to take military action was public—it was argued out in this House. There was no way in which the House could have been misinformed or, by implication, misled. If my hon. Friend and other Members who took a different view about going to war read the record, they will see that by the time of the lead-up to the decision to take military action in mid-March, the arguments were not about the dossier, and still less about the 45 minutes. The issue was the breach of resolution 1441 and what we should do about it. As for his point about the Franks committee, in the debate on 22 October I recalled that when Franks published his report in January 1983, some of my hon. Friends were sceptical about it, and used the customary adjective. It was the request and the proposal of the Opposition that we should have a Franks-style committee now, however, and it is important that, as far as is conceivably possible, it should be on a bipartisan basis. I believe that those who have accepted the invitation to serve on the committee will do so with great distinction and independence.
Mr. Andrew Mackay: Whereas the hon. Member for Cynon Valley (Ann Clwyd) and many Conservative Members would have supported the Government in going to war with Iraq even if there had not been evidence of weapons of mass destruction, it is clear that a large number of Labour Back Benchers voted with the Government only because they were told that weapons of mass destruction were there. Can I tempt the Foreign Secretary to speculate as to whether he would have won that vote with this evidence?
Mr. Straw: The right hon. Gentleman has greater insights into the state of mind of my hon. Friends on 18 March than I would ever claim. What I look at is the motion before the House, which was all about the breach of resolution 1441, and the arguments put before the House, which again were about the breach of resolution 1441. That was the basis on which people made their decision.
Mr. George Foulkes: May I ask the Foreign Secretary to draw the attention of members of the committee to the

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whole of the debate on 18 March 2003, in which no one, including the leader of the Liberal party, questioned the existence of weapons of mass destruction? Indeed, arguments were put forward forcibly by the shadow Foreign Secretary:
"does Saddam Hussein really pose a risk to international peace and security? Well, the UN certainly thinks so, and it has thought so for the past 12 years".
He continued:
"Hans Blix's 7 March report demonstrates the terrifying weapons of mass destruction that are missing, and that must still be assumed to be there."—[Official Report, 18 March 2003; Vol. 401, c. 892.]
That was the kind of argument that, along with the arguments of my hon. Friend the Member for Cynon Valley (Ann Clwyd), made me vote for the Government, and I would do so again today.[Interruption.]
Mr. Straw: I will indeed draw the Hansard of 18 March to the attention of the leader of the Liberal party. A fat lot of good that will do. however, because Members on both sides of the House are used to the Liberals jumping on to any passing bandwagon and seeking to rewrite their history. This is simply a further episode in the continuing story of why the Liberal Democrats are not taken seriously.

Organ Donation (Presumed Consent and Safeguards)
1.37 pm
Siobhain McDonagh: I beg to move,
That leave be given to bring in a Bill to provide for the removal of organs for transplantation purposes, after death has been confirmed in a person aged 16 or over, except where a potential donor previously registered an objection or where a close relative objects.
On average, one person dies every day in this country while waiting for an organ transplant. I come to the House this afternoon because of that stark sad fact. What is more, in the past 10 years, the number of people waiting for a transplant has increased by more than one third. During the same period, the number of organ transplant operations has decreased by 12 per cent.
Medical advances in our modern NHS have enabled very sick people to live longer while they are waiting for transplants. They have also ensured that more people who might in the past have died in accidents or from strokes now survive. Their organs are therefore no longer available for transplant. Therefore, there is a widening gap between the number of people waiting for transplants and the number of organs that become available.
I want us to reflect seriously today on how we can begin to narrow that gap and save hundreds of lives every year. First, I thank the BMA, the National Kidney Federation and doctors and patients at my local hospital, St. Helier, which has one of the south-east's leading renal units. They have persuaded me to take up this issue now. I also praise the efforts of other Members on both sides of the House who have led previous campaigns to extend organ donation, especially my hon. Friends the Members for Linlithgow (Mr. Dalyell), for Broxtowe (Dr. Palmer) and for West Bromwich, East (Mr. Watson), the right hon. and learned Member for Rushcliffe (Mr. Clarke) and the hon. Member for Oxford, West and Abingdon (Dr. Harris). I also thank those listeners to the Radio 4 "Today" programme who voted for presumed consent as the measure that they most wanted us to pass.
Surveys repeatedly show that between 70 and 90 per cent. of the population want to help someone else to live by donating their organs for transplant after their death. However, fewer than 20 per cent. formally join the NHS organ donor register or carry an organ donor card, and most families do not discuss their wishes about donation.
Unfortunately, the upshot is that at a time of bereavement, half of all relatives opt for the default position, which is not to donate, although studies show that many families later regret that decision. I do not criticise the families of deceased, who are undergoing a terrible ordeal. I hope that changing to a system of presumed consent will make the decision a little easier for them.
The decisions made have terrible consequences for the very ill patients in hospitals such as St. Helier who are desperate for a transplant. Without a transplant, they may have to spend years getting treatment such as dialysis at great cost to the NHS, and are often unable to carry out normal everyday activities or have a good

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quality of life. It is estimated that for the average patient, compared with dialysis, a kidney transplant saves £191,000 over nine years, which is the median graft survival time. A patient who has had a transplant is far more likely to be able to contribute fully to society: to have a full life, to work, and, indeed, to pay taxes.
My constituency is in the London borough of Merton. Recently, Merton's head of special needs education, Trevor Cook, had to leave work because he was too ill to continue. The people of Merton have lost a highly experienced and respected man who has contributed enormously to local public services, simply because he cannot get a transplant. Obviously, there are many other Trevor Cooks throughout the country.
As long ago as 1994, the King's Fund carried out a major survey of potential solutions to the transplant shortfall. It concluded that
"an initiative which increases the supply of organs will, ipso facto, have one very important ethical argument in its favour: the potential to avoid death and relieve suffering."
The Bill aims to defend the wishes of the deceased and deal with the gap between people's wishes and donation rates. It will reflect the fact that a majority support transplants, and allow doctors to presume that the deceased have consented for their organs to be used for transplants. Since consenting is more likely than not consenting, that should become the default position.
As things stand, we presume that the deceased have not given consent, even though the chances are that that is against their wishes. However, the Bill includes several safeguards. It will be easy for people to opt out. It would be fair to say that anyone who had not opted out had made an informed decision not to do so. The Bill applies only to transplants, not to organ retention, and the families of the deceased can opt out. The proposals will not apply to children.
Presumed consent is neither a new idea nor simply a theory. It already operates elsewhere in the world. In Belgium, some interesting research has compared Antwerp with Leuven, two areas that are otherwise similar. Antwerp did not introduce the new presumed consent system, and its donation rates remained the same. However, Leuven adopted the new law and in three years its rates rose from 15 to 40 donors a year.
Let us consider the slightly more complicated story of Spain, which currently has the highest rate of organ donation in the world. Although it has a presumed consent law, the Spanish transplant organisation always seeks the consent of those closest to the donor. I propose that practice. Spain has the mindset that consent is presumed but that the relatives can overrule. That is more likely to get a positive and accurate outcome than is currently obtained in the UK.
Some, like Dr. Rafael Matesanz, believe that Spain's law on presumed consent is not the cause of increasing donation rates. However, since the change in the law, the number of families who withdraw consent has fallen to about one in five, compared with approximately half in the United Kingdom. I believe that a soft form of presumed consent has helped to change the mindset in Spain and improved attitudes to organ donation. The best comparative evidence from abroad clearly shows that presumed consent works.
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Gimble et al have conducted the most thorough analysis of organ, donation. They considered all the factors that contribute to increased donation rates, including religion, culture, education and other social pressures. Their conclusions were that presumed consent laws
"had a significant effect on the number of cadaveric donors per million population. As the gap between supply and demand for transplant organs continues to widen, professionals and policymakers should consider revisiting the implications of this legislation, or some hybrid of alternatives, as an effort to expand the 'gift of life' to those in need."
That is the crux of the matter: to expand the gift of life to those in need.
I hope that I will be allowed to take this brief opportunity to urge all hon. Members, and anyone following the debate—in the Galleries, in Hansard or in the media—to sign up to the NHS organ donor register. It is possible to do that by visiting website www.uktransplant.org.uk or by calling 0845 60 60 400. Until presumed consent is in place, that remains the best way in which to help someone else to live after one's death.
In the long term. I believe that the best means of increasing the number of lives saved by organ donation, respecting the wishes of the deceased and being kinder to grieving relatives is to presume consent unless someone has opted out. I hope that the Bill will persuade more people to consider organ transplants seriously and to discuss it with their families. For the sake of thousands of people who are awaiting transplants in my constituency of Mitcham and Morden and throughout the country, I commend the Bill to the House.
1.47 pm
Mr. David Wilshire: I oppose the Bill, not because I am against its objectives but because I disagree with its methods. Before I explain the reasons, I stress that I am not speaking as an official spokesman. We are considering an intensely personal, free-vote issue for all of us.
My views were formed following the death of my 12-year-old daughter 22 years ago. I explained the painful details in the debate on Second Reading of the Human Tissue Bill on 15 January, so I hope that hon. Members will forgive me if I do not repeat them today. However, I cannot avoid referring to them because the Bill would draw a distinction between a child and an adult. I do not believe that that distinction is valid. Surely a 17-year-old or a 25-year-old child is as precious to its parents as a 12-year-old. Many people of 30-something are just as precious to their spouses or children. I do not understand the distinction.
I have no objection in principle to the removal of parts of a dead body. I have carried an organ donor card all my adult life. However, I have serious anxieties about presumed consent. I readily accept that there are some powerful arguments for presumed consent, principally the shortage of donor organs and the many opportunities to help even more people who need a transplant. They are worthy objectives, which I hope that we all support.
However, I doubt whether presumed consent would solve the problems that its supporters claim it would. There are other, better ways in which to achieve the

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Bill's objectives. In addition, there are understandable fears about abuse and the potentially distressing impact of presumed consent on bereaved relatives. In the circumstances I found myself in 22 years ago, had presumed consent been in operation, a doctor would have got on and done what he judged was needed, or would have had to check that I had no objections. Had I discovered later that although I was in the hospital, no one had taken the trouble to consult me, I would have been outraged. Had I been invited to object, rather than asked to agree, I would probably haw, been made to feel guilty for the rest of my life had I decided to refuse. When struggling to cope with the death of a loved one, of whatever age, the last thing a person needs is avoidable additional grief. In my mind, something that has the capacity to cause outrage and guilt, and add those to the hell that that person is going through, simply has to be wrong.
That said, I well understand that doctors are busy people, and one might ask why I want to put obstacles in their way. Asking permission from a bereaved family will never be easy, so why make clinicians do something difficult and unpleasant? My answer is this: if ever there is a situation in which the needs and wishes of patients and their families must come first, this is it. On such occasions, clinical convenience is a very secondary issue. Even so, presumed consent would not spare doctors the dreadfully difficult task of raising the issue of organ donation with bereaved families. Asking, "Do you wish to object?" is no easier than asking "Please may I do this?" but the latter is far kinder and gentler.
As I said at the outset, I believe that there are better ways of achieving the highly desirable outcome for which the hon. Member for Mitcham and Morden (Siobhain McDonagh) has spoken. My preferred way would be required request, and I shall give the House a few examples of what I have in mind. We could train, then require, general practitioners to raise the issue with
648
their patients, especially when registering new patients, and record all agreement on a central database. We could help, then require, hospital managers to add some sort of question to hospital admission forms. We could train, then require, hospital doctors, especially those who specialise in accident and emergency, to raise the subject gently with the bereaved.
I am as keen on the objectives underpinning the Bill as its sponsors are. In opposing them, I mean no criticism of either the objectives or the sponsors. The last thing I want is to be divisive. Happily, all these issues, and more, are currently being fully considered by the Standing Committee handling the Human Tissue Bill. I understand that there will also be a very full debate during that Bill's Report stage. That is the time for all those who want to speak on and wrestle with these intensely personal issues to do so. That is the time to have a full and free vote on the best way of achieving the objectives. That is why I have no wish to divide the House this afternoon.
Question put and agreed to.
Bill ordered to be brought in by Siobhain McDonagh, David Cairns, Mr. Tom Watson, Laura Moffatt, Mr. Stephen Pound, Mr. Tam Dalyell, Mr. Alistair Carmichael, Mr. Kenneth Clarke, Dr. Evan Harris, John Austin, Mark Tami and Dr. Nick Palmer.

Organ Donation (Presumed Consent and Safeguards)
  ORGAN DONATION (PRESUMED CONSENT AND SAFEGUARDS) BILL
  Siobhain McDonagh accordingly presented a Bill to provide for the removal of organs for transplantation purposes, after death has been confirmed in a person aged 16 or over, except where a potential donor previously registered an objection or where a close relative objects: And the same was read the First time; and ordered to be read a Second time on Friday 30 April, and to be printed [Bill 47].
Orders of the Day
  Child Trust Funds Bill
  Not amended in the Standing Committee, considered.
  Child Trust Funds Bill
    New Clause 1

      EARLY WITHDRAWAL, ETC, FOR DISABLED CHILDREN
      If this section applies to a child, the responsible person may withdraw funds from the child's account in accordance with the provisions of this section.

      This section applies to a child if—

      a child trust fund is held by the child, and

      a person is, or persons are, entitled to Disability Living Allowance in respect of the child.

      A responsible person shall inform the relevant account provider if this section applies to a child trust fund.

      The account provider must inform the Inland Revenue of information provided in accordance with subsection (3).

      A responsible person may, after having informed the relevant account provider in accordance with subsection (3), apply to withdraw amounts from the fund, including the whole amount of the fund, for expenditure for one or more of the purposes specified in subsection (7).

      On receipt of an application, the account provider must—

      release the amount requested to be withdrawn, and

      inform the Inland Revenue in accordance with regulations.

      Those purposes are—

      the purchase or hire of equipment for use by the child in respect of their disability;

      payment for nursing, night or child care;

      payment for respite care or temporary residential care; and

      payment for any specialist medical or palliative service in respect of the child's disability.

      The responsible person shall, wherever practicable, consult the disabled child about the expenditure of amounts withdrawn in accordance with the provisions of this section.

      Regulations may prescribe—

      the means by which account providers and the Inland Revenue are informed about the application of this section to a child, and

      requirements for the provision of information to the Inland Revenue relating to expenditure of amounts withdrawn in accordance with the provisions of this section.'—[Mr. Cameron.]

      Brought up, and read the First time.
      1.55 pm
      Mr. David Cameron: I beg to move, That the clause be read a Second time.
      Madam Deputy Speaker: With this it will be convenient to discuss the following: New clause 2—Early withdrawal in case of terminal illness—

      If this section applies to a child, the responsible person may withdraw funds from the child's account in accordance with the provisions of subsections (4) and (5).

      This section applies to a child if—

      a child trust fund is held by the child, and

      the child was first an eligible child by virtue of section 2(1)(a), and

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      it is certified by a consulting physician in accordance with regulations under subsection (3)that the child has a terminal illness.

      Regulations may prescribe the requirements for the issue of a certificate for the purposes of subsection (2)(c).

      A responsible person may, having given a certificate to the relevant account provider, apply to withdraw amounts from the fund, including the whole amount of the fund.

      On receipt of the certificate and application, the account provider must—

      release the amount requested to be withdrawn, and

      inform the Inland Revenue in accordance with regulations.

      The responsible person shall, wherever practicable, consult the child about the expenditure of amounts withdrawn in accordance with the provisions of this section.

      In this section—
      "attending physician" means the physician who has primary responsibility for the care of the child and the treatment of the child's illness;
      "consulting physician" means a consultant physician practising in the National Health Service who is qualified by speciality to make a professional diagnosis and prognosis regarding the child's illness and who is independent of the attending physician;
      "physician" means a registered medical practitioner; and
      "terminal illness" means an illness which, in the opinion of the consulting physician, is inevitably progressive, the effects of which cannot be reversed by treatment (although treatment may be successful in relieving symptoms temporarily) and which will be likely to result in the child's death before his eighteenth birthday.'.

      Amendment No. 3, in page 2, 1ine 44 [Clause 3], leave out 'as' and insert
      'in accordance with the provisions of section [early withdrawal, etc., for disabled children] or as otherwise'.
      Amendment No. 4, in page 2, line 44 [Clause 3], leave out 'as' and insert
      'in accordance with the provisions of section [early withdrawal in case of terminal illness] or as otherwise'.
      Amendment No. 58, in page 3, line 17 [Clause 4], at end insert
      'except under provisions made by regulations to allow for the assignment of the child trust fund investments of terminally ill children.'.
      Amendment No. 15, in page 6, line 36 [Clause 12], leave out 'amount' and insert 'amounts'.
      Amendment No. 16, in page 6, line 39 [Clause 12]. at end insert—
      '(2A) Regulations under subsection (2) shall prescribe—

      a standard maximum amount, and

      a higher maximum amount in respect of child trust fund accounts held by children to whom section [early withdrawal, etc., for disabled children] applies, which shall be expressed as a multiple of the standard maximum amount.'.

      Amendment No. 19, in page 10, line 39 [Clause 20], after '3(4)(d)', insert
      'or by section [early withdrawal, etc., for disabled children]'.
      Amendment No. 20, in page 10, line 39 [Clause 20], after '3(4)(d)',insert
      'or by section [early withdrawal in case of terminal illness]'.

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      Amendment No. 25. in page 13, line 13 [Clause 22], at end insert—
      '(4A) A person who is required by the Inland Revenue to provide information under regulations under section [early withdrawal, etc., for disabled children] may appeal against the decision to impose the requirement.'.
      Mr. Cameron: I wish to speak to new clause 1 and amendments Nos. 15 and 16. As hon. Members who served on the Committee will recall, they involve two proposals. I believe that they are fundamentally linked, and I know that the Minister agrees with me. She was generous about the proposals in Committee and promised to consider them carefully and introduce them through regulations if she could. I hope that she will continue to back them today and in the future, because they provide a real chance to help families with disabled children.
      The two proposals are as follows. The first, in amendment No. 16, would increase the amount that families and others could put into baby bonds in the case of a disabled child. The second, in new clause 1, would allow families to dip into the baby bond in specific and limited circumstances before the child reached the age of 18.
      Before I start the argument in favour of the proposals, I should declare an interest beyond that which is in the register. My wife and I are fortunate to have a new baby, Nancy, who is just two weeks and one day old. I cannot say that she has already told me how much she is looking forward to her baby bond, but I am sure that she would if she could. I hope that the House will be patient with me today because we are still at that sleepless nights stage. Although one occasionally feels that one is going to nod off during someone else's speech, it is uncommon to nod off during one's own. Today, that is just possible. Nancy is clearly a very canny baby. She was meant to arrive after the Hutton inquiry, on which I was involved in helping the Leader of the Opposition. Clearly she knew something that I did not: that the report was not worth waiting for. I should have started my paternity leave straight away.
      More relevantly to the debate, my wife and I also have a 22-month-old son, Ivan, who is severely disabled with epilepsy, cerebral palsy and a range of complications. He is unlikely ever to walk or talk acid needs constant care. That has stimulated my interest in disability, an interest that has been backed up by people who have come to my surgeries in west Oxfordshire to bring their stories and experiences of bringing up disabled children, with all the difficulties, challenges and costs that that involves.
      The first proposal would lift the cap on the amount that parents could put into a baby bond in the case of a disabled child. Amendment No. 16 refers to a "multiple" of the £1,200 limit proposed for all baby bonds. I hope that that multiple, which will be considered in regulations, will be generous. I cannot believe that there is much room for anyone to use child trust funds as a route of tax avoidance, so we should be as generous as possible with the multiple that people can put in.
      Why do I think that it is a good idea to de-limit the amount that people can put into child trust funds? First, the scheme would be very simple. We know who the
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      disabled are: we have disability living allowance and a list of disabled children. Barnardo's refers in its report, "Still Missing Out?", to a figure of 360,000 disabled children. The scheme would be a simple way of allowing parents and communities to help those children. It would not be very expensive for the Treasury and Inland Revenue because the funds do not provide a tax break for the donor who puts money in. They provide a small tax break for the recipient, because under the child trust fund scheme, no income tax is paid on the interest accrued by the fund.
      The accounts would be incredibly easy to use. Child trust funds will be set up in any event for every child—Nancy, fortunately, is included—over the next few years, so friends, family and others who want to help but do not know how, could easily do so in future by putting money into the fund. Above all, the argument for delimiting the amount that one could put in for disabled children is that it would be effective. Disability brings huge costs, and at the age of 18, the transition from childhood to adulthood is particularly expensive. In "Still missing out?" Barnado's says that the transition from childhood to adulthood is a difficult time for all teenagers, but can be particularly fraught for disabled young adults, both in terms of accessing appropriate adult services and in dealing with their fears and anxieties at a key life stage. The Minister made some good arguments in Committee and on Second Reading about the case for 18-year-olds having an asset or capital, and the argument for disabled children is, in my view, stronger still.
      2 pm
      Mr. Steve Webb: I am sure that the House agrees with the hon. Gentleman that we want to do all that we can to help disabled children, and we respect his first-hand knowledge of the subject. Does he accept that it is odd to make a specific concession for disabled children whose parents have a lot of spare cash to put into accounts? Do we not want to support all disabled children, and is the social security system not a better way of doing so than the tax and baby bond system?
      Mr. Cameron: The break would not just be for the middle classes and the better-off. Every child in the country will have a child trust fund, and it will be open to anybody to contribute to those funds. As I have said, in the case of disabled children, friends, family and the larger community want to help, and my proposal would create a clear way in which to do so. As for the least well-off, there is a genuine opportunity for the Government to contribute. The Government have already said that, in the case of children of parents who are on income support, they will put as twice as much into their child trust funds. In the case of disabled children, there is a similar opportunity for the Government, social services or anybody else to help in a specific way. I shall deal later with the role of social services, which clearly have the lead responsibility in helping families to look after disabled children.
      My proposals recognise the fact that there is an awful lot that families want to do, and indeed do, themselves. Nine out of 10 disabled children are looked after at home, and their families already do an immense amount. My modest proposals would simply make that

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      easier for them. There has been a warm welcome for my de-limiting amendment from the disability charities. I received a useful note from Mencap, Barnado's and the Disability Rights Commission among others, which said:
      "We strongly endorse the proposed amendment, which will enable family and friends to contribute more into the Trust Fund when a child is disabled."
      That reinforces the point that I made to the hon. Member for Northavon (Mr. Webb).
      The note also says:
      "disabled young people will face greater costs at transition: the Child Trust Fund could play an important role in giving them the best opportunities as they move to adult life."
      That is a positive response.
      As I told the hon. Gentleman, the amendment would not benefit only the better-off. It offers a good opportunity for other people who want to contribute and it is open to the Government to top funds up if appropriate. There was a slight misunderstanding about contributions from the wider community on the part of the disability charities, who said in their note:
      "If this was to be the case, then there would be issues around accountability and, indeed, as to the desirability of charitable status being sought for the Trust Fund."
      That slightly misses what I am trying to get at. All I am saying is that if someone wants to help a disabled child, they can put money into the trust fund. It will all be tax-free when the child receives it at 18. That will make a genuine difference to children at 18, particularly regarding housing, training, mobility and other issues. Amendment No. 16 is straightforward. It discriminates in favour of the disabled and provides a vehicle that all families can use. It is simple and effective, and I commend it to the House.
      I accept that new clause 1 is more controversial, but it is even more important. I shall explain what it does and why it is right, before looking at potential objections. Very simply, it allows a family with a disabled child to dip into the fund before the child reaches the age of 18. However, it sets out clearly—my thanks to the Clerks, who helped me to draft it—that that can be done only for certain purposes. It explains that the Inland Revenue must be informed by the account provider when it is dipped into, and specifies that the child must be consulted whenever possible. The purposes for which people can dip into the fund are set out in the new clause, and include
      "the purchase or hire of equipment … payment for nursing, night or child care … payment for respite care or temporary residential care; and …payment for specialist medical or palliative service".
      Before I try to justify those payments individually, I shall explain the general principle of why it is right and a good idea to allow families with disabled children to dip into their—enlarged, I hope—child trust funds. Disabled children bring massive extra costs to their families. The Barnado's report "Still missing out?" found that on average it cost more than three times as much to bring up a disabled child as an able-bodied child. Families with disabled children are frequently in crisis. Mencap, in its excellent report "Breaking Point", found that eight out of 10 families with disabled children had reached the point where they were finding it
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      extremely difficult to go on. When that happens, the alternative to the child being looked after at home is for it to go into care. We should try to do everything that we can to help families to look after those children at home. Families know best how to spend money on their children. As I said, nine out of 10 disabled children are looked after at home.
      Mr. Hilton Dawson: I am sympathetic to the hon. Gentleman's purposes. One benefit of child trust funds is that they will reinforce young adults' sense of autonomy and responsibility at 18. Does he think that there is a danger, if the new clause applies to a broad range of children with disabilities, that their right to autonomy and responsibility will be infringed? Should that money not be theirs, rather than their families'?
      Mr. Cameron: The hon. Gentleman intervened on me once or twice in Committee, and has some good points to make. In response to his specific objection, families should not access the money initially provided by the Government and the interest that it accrues. However, I am trying to come up with something that will help families with disabled children. We should allow them to put more money in and take it out for specific purposes. On the whole, parents want to do what is best for their children, and parents who in many cases spend 24 hours a day looking after disabled children will not raid child trust funds, robbing their children of an opportunity to have that money at 18. They will use it as a safety valve, putting a lot of money in I hope, but occasionally taking it out when they are under huge pressure and there are things that they genuinely need, as I shall explain.
      On a related matter, the support that families receive from the national health service and social services is rightly statutory support, mostly unrelated to the means to pay. It is a huge help, but all families with disabled children would agree that it is never enough, and is never going to be. I shall try to explain why. Some services are provided free at the point of use, including most nursing care, most equipment and all medical interventions. Worthwhile as those services are, the family will always want more. If they are looking after a disabled child 24 hours a day, they will get some help from social services, but there will always be times when they find it hard to cope arid would like some more. My modest amendments provide one vehicle for families to access that extra help.
      The disabled facilities grant is used to pay for modifications to the home such as installing a stair lift or a bath hoist, or changing its configuration to look after a disabled child. Such benefits tend to be means-tested. Families on modest incomes have to pay for such services, but if there was extra money in the child trust fund, they could access it for things for which they are currently means-tested. My proposal would help to provide services that are not means-tested but are by their nature limited, and also services that are means-tested and must be paid for even by those with relatively modest incomes.
      Some say that health and social services departments could do all this, but provision for families with disabled children is patchy and likely to remain so. According to its excellent report. the Audit Commission

      655
      "found a lottery of provision. The services that disabled children, young people and their families are offered depend largely on where they live and how hard their parents are able to push."
      The situation is unlikely to change overnight, and in many respects it may get worse before it gets better. More disabled children are surviving birth and more are living longer, thankfully, but the things that must be done to look after them, and the costs of that, are increasing.
      Even if the situation did change overnight—even if Camelot suddenly arrived—provision would never keep up with demand, because families and individuals always want more. Even if a miracle occurred and every service needed by a disabled child was available, would it not still be better sometimes for parents to have control over the way in which service are provided?
      My new clause refers to
      "the purchase or hire of equipment".
      Although the NHS provides most of the equipment, more may sometimes be needed. The child might spend one or two nights with a parent or grandparent, and on such occasions it would be useful to have an extra wheelchair or standing frame, but the NHS is unlikely to provide two. Then there is
      "nursing, night or child care".
      In most cases, social services departments struggle to provide the care that is needed, but people will always want more. Kensington social services are very generous to us: three nights a week a fantastic nurse is with us between 7.30 pm and 7.30 the following morning. Nevertheless, to sustain my life in this; place and do my work, I must dip into my pocket and buy a bit more care. At night my child is often awake, and may have epileptic seizures. Three nights a week are not enough, so I have to buy more. The same will apply to many parents with disabled children.
      Those in the disability sector tell me that "respite" is not a very politically correct word; we have to talk about "short breaks". Short breaks are essential to help families look after their children while keeping up the good work that they do, but the short breaks provided by social services are unlikely ever to be enough for all families in all circumstances. On occasion, people will need more.
      In referring to
      "specialist medical or palliative service"
      I do not want to trespass on new clause 2, but, especially in the case of severely disabled children, an essential operation or form of care may not be available in this country. We often read in the newspapers of families having to go to America to secure an operation that will be very expensive, and trying to raise funds in their communities. What I propose would make that more straightforward.
      How have charities responded to new clause 1? In general they have responded positively, but I will deal with some of the objections. Macintyre Care wrote to me
      "Your specific points are well made and will improve the Bill, if taken up".
      Contact a Family wrote:
      "We agree that the proposals will offer significant advantages to some parents."
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      It said that life-threatening illnesses
      "and the many others which may lead to early death are the main reason that we would support access to the Child Trust Funds prior to age 18."
      The Chiltern Centre for Disabled Children, in the constituency of my hon. Friend the Member for Henley (Mr. Johnson), wrote:
      "We fully endorse the changes proposed—as you can imagine, we could not be more aware of the additional cost burden on these families, and the difficulty they have in finding and funding the equipment and services they need."
      2.15 pm
      As for the objections, there are three. The first two come from Mencap, Barnardo's and the Disability Rights Commission. They are concerned about the "early draw-down" of money. They say:
      "we are concerned that any flexibilities within access to (or payments into) the Child Trust Fund for disabled children should not result in young disabled people receiving a much reduced sum at age 18 because of early withdrawals."
      The second point is, effectively, the one made by the hon. Member for Northavon (Mr. Webb) that social services departments and the NHS might be encouraged to do less if they thought that families would do more.
      I discussed the third objection with the Minister this morning. It goes something like this: "If you want a trust fund for disabled children that you can dip into, do not use the child trust funds. There are existing trust funds that can be set up for children that would provide many of the same tax advantages." To argue that there are other trust funds out there, and financial vehicles for children, is really to argue against the whole concept of the Bill. More to the point, the great thing about the child trust funds is that they will be set up for all children. The other funds are extremely complicated. The beauty of my proposal is that because every child will have a fund, my modest amendments in respect of disabled children will provide the ideal vehicle for the investment of more money, while also providing a safety valve to allow some money out.
      Mr. Michael Weir: Does not the structure of the child trust funds pose a slight danger? In Committee, we heard much about why they should be equity-based. Is an equity-based fund the right vehicle for money that can be put in and taken out at regular or irregular intervals? The argument about disabled children is sensible, but should there not be a more hybrid fund to allow such withdrawals?
      Mr. Cameron: I understand that child trust funds are relatively flexible, and can contain cash, equities or bonds. Unless the relevant amendment was won in Committee, which I do not think it was, I believe that all contributions to the funds must be in cash, but can then be used for different purposes.
      I am not suggesting that families of disabled children should dive into the funds on a weekly basis. I see them as a safety valve. When those families are close to breaking point—when they really need extra help because what they are getting from social services and the NHS is not enough—the funds will be there. I hope that they will be able to gain access to cash. but if

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      necessary they can sell shares. The shares would attract no capital gains tax, and the dividend income would attract no income tax.
      It has been suggested that allowing families to dip into the funds might cause disabled children to receive a smaller trust at 18. There are two answers to that. As I think that I said earlier, I am not suggesting that families should be able to spend the initial Government contribution and the interest accruing on it. I am sure that we could protect that in regulations. I think that the objection misses the point. No two children are likely to receive the same amount; in fact, disabled children are likely to have more because families, communities and friends will contribute more. I believe that parents will behave responsibly, and will only dip in and spend the money when they really have to. Indeed, they will only be able to do that if there is more money in the fund because people have contributed. As I said, my change would tailor child trust funds to the needs of disabled children and their families.
      The final objection is that my proposals would encourage local authorities and the NHS to do less and that they would turn round to families with disabled children and say, "Sorry, you cannot have the services because you have got this lovely child trust fund so we won't give you night care or respite care and you can pay for your own equipment." I do not believe that that would happen because social services departments and the NHS have statutory responsibilities. Parents will always want more and child trust funds provide them with the means to get some more. On means-tested services, a child's wealth should clearly never count in a means test—I believe that that is the case—and only the parents' means should be examined. It would be better if measures such as the disabilities facilities grant were not means-tested at all.
      Finally, the Financial Secretary made one other point when we discussed the matter outside this House: if families with disabled children were allowed to dip in to the child trust fund, would it put up the cost of administering the fund and would that make life difficult? I have considered that point and do not believe that it is a real objection. People will dip in only if more money has been put into the fund for them to dip in to. If more money were put into the fund, the charges would probably be sustainable because there would be more money in the fund from which to draw a percentage administrative charge.
      The more I examine the amendments that I discussed on Second Reading and moved in Committee, the more I think that they have great merit. They have the beauty of simplicity: here is something that we can do that will help families with disabled children to build up a bigger baby bond for their disabled children, who will have great needs throughout their lives. When the need is there—in extremis and as a safety valve—parents should be able to dip in to the fund to make a real difference to the life of their child. I hope that the Financial Secretary will go on being as generous as she has been in entertaining these proposals and examining how we can implement them through regulations or in other ways. This is a real chance to do something positive for families with disabled children, and I am delighted to commend new clause 1 and amendments Nos. 15 and 16 to the House.
      Mr. Weir: I had some reservations when the hon. Member for Witney (Mr. Cameron) first raised this question on Second Reading. Like him, I have a disabled child, although not one who will qualify for a baby bond. I have been largely persuaded by his argument today, which has a lot of merit.
      One problem will arise as disabled children move towards the age of 18. As we get older, we worry what will happen to our children once we are not about—disabled children survive to an older age than they might have done in earlier times. Some thought must be given to what happens to baby bonds once disabled children turn 18. Many children will never be in a position to manage money on their own. We must examine how we can address the needs of disabled children after they are 18, especially when their parents are no longer able to cope or are no longer around.
      The hon. Gentleman said that new clause 1 was more controversial than amendment No. 16, but he has persuaded me of his argument. As he rightly says, throughout life disabled children often need special care or special items. Whether we like it or not, NHS provision of specific items is to some extent a postcode lottery. It is also possible for the NHS and the parent to disagree about what the child requires. The parent will often be able to get equipment or care only if they can fund it or if they can persuade a local charity to help. Up and down the country, many local charities specifically deal with children in such circumstances, but many parents would rather not go through that process. New clause 1 has a lot of merit, and I am prepared to support it.
      As I mentioned in my intervention, my one worry about new clause 1 is the structure of child trust funds. We debated the issue in Committee, where I argued that child trust funds should permit an account similar to that offered by a building society. The Financial Secretary gave a good explanation of why that is not possible, and at great length discussed with the hon. Member for Yeovil (Mr. Laws) her preference for an equity-based investment because of its growth over an 18-year period. Our discussion of the economy went back as far as William of Orange, which was before the Union, so that does not apply to Scotland. The point is that over any given 18-year period, growth is better in an equity-based investment than in other types of investment.
      My concern is that if new clause 2 permits regular—or perhaps irregular—withdrawals, we should be careful to ensure that regulations allow an investment that is suited to such regular withdrawals. According to the Financial Secretary's presentation of child trust funds, most of the companies or societies that will design them view them as long-term, 18-year investments with what she called "lifestyling" towards the end of the term. If new clause 2 is added to the Bill, different criteria will be required for disabled children. We must ensure that a child trust fund has, as far as we can determine it, potential for reasonable growth in the short-term, which obviously depends on many other factors, but can also be dipped in to, as the hon. Member for Witney put it, from time to time. It is to be hoped that dipping would not occur regularly, but it must be possible. I would hate trust funds to be set up for disabled children that lock in

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      the money for 18 years to get reasonable returns but prevent the very objective that the hon. Gentleman seeks to achieve.
      I am inclined to support new clause 1, but I say to the Financial Secretary that we must carefully examine the regulations to allow a different type or child trust fund for disabled children. New clause 1 states that the Inland Revenue and the account provider must be informed that the section would apply to them but perhaps we should go further and ensure that before advice is given on the type of trust fund the objective of the fund is made clear and an appropriate vehicle is available.
      Mr. George Osborne: I have little to add to what my hon. Friend the Member for Witney said so eloquently about new clause 1 and amendment No. 16, which appear in my name and those of my right hon. and hon. Friends but are wholly inspired by him. Indeed, readers of his weekly internet column in The Guardian will know that he hopes that the provision will be called "Cameron's law" when it is enacted. That would imitate what happens in the United States Congress, where significant legislation is named after the legislators who introduced it. We are not quite there yet, but I hope that my remarks will help him.
      My hon. Friend reminds us that some hon. Members have a direct interest in the Bill. Like him, the Financial Secretary and I have children under one year old who will benefit from child trust funds. He speaks from personal experience of the emotional and financial strain on families with severely disabled children. He is a personal friend as well as an hon. Friend of mine, and I can attest to the fact that he and his wife Sam are extremely loving and caring parents for their son, Ivan. They have been put under enormous pressure and strain and they have coped with it admirably. He is a personal testament to the unsung heroes in many families who deal with very disabled children.
      My hon. Friend reminded us of Mencap's "Breaking Point" campaign, which was very effective. It found that eight out of 10 parents with disabled children are close to breaking point. Indeed, today, in Committee and on Second Reading he has pointed to the gaps in society's provision of respite care—I suppose that I should use the term "short breaks" instead—equipment and support for parents with disabled children, and to the challenges facing severely disabled children who try to lead an independent life once they reach 18.
      2.30 pm
      My hon. Friend's amendments seek to help. They would, as he says, allow families to build up a pot of money to help children achieve as independent a life as possible, and to provide a home for the money given by charities, relatives and other family members. They would also allow for early withdrawal, to enable the provision of specialist equipment and of care in special circumstances. We had several debates in Committee on whether early withdrawal from the child trust fund should be allowed in general terms. Here, of course, he is talking about a specific case and about specific needs that the child trust fund could meet.
      I shall anticipate some of the objections that might be raised, the first of which is that such a provision could be open to abuse: that it could be used as some form of tax
      660
      avoidance scheme. Frankly, that is a highly unlikely, fairly low-risk possibility. In any case, there are limited tax advantages to child trust funds. There are many other tax loopholes that the Inland Revenue could spend its time investigating. I cannot see that such a provision would be widely abused.
      The second objection that might be levelled is that parents would withdraw the money and spend it on themselves: that they would abuse the rights that we would be giving them. Again, that is highly unlikely. We are talking about parents who have taken it upon themselves to look after their children, rather than throwing in the towel and saying that they cannot cope. Moreover, they are the kind of parents who will have built up a significant child trust fund, so they are unlikely to abuse it at a later point. However, we would be willing to look at restrictions that the Minister might want to place on the number of early withdrawals, or on the proportion of the fund that could be withdrawn at a particular time. Indeed, as my hon. Friend said, we could consider protection of the initial Government contribution, so that it could not be withdrawn early.
      The third objection that might be raised is that it would be difficult to police how the money is being used, even if it is being spent on the child. My hon. Friend's new clause sets out some of the uses to which that money could be put, but if the Minister feels that such a provision would be impossible to police I suggest that she simply trust that the parents would make good use of the money in such circumstances. In the light of that and of the restrictions to which I have referred, perhaps that would constitute a sufficient safeguard.
      I remind the House that my hon. Friend received generous support from other Members when we discussed this issue in Committee, including from the hon. Member for Yeovil (Mr. Laws), who spoke for the Liberal Democrats, and from the hon. Member for Angus (Mr. Weir), who has just spoken eloquently in support of what my hon. Friend seeks to achieve. Indeed, my hon. Friend also enjoyed the support of the hon. Member for Lancaster and Wyre (Mr. Dawson). He was the most vocal Labour Member in Committee— two contributed regularly; all the others were silent—and he made a number of good contributions, including in respect of these new clauses and amendments. He said that my hon. Friend's
      "proposal fits with the future model of social care that the Government want: it fits with a model in which more users of services are given the ability to determine their own services through direct payments."
      He continued:
      "There was some agitation on the Labour Benches because Members were genuinely taken by the strength of the hon. Gentleman's argument and the good idea that he has expressed. I hope that the Minister will be able to respond positively to the suggestion that has been made."
      Of course, the Minister did just that, and my hon. Friend and I were slightly taken aback by the enthusiastic support that she offered. We had always been led to believe that one achieves absolutely zero in Committee when in opposition, so we were absolutely delighted when she said that she found his amendments
      "forceful, interesting and creative. He highlights an opportunity that could be provided by the child trust fund and employs the sort of creativity that I would like to see applied to the fund as it develops over the coming years."

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      She was
      "struck by the force of his arguments",
      and said:
      "I would like to go away and consider the proposal, and to see whether we could work up a scheme to deal with such a category of person. I am advised that we could do that through regulation… if it is possible …I would introduce a further regulation, perhaps a few weeks later, to deal with the issue."—[Official Report, Standing Committee A, 15 January 2004; c. 167–172.]
      So the Minister was quite specific, and I know that, privately, she is very sympathetic to my hon. Friend's suggestion. Indeed, she has gone to considerable lengths to look at the technicalities and practicalities involved. I suspect that some of her officials in the Inland Revenue are presenting her with all manner of practical problems and objections. I urge her to override them, to exercise her ministerial discretion and to get the job done.
      New clause 2 deals with the tragic cases of children with terminal illnesses. It would allow the parents—the shorthand term for a "responsible person", which is the phrase used throughout the Bill—of a terminally ill child to withdraw anything up to the full amount from the child trust fund. In such circumstances, parents would require a certificate from a consultant, attesting that the child had a terminal illness. That consultant would have to be practising in the NHS, and be
      "qualified by speciality to make a professional diagnosis and prognosis regarding the child's illness".
      My attempted definition of terminal illness—arriving at it was not a particularly pleasant way to spend yesterday afternoon—is:
      "an illness which, in the opinion of the consulting physician, is inevitably progressive, the effects of which cannot be reversed by treatment (although treatment may be successful in relieving symptoms temporarily) and which will be likely to result in the child's death before his eighteenth birthday."
      The purpose of the new clause will be obvious to the House. The funds in the child trust fund of a terminally ill child could be used to bring a little happiness and relief in a desperate situation. They could be used, for example, to pay for a special holiday or treat, or for palliative treatment or special care if, for some reason, the NHS was not providing it. Everyone will doubtless agree that it would be a cruel situation if a family who could not afford such things, except through the money in the child trust fund, could access that money only on the death of the child. There would rightly be great public concern at such a situation, and one can imagine cases grabbing the public's attention in a fairly lurid way. That would undermine much of the good in the child trust fund proposal.
      The Government did look at this issue, but according to the White Paper they decided that they could not tackle it—for what I would regard as fairly bureaucratic reasons. The White Paper states:
      "Where a child develops a terminal illness, parents may want access to CTF funds"—
      child trust fund funds—
      "to pay for medical treatment or a special holiday. Although entirely understandable, particularly where parents have made contributions to the fund, the Government is concerned that this would be very difficult to administer fairly and with sensitivity.
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      It is also possible that some people would make fraudulent claims to access the money in the CTF account.
      In view of the difficulties and risks involved, the Government does not intend to allow access to CTF accounts in these circumstances."
      I suggest to the Minister that the prospect of fraud is extremely limited, not least because, if she adopted something like the safeguards set out in my new clause, a certificate from a consulting physician would be required, which would also help to provide sensitive and fair administration of the system. The alternative to the occasional case of fraud is far worse: a dying child who is deprived of the use of their money because of some pedantic concern.
      In Committee, the Minister was pretty positive on this issue; indeed, she was pretty positive about virtually everything that we said in Committee. She said that she was
      "struck by the arguments about terminal illness, which the Committee has already debated, and I shall consider whether parents of terminally ill children should have … access to the fund."—[Official Report, Standing Committee A, 15 January 2004; c. 172.]
      I know that she is sympathetic, but I would be grateful for further assurance that she is prepared to move forward on the issue and perhaps introduce regulations this year. We want to avoid the parents of a dying child being unable to access the pot of money or spend it to good purpose while the child is alive, and having to wait for the child to die before they can access the funds.
      Mr. David Laws: We have had a good airing of the issues surrounding new clauses 1 and 2 and their associated amendments today, and we discussed the same issues in Committee, so I can keep my comments relatively short. The hon. Member for Tatton (Mr. Osborne) highlighted the two issues in the provisions: first, early access for parents of children with terminal illness; and secondly, the circumstances described by the hon. Member for Witney (Mr. Cameron)—early withdrawal and the terms under which parents or responsible adults of disabled children can put moneys into the child trust fund accounts.
      In common with the hon. Member for Tatton, I hope that the Minister will confirm today that the Government will introduce regulations to deal with the problems facing parents of terminally ill children. I understand the Government's earlier comments and their concerns about the difficulty of implementing a particular scheme, but the hon. Member for Tatton has dealt with the point in stressing that we are talking about only a relatively small number of children. His new clause 2 is very good—something of a Rolls-Royce of its type, with excellent drafting on the involvement of medical practitioners. It contrasts powerfully, I am afraid, with my own amendment No. 58, which looks merely at the reassignment of child trust fund accounts for this particular category of children. I happily support new clause 2, and I hope that no Division will be necessary. I know that the Minister spoke with understanding and sympathy in Committee and I hope that she can give us the undertakings that we seek on that matter today.
      The Minister has more difficult issues to deal with in respect of new clause 1 and the associated amendments tabled by the hon. Member for Witney. I set out our

      663
      views in Committee and I have considerable sympathy and understanding for the hon. Gentleman and, indeed, all individuals who have care of disabled children. That is why I have an instinctive sympathy with his new clause. I also have sympathy with it in speaking for a political party that is sceptical about the whole value of the child trust fund accounts and believes, as the hon. Member for Witney put it, in giving more power to parents rather than to the state.
      As I said in Committee, I wonder whether new clause 1 cuts away at the basis for a child trust fund account, which is essentially to lock away a pot of money from birth to the age of 18 and prevent its use even where the parent might decide that the money could be used more effectively during the childhood period than at the age of 18. One could also imagine urgent circumstances in which parents whose children are not disabled might wish to draw early on the child trust fund account. That applies not just in the tragic and extreme case of terminally ill children—other aspects of deprivation could lead a parent to decide that the moneys could be better utilised rather than being tied up in the child trust fund account up to the age of 18. The key issue is whether the parent might want to put moneys into the fund account in the first place or, as mentioned by the hon. Member for Witney, choose to use a different account to accumulate funds—a more accessible account, but with similar tax advantages.
      I hope that the hon. Member for Witney understands that I have complete sympathy with the purpose of his new clause and that I hope that the Minister will give ground on it, not least because it underlines some of the weaknesses of the child trust fund account in denying access to people and children who could use some of the moneys in a far more effective way.
      The Financial Secretary to the Treasury (Ruth Kelly): I am sure that the whole House would wish to congratulate the hon. Member for Witney (Mr. Cameron) on his new arrival. We should also pay tribute to him for the way in which he spoke about his first son and how he brought his personal experience to bear on circumstances in which many parents find themselves. I am sure that, in listening to his arguments, we all feel that he made a persuasive and powerful case on their behalf.
      2.45 pm
      The hon. Member for Witney argued that parents of disabled children should be allowed to access child trust funds before the child reaches the age of 18—in the best interests of the child. He also argued that the annual limit on contributions should be higher than the currently proposed £1,200 limit. I have given much thought to his proposal and I understand his arguments. I shall not repeat the arguments in favour, because the whole House has heard them set out very persuasively and they will be available for all to read in Hansard. People who follow the events of the House can read them there.
      I am not going to argue that support for disabled children has increased markedly since 1997—in financial and non-financial aspects—even though it has. The hon. Gentleman brings a different argument to bear, which has wider implications than the provision
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      that the Government have made on this matter. However, I want to expose the House to some of the Government's thinking on the subject.
      The first major question that we have to answer is whether the child trust fund is the most appropriate vehicle for well-wishers, friends and the local community to invest money on behalf of a child. Is there an argument for the £1,200 limit to increase so that well-wishers and relatives can add further contributions beyond that already proposed? Having looked into those questions, I concluded that there is no real tax advantage to be gained, because contributions to children's savings accounts by anyone other than a child's parents are not affected by the income tax settlements legislation. In other words, the child can incur interest on an account in excess of £100 a year if the gift of that money, or that endowment, is provided by relatives and friends rather than the child's parents.
      If the purpose of increasing the limit is for others to contribute to the child trust fund, there is no inherent reason why the child trust fund route is appropriate because the tax advantages are already in the system. It would be possible to open an instant access account for well-wishers and others to invest on behalf of the child. Indeed, an endowment of £65,000 could be built up without triggering the income tax threshold of the child. so a fairly substantial sum could be built up by well-wishers and relatives in that way. It would be possible for disabled children to have twin accounts—a child trust fund account with the initial Government endowment building up so that the child has an asset at the age of 18, and a parallel account built up so that parents can have instant access to the money whenever they judge it the most appropriate moment to use it.
      Given that there are other vehicles that also have tax advantages, should the aims of the child trust fund be skewed or distorted to the potentially very good end of giving the parents of disabled children access to the account? I have considered at least three questions that have a bearing on this matter. First, will disabled children feel disadvantaged if parents decide to access the account before their children reach 18 years of age? This question is relevant to the comment of my hon. Friend the Member for Lancaster and Wyre (Mr. Dawson), who said that children at 18 need to develop autonomy and responsibility, and that they should have a financial asset to back them up.
      The question is also relevant to the Barnardo's argument, raised by the hon. Member for Witney, that disabled children aged 18 face greater transitional costs. Those costs need to be met, and parental access to the account before children reached 18 could raise questions about whether the account had been run down. Would children feel disadvantaged if parents were able to access the accounts? The hon. Gentleman argues that more money might be invested in the child trust fund to start with, but that is open to debate.
      Secondly, would the growth of the initial endowment be diminished by possible early or frequent withdrawals? If that happened, the endowment built up over time would be lower. Thirdly, would stakeholder child trust fund accounts still be the appropriate vehicle for disabled children? That question was touched on by the hon. Member for Angus (Mr. Weir). Stakeholder accounts are primarily equity based, and lifestyling requirements mean that they move from riskier assets in

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      a child's early years to safer ones later on. Would those factors be appropriate in an account with the potential for early access? I think that the answer is probably not, but I can reassure the hon. Gentleman that it would be possible for parents of disabled children to choose a non-stakeholder, cash-based account instead.
      Mr. Weir: A parent may want to access an account fairly quickly. Stakeholder accounts are based on equities and depend on the state of the market at any given time, so it might not be feasible or reasonable to access them. Would it not make more sense to have the money in a more easily accessed account from the beginning?
      Ruth Kelly: Of course, parents could choose a cash-based account at the outset, but there is nothing to stop them transferring the fund from an equity-based account to a cash-based account. The regulations make it clear that no exit penalty would be attracted, and I would like to think that the process would cause little delay. I hope that the hon. Gentleman is reassured on that point.
      The next set of questions has to do with proportionality. Would the administrative burden on providers and the Inland Revenue be proportionate to the policy objective, given that other vehicles exist for achieving that objective? The initial proposal from the hon. Member for Witney was that receipts could be provided by the families of disabled children. They would be checked, and it would be for the Inland Revenue to determine whether it would be in the best interests of the child to part with the money.
      The proposal would involve a significant administrative burden. Moreover, it is at least arguable that that burden would not be proportionate to the policy objective. However, I have undertaken to consider whether there might be less labour-intensive ways to achieve the same goals, and whether restrictions or safeguards could be built in, along the lines suggested by the hon. Member for Tatton (Mr. Osborne). Such possibilities raise different sets of questions.
      Finally, what is the constituency of support for this sort of change? Is there a demand—among disabled people, the parents of disabled children and disability groups—for the proposal? In Committee, I promised to consult disability groups on the matter. The hon. Member for Witney read some of the responses that he has received from disability groups. The response has been somewhat mixed, and it is not clear that the proposal has a strong basis of support. However, I undertake to consider the arguments further and to have a more in-depth consultation with disability groups. If a consensus emerges for the changes that have been proposed, I shall undertake to consider them seriously to see whether a sensible change can be implemented that would satisfy all concerned.
      I am afraid that I cannot give the hon. Member for Witney a greater assurance than that at this stage, but I certainly agree to meet him over the coming weeks. I want to continue to engage him in the work on taking this agenda forward. I hope that we can persuade him of the rightness of the changes that we propose to make.
      Mr. David Ruffley: Will the Minister clarify the resource implications for the
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      Exchequer if the amendments were to be accepted in due course? She has not touched on that matter so far. Secondly, new clause 2 relates to the terminally ill —
      Ruth Kelly indicated assent.
      Mr. Ruffley: The Minister is nodding, so I am sure that she is about to deal with the question that I want to ask. However, I shall put my question on the record anyway. It seems that the Inland Revenue has concerns about when discretion might be exercised in cases where terminally ill children with only 12 months to live, as certified by a medical practitioner, need to draw money from the child trust fund. My understanding is that life insurance policies already pay out for adults in similar circumstances, where medical certification is available. Will the Minister clarify that matter? The Inland Revenue seems to be talking about a problem already covered, for adults, by existing products.
      Ruth Kelly: It is not clear that there would be significant resource implications for the Exchequer from the system offering tax advantages in addition to what is already available, but the Inland Revenue would face a significant additional administrative burden, in that it would have to set up the system and run it. The burden on providers would also be greater. We do not know how serious that administrative burden is likely to be, and I am not able to tell the House today what our best estimate is. However, I pledge to keep the hon. Gentleman informed of progress on this matter. I hope that we can work towards a sensible system, as he desires.
      On terminal illness, I am persuaded of the case for change for the parents of terminally ill children. However, I cannot give hon. Members the assurance that they seek in respect of the exact details of such a scheme. I have considered the proposal put forward by the hon. Member for Tatton, but at first sight there seem to be some difficulties with it. A certificate from an NHS doctor may be the best way to tackle the matter, but less burdensome ways to achieve the same goal may be found. Again, I pledge that we will continue to examine the matter thoroughly. If there is a reasonable way to achieve the goal, we will introduce regulations to that effect.
      I hope that I have given the House sufficient guarantees that we are looking at these matters seriously. If I think that we can deal with them in a proportionate and appropriate way, we will do so.
      Mr. Cameron: I am grateful for the Minister's undertaking to look at these matters carefully and to see what progress can be made. She is right to listen to the lobby groups, and I am listening to them too. Inevitably, they focus on the statutory services provided by social services and the NHS. I shall ask them to talk as much as they can to their Members of Parliament, with a view to enlightening them and ordinary members of the public about the suggestions that I have made.
      The Minister asked whether the child trust fund was the right vehicle. I think that it is because, like Everest, it is there. That is the main point: all children will have the fund. Other accounts may be worth while, but not everyone will have them or know how to get them. The

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      child trust funds will be available for everyone, so other factors become somewhat secondary. I am keen to work with the Minister to get my proposals on to the statute book, as I think that would be a good thing. In the meantime, I am happy to withdraw new clause 1. I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    New Clause 3

      OPENING BY RESPONSIBLE PERSON WITHOUT VOUCHER
      In the case of each child who is first an eligible child by virtue of section 2(1)(a) and was born on or before 31st August 2002 a responsible person may apply to the Inland Revenue, in a manner prescribed by regulations, to open a child trust fund account.

      Upon receipt of an application, the Inland Revenue must give the responsible person concerned written authorisation to open a child trust fund account.

      A responsible person may, by giving the written authorisation to an account provider, apply to open for the child with the account provider a child trust fund of any description provided by the account provider.

      On receipt of the authorisation the account provider must—

      open, in accordance with regulations, a child trust fund of that description for the child and

      inform the Inland Revenue in accordance with regulations.'.—[Mr. George Osborne.]

      Brought up, and read the First time.
      3 pm
      Mr. George Osborne: I beg to move, That the clause be read a Second time.
      Madam Deputy Speaker: With this it will be convenient to discuss the following: New clause 8—Uprating of Inland Revenue contributions in line with inflation—

      The amount of Inland Revenue contributions under sections 8 to 10 other than—

      original contributions, or

      initial contributions the amount of which is determined in accordance with the provisions of section [determination of initial contributions for children born before 1st April 2005],
      shall be determined in accordance with the provisions of this section.

      The amount of a contribution to which this section applies shall be increased from the previous applicable amount with effect from 1st April in every calendar year by such amount as the Treasury determines is required to maintain the value of the amount in real terms.'.

      New clause 9—Determination of initial contributions for children born before 1st April 2005—

      This section applies for the purpose of determining the amount of initial contributions for eligible children born during the period beginning with 1st September 2002 and ending with 31st March 2005.

      The amount of the initial contribution for eligible children born during the period beginning with 1st September 2004 and ending with 31st March 2005 shall be 107 pen cent. of the amount prescribed by regulations under section 8(1A).

      The amount of the initial contribution for eligible children born during the period beginning with 1st September 2003 and ending with 31st August 2004 shall be 107 per cent. of the amount determined in accordance with the provisions of subsection (2).

      668

      The amount of the initial contribution for eligible children born during the period beginning with 1st September 2002 and ending with 31st August 2003 shall be 107 per cent. of the amount determined in accordance with the provisions of subsection (3).'.

      Amendment No. 1, in page 1, line 13 [Clause 2], leave out '2002' and insert '1988'.
      Amendment No. 2, in page 2, line 26 [Clause 2], leave out subsection (7).
      Amendment No. 8, in page 3, line 29 [Clause 5], at end insert
      'and was born after 31st August 2002'.
      Amendment No. 62, in page 4, line 31 [Clause 8], after 'regulations', insert
      'under subsection (1A) or determined in accordance with the provisions of sections [uprating of Inland Revenue contributions in line with inflation] or [determination of initial contributions for children born before 1st April 2005]'.
      Amendment No. 11, in page 4, line 34 [Clause 8], at end insert—
      '(1A) Regulations under subsection (1) must prescribe an initial contribution of nil in respect of any child trust fund held by a child born on or before 31st August 2002.'.
      Amendment No. 63, in page 4, line 34 [Clause 8], at end insert—
      '(1A) Regulations under this subsection shall prescribe the amount of the initial contribution in respect of children born during the period beginning with 1st April 2005 and ending with 31st March 2006 ("the original contribution").'.
      Amendment No. 64, in page 5 [Clause 9], leave out line 3 and insert
      'determined in accordance with subsection (2A) or with the provisions of section [uprating of Inland Revenue contributions in line with inflation]'.
      Amendment No. 12, in page 5, line 3 [Clause 9], at end insert—
      '(2A) Regulations under subsection (2) may prescribe a supplementary contribution of nil or a lower rate of supplementary contribution in respect of any child trust fund held by a child born on or before 31st August 2002.'.
      Amendment No. 65, in page 5, line 3 [Clause 9], at end insert—
      '(2A) The original contribution payable under subsection (2) shall be twice the amount prescribed by regulations under section 8(1A) or determined in accordance with the provisions of section [determination of initial contributions for children born before 1st April 2005].'.
      Amendment No. 66, in page 6, line 9 [Clause 10], leave out from 'Revenue' to first 'of' in line 10.
      Amendment No. 67, in page 6, line 14 [Clause 10], leave out from 'by' to end of line and insert
      'regulations under subsection (2) or determined in accordance with the provisions of section [uprating of Inland Revenue contributions in line with inflation]'.
      Amendment No. 13, in page 6, line 14 [Clause 10], at end insert—
      '(1A) Regulations under subsection (1) may prescribe a further contribution of nil in respect of any child trust fund held by a child born on or before 31st August 2002.'.
      Amendment No. 68, in page 6, line 15 [Clause 10], leave out subsection (2) and insert—
      '(2) Regulations under this subsection shall prescribe the initial amounts of contributions payable under subsection (1), which shall be expressed as amounts payable to children reaching a

      669
      specified age during any period beginning with 1st April and ending with 31st March of the following calendar year ("the original contributions").'.
      Mr. Osborne: I thank the Minister for her remarks about new clause 1 and her commitment to looking again at the terminal illness clause. I join my hon. Friend the Member for Witney (Mr. Cameron) in his remarks about considering the scheme for parents with disabled children.
      New clauses 3, 8 and 9 and the consequential amendments would allow the responsible person to open a child trust fund for a child born before 1 September 2002 but without the initial Government contribution or any top-up at age seven—so my proposal should not add significantly to the burden on the taxpayer; I would not have secured the support of my right hon. and hon. Friends in the Treasury team otherwise.
      Parents could set up a child trust fund account for an older child for savings of up to £1,200 a year, with a tax-free sum for the child when he or she turns 18. Amendments Nos. 8, 11, 12 and 13 make it clear that there would not be a Government contribution. In Committee, I restricted that arrangement to children born since 1992, who are not now teenagers. That arrangement drew some criticism—particularly from the hon. Member for Hastings and Rye (Mr. Foster), who commented:
      "I support the principles that the hon. Member for Tatton displays in wishing to extend the benefits of this excellent scheme, which I wholly support. However, he is too modest in seeking…to extend it only to those born after 1992. If we want to benefit all children, we should extend it to all children. For that reason, I shall not support an amendment that simply creates a divide different from that which already exists."—[Official Report, Standing Committee A, 6 January 2004; c. 25.]
      I was happy to heed the hon. Gentleman, so the proposed amendments broaden the scope of the scheme, opening it up to all children born after 1988. By the time the scheme is introduced, it will be open to all children under the age of 18. The hon. Member for Hastings and Rye is not in his place but I look forward to his support when he reads my comments in Hansard tomorrow.
      The benefits of extending trust funds to all children are obvious. The Government want to encourage children to save, and parents to save for their children, which is wholly admirable—but why restrict that ambition to newborn children? Why not give parents the opportunity—not force them—to open trust funds for older children who were not lucky enough to be born when the scheme was up and running? That would help people such as the Minister and myself, who will have children who qualify and children who do not. We may find it difficult to explain, when our children reach 18, why one has a child trust fund and another does not.
      The Minister and the hon. Member for Yeovil (Mr. Laws) have made the point that other savings vehicles are available, but as my hon. Friend the Member for Witney said, that argument could be deployed against the entire concept of a child trust fund—the beauty of which is their simplicity and the fact that all children could have one. Such funds allow parents to tell their children, "You're all getting the same, except the initial
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      contribution." Parents with older children might be encouraged to save because that would piggyback on the Government's publicity campaign that the Financial Secretary is planning to coincide with the launch of child trust funds. My proposal would also remove the potential disincentive for parents such as myself, who may not want to single out one child for special treatment, and could be discouraged if they have some children who qualify and some who do not.
      My proposal has widespread cross-party support, such as that of the Treasury Sub-Committee, whose excellent report concluded:
      "We consider that the natural reaction of parents with children born on either side of the cut-off date will be to try to see that they are treated equally. This may mean that those parents with sufficient financial resources will make additional provision for children who do not qualify for a Child Trust Fund account. We believe they would be encouraged to do this if Child Trust Fund accounts, identical in all respects save the absence of a Government endowment, were available for their other children…In light of the evidence that the costs of the Treasury of the extra tax relief afforded by Child Trust Funds is negligible, we recommend that consideration be given to extending the availability of Child Trust Fund accounts but without Government endowments, to children before 1 September 2002."
      Both Labour Members who spoke on Second Reading also supported my proposal. I must say that as this is Government flagship policy, the Labour Whips did poorly in fielding only two speakers—and half the Labour Members in the Chamber at the moment are Whips.
      In Committee, the proposed change was supported by the hon. Member for Dumbarton (Mr. McFall), the Chairman of the Treasury Select Committee, and by the hon. Member for Hastings and Rye—and I have overcome his objection that my amendment was not ambitious enough. The initial objections of the Financial Secretary were difficult to understand—that is a polite way of putting it. They were not made on the grounds of cost because the hon. Lady had already told the Sub-Committee:
      "We had to make a costing assumption for the purposes of the Red Book and we came up with the conclusion that the cost of the extra tax relief"—
      for the entire scheme—
      would be negligible."
      The cost of extending the scheme to older children would also be negligible.
      The Financial Secretary deployed a curious argument to do with the administrative burdens on financial providers. She said on Second Reading:
      "We have looked at that"—
      that is, the proposed extension of the scheme—
      "extremely carefully, and I am disappointed to tell the House that the administrative burden on providers of allowing all children from previous cohorts to benefit from an identical tax-free vehicle is disproportionate to the benefits that would be offered."
      The hon. Member for Hastings and Rye intervened to ask:
      "Is that not a problem anyway? As time goes on, greater numbers will apply, so in 18 years' time people would have to deal with that volume of applications in any event."
      The Financial Secretary had to concede that the hon. Gentleman was right and that

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      "a greater number of children will have such accounts over time, but providers have made it quite clear that the scheme needs to be phased in."—[Official Report, 15 December 2003; Vol. 415, c. 1394.]
      I do not know which financial providers the Minister had spoken to, but all the financial providers and trade organisation representatives to whom I spoke were in favour of extending child trust funds to elder children.
      The Minister's argument on Second Reading was comprehensively knocked down by the chief executive of Children's Mutual, David White, who wrote to all members of Standing Committee A:
      "The Minister in her remarks at Second Reading argued that one reason for not extending the Child Trust Fund to ineligible children is that it would impose a burden on providers. We would be happy to work with the Government on how any administrative burden could be overcome, something we believe to be possible."
      Thankfully, the Minister listened to the arguments advanced in Committee with the help of some of the more vocal Labour Members, and said:
      "Having heard the strength of feeling on the matter, I am perfectly willing to talk to providers to see whether they think that there would be a gap that needed addressing.'
      She continued:
      "I undertake to ask providers whether they believe that such unmet demand exists or is likely to exist so that we can review the situation in the future."—[Official Report, Standing Committee A, 6 January 2004; c. 30.]
      The Minister was true to her word. I happened to bump into David White in the Commons about two days later. He said, "Thanks very much for what's going on in Committee, because the Inland Revenue has already been in touch with Children's Mutual, and no doubt others, and is working up a scheme." He confirms those comments in the briefing that his company has provided to all Members for this debate, which says:
      "We are delighted that the Government has agreed to consider opening up the Child Trust Fund wrapper to families of children born before September 2002 and look forward to continuing discussions on this development."
      I have tabled the new clause and the amendments so that we can discuss these matters now, on Report. I confess that they are much less elegant than the amendments that I tabled in Committee, but I was told that I had to come up with a different device so that we could discuss the same subject on Report. I have come up with a slightly less elegant version of what we did in Committee, but it is really only a device for getting some assurances from the Minister that discussions are ongoing, that she is talking to the providers, and that she is prepared to identify the regulatory changes that are needed, if any. She has indicated that none may be necessary. She may be right about that, but will she give me some specific assurances? That is the reason for all these amendments. If some regulatory changes are required, will she give an undertaking to make them?
      Mr. Laws: I shall not deal with the issues that have just been covered by the hon. Member for Tatton (Mr. Osborne). As we pointed out in Committee, we are not in favour of the Bill or the child trust fund accounts, so we do not seek their extension to any other cohorts of children.
      I shall speak to new clauses 8 and 9 and amendments Nos. 63 to 68, which would lay down in a little more detail the basis on which the inland Revenue
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      contributions will be calculated over time. At present, most of those issues seem to be left entirely to the discretion of the Chancellor and the Treasury, so new clause 8 would index some of the contribution levels to the rate of inflation, while some of the amendments would fix the relationship between particular levels of contribution. For example, amendment No. 65 fixes the supplementary contribution at twice the initial contribution.
      I seek clarification from the Financial Secretary on an issue on which I thought we had made some progress in Committee: in essence, how much compensation will be paid by the Treasury because people entitled to child trust fund accounts from 1 September 2002 onwards will not receive the moneys until April 2005? I was expecting to tease the Financial Secretary by indicating that I thought that she would offer compensation at the rate that she anticipated the accounts would yield—that is, the 7 per cent. that the Government said would be yielded over time, which is an 8 per cent. rate of growth minus a 1 per cent. assumed level of charge.
      3.15 pm
      In Committee, to my surprise, the Financial Secretary said:
      "The hon. Member for Yeovil queried the assumption of a 7 per cent. nominal rate of growth. I assure him that it is the rate recommended by the FSA in its "conduct of business" handbook as a fairly cautious estimate of future growth. We are aware that children born after the qualifying date of 1 September 2002 but before April 2005, when the first payments are to be made, will lose out on the potential growth of the fund over that time."
      However, she went on to say:
      "I intend to make up for the difference in the regulations, and I can announce that the value of the endowments will reflect a 7 per cent. growth of the fund in nominal terms for each cohort or financial year in that period, but the exact figures will be laid down in regulations."—[Official Report, Standing Committee A, 13 January 2004; c. 120.]
      As we have finally been given the regulations, we can see that paragraph 7, on page 7, which deals with Government contributions, indicates how they are to be uprated to account for the fact that people will not actually get their hands on the money until April 2005.
      Perhaps it is just me—I do not know whether my brain is not working properly today—but those amounts seem lower than I would have expected from the application of a 7 per cent. yield, compared with the amounts that would be expected by children who would otherwise have received them from September 2002 onwards. I had assumed that the Minister would be generous—or, to put it another way, fair—in her calculation of the amounts, but the amounts set out in paragraph 7(ii) on page 7 of the regulations are somewhat mean in the application of the 7 per cent. yield, compared with the amounts that would be received by individuals in their child trust fund accounts.
      For example, sub-paragraph (ii) indicates that children born between 6 April 2003 and 5 April 2004 would receive £268. That seems to reflect an uprating factor of roughly 7 per cent., so anyone born during that period will receive a 7 per cent. uprate. However, children born at the beginning of the period, who would not otherwise receive their money until April 2005, could forgo two years of yields at 7 per cent. I have been

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      unable to work out the method of calculation under subparagraph (iii), which applies to children born between 6 April 2004 and the day preceding the appointed day—I assume that will be the end of March or the beginning of April 2005. The amount specified to be received by that cohort is only about £256, which seems to be a yield of only 2.5 per cent.
      There seems to be a gap between what we might have expected those cohorts to receive, with the full application of the 7 per cent. yield, and the amount that they will actually receive. I seek clarification from the Minister about how those amounts were calculated. Does she consider that the calculation is fair, especially to people born at the beginning of the periods in question? For example, a child born on or just after 6 April 2003 might have expected to receive 7 per cent. compounded for two years. There appears to be a gap between what the Financial Secretary is delivering and the undertaking that was made in Committee, so it would be helpful to have clarification on that point.
      Ruth Kelly: We have already held a significant debate in Committee about whether siblings should qualify for a look-alike child trust fund without Government contributions. It is a shame, but I have to say that the hon. Member for Tatton (Mr. Osborne) rather misrepresented my position on Second Reading. In fact, I argued that if we allocated accounts to all siblings of children who qualify for a child trust fund account, there would be 10 million shell accounts, which would be an unwarranted burden for providers. They would not welcome that additional burden at this time.
      However, I recognised in Committee, as I recognise now, that there could be—indeed, would be—many parents who wanted to open similar accounts for older children and add their own endowment to the fund on a voluntary basis. That is a completely different proposition, with a much reduced impact and burden on providers. I continued to argue in Committee that if there was a demand for such a product, there was no reason why the market should not provide—and, indeed, market—a look-alike product for older siblings when marketing the child trust fund for younger siblings. It would be open to providers to offer a similar account; they could offer a charge cap which matched that on their child trust fund product, or they could offer a lifestyling facility which matched that on the child trust fund. The main difference between the accounts would be their tax treatment.
      I argued, however, that the child's income from savings would not be enough to incur tax in most cases. Children have the same personal allowance as adults—currently £4,615—and the parent is taxed only when a gift from a parent produces more than £100 gross income a year. I said that I was sure that the industry would provide a look-alike product without a Government endowment if there were sufficient demand in the marketplace for such a product. However, I did commit to consult providers on whether they thought that there would be a gap in the marketplace if the Government did not step in to offer a product identical to the child trust fund for older siblings.
      The Inland Revenue and I have undertaken some informal consultations with those in the industry, which has confirmed that of course, an identical product would
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      make life easier for them. However, they have also said that they would undoubtedly step into the market to provide a look-alike product on the day of the launch and that they would see that as opportunity to market a savings vehicle for older siblings, as well as the child trust fund to younger siblings.
      If we were to offer an identical child trust fund product—without the Government endowment, of course—to older siblings, it could not be up and running by 2005, which is the launch date of the child trust fund. Given that providers think that the market seems to exist and that they intend to fill that gap, we should monitor the situation to find out whether, after the launch of child trust fund products, parents feel that their demands have not been properly met, or providers feel that they have not had the opportunity to fill a gap in the marketplace. That issue will have real resonance for parents, but it will be fulfilled and taken up by the market place.
      Mr. George Osborne: What regulatory changes does the Financial Secretary think would be required to provide an identical product? What is the main regulatory problem? What would have to be changed?
      Ruth Kelly: As the hon. Gentleman correctly identified, we have been working up proposals so that we would be able to meet any unfilled gap in the market, if such a gap were identified. However, he will know that we are still at a very early stage of any plan, and I will continue to consider whether any change in regulation is required. If we find evidence of a gap in the marketplace and regulation is required to fill it, that is clearly something that we would consider.
      On new clause 8, the hon. Member for Yeovil (Mr. Laws) asked us to commit to raising the Government contributions in line with inflation. It is only fair to say that it is much more sensible for the Government to keep the structure and level of the endowments under review, in the light of the progress and future evaluations of the child trust fund. I know that he is sceptical about the merits of the child trust fund, but surely he would agree that it is sensible to take into account how it develops before committing ourselves to stating in the Bill how that endowment will be increased in the future. The regulation-making powers that we are taking will enable us to develop the child trust fund further to achieve policy objectives if the evaluation of the policy suggests that that is a good idea.
      New clause 9 and the related amendments suggest what the retrospective payments to children born between September 2002 and April 2005 should be. As the hon. Gentleman suggested, those extra payments were set out in the draft regulations, published on 2 February 2004. All children born between September 2002 and April 2003 will receive £277, with those entitled to the higher amount getting an additional £266. Those born between April 2003 and April 2004 will get £268, with those entitled to the higher amount getting an additional £258, and those born between April 2004 and April 2005 will get £506. The hon. Gentleman suggests that that is somehow not generous and fair. In fact, I believe that it is both generous and fair. For example,

      675
      those figures do not include any allowance for the administrative cost to the Government, whereas, as he rightly points out, the illustrative figures in the projections included an amount for the charge cap.
      Mr. Laws: I wonder whether the Financial Secretary is taking this opportunity to trim back on her earlier commitment. Will she acknowledge that anyone born between 6 April 2003 and 5 April 2004 will essentially get the same compensation as though they had been born on the latter date? People born at the beginning of the period, who should get a 14 per cent. uprating, will get only 7 per cent. Why are the Government short-changing people in that way?
      Ruth Kelly: I am sure that the hon. Gentleman will accept that we are not short-changing people. For the initial payment, we calculate growth at the middle of each band, so there will be some winners and, undoubtedly, some losers. However, for administrative simplicity, we have averaged over the bands. For the supplement, we took April at the end of each band, which is when the supplement would be given to the family in the usual course of events. Given that the child tax credit has to be claimed, the hon. Gentleman will understand that the second payment is normally made after the first payment. In no sense have we short-changed families. In fact, we have been both generous and fair—while, of course, ensuring value for money for the Government. The figures were calculated using a 7 per cent. nominal rate of return in accordance with FSA guidelines, as the hon. Gentleman suggests. Given that we have fulfilled his requirements, I ask him to reconsider his new clauses.
      Mr. Laws: I thank the Financial Secretary for giving way one more time. I remain dissatisfied about the way in which the Government will compensate people, but what does she expect to be the total cost of delivering all the amounts that it is now anticipated will be delivered in one go, in the 2004–05 fiscal year?
      Ruth Kelly: I do not have figures to hand on the total cost of the changes. I think that I gave them to the hon. Gentleman in Committee, but if I did not, I apologise. I will certainly write to him with those figures, but I can assure him that the amounts are fair, and no one is being short-changed. Given the hon. Gentleman's consideration of those factors, I hope that he will not press any of the new clauses to a Division.
      Mr. Osborne: I pretty much welcome what the Minister said about new clause 3, although the hon. Member for Yeovil (Mr. Laws) made it pretty clear what he thinks of what she said about his new clauses. My brief experience of politics shows me that when there are winners and losers, the winners do not thank people, but the losers complain. We shall see what happens with people born between 1 September 2002 and the date of the implementation of child trust funds.
      I turn to new clause 3, which I moved. I am sorry if I misrepresented what the Financial Secretary said on Second Reading, but that was an understandably easy mistake given that my thoughts were shared by the hon. Member for Hastings and Rye (Mr. Foster) and by Children's Mutual. I am sure that what she said was
      676
      clear. She was right to point out that there are other savings vehicles—she regularly points that out—but as my hon. Friend the Member for Witney (Mr. Cameron) said at the start of our consideration on Report, that argument could be deployed against the entire Bill. She said that during her informal consultation, the providers said that an identical product would help them—I think that those were her words. She has given a commitment to monitor the situation so that if she finds a gap because of unmet demand that requires regulatory change, she will consider doing taking action.
      3.30 pm
      Although I shall not press new clause 3 to a Division, I send a message from the Dispatch Box to financial providers. If they become aware of unmet demands, believe that it would significantly help their marketing if they were able offer child trust funds to older children, and think that would encourage savings and help the child trust fund scheme to work from its launch, I urge them to make representations not only to me, but to the Financial Secretary, so that she will get on with making any regulatory changes that might be necessary. With that, I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

      New Clause 4

        REDUCTION OF AGE OF MAJORITY IN RESPECT OF CHILD TRUST FUNDS
        'For the purpose of any contact entered into in respect of a child trust fund, the age of majority shall be 16.

        The Family Law Reform Act 1969 (c. 46) is amended as follows.

        After section 1 insert—

        "1A Reduction of age of majority in respect of child trust funds

        For the purposes of any matter specified in subsection (2) which relates to a contract entered into in respect of a child trust fund, a person shall attain full age on attaining the age of sixteen

        Those matters are—

        any rule of law, and

        the construction (in the absence of a definition or of any indication of a contrary intention) of the expressions listed in section 1(2) and similar expressions in—

        any statutory provision, whether passed or made before, on or after the date on which this section comes into force; and

        any deed, will or other instrument of whatever nature (not being a statutory provision) made on or after that date.

        Subsections (6) and (7) of section 1 shall apply to the provisions of this section as they apply to the provisions of that section.

        In this section 'child trust fund' has the meaning given by section 1(2) of the Child Trust Funds Act 2004."

        In section 28(4) (extent), after paragraph (a) insert—
        (aa) section 1A extends to Northern Ireland;".'.—[Mr. George Osborne.]
        Brought up, and read the First time.
        Mr. George Osborne: I beg to move, That the clause be read a Second time.
        Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following: New clause 5—Designation of responsible person by young parents—

        677

        'This section applies to a person who has parental responsibility in relation to a child who is under the age of 18 or, in Scotland, 16 (person A).

        Person A may designate another person (person B) who is over the age of 17 or, in Scotland, 15 as the responsible person in relation to the child for whom person A has parental responsibility.

        Person B must inform the Inland Revenue that he has been designated as the responsible person in respect of the child.

        Regulations may prescribe—

        the required method of designation under subsection (2),

        any requirements relating to person B informing the Inland Revenue under subsection (3), and

        the circumstances in which person B shall cease to act as responsible person on or after the day on which person A reaches the age of 18 or, in Scotland, 16.'.

        New clause 11—Early withdrawal by young person in full-time employment—

        If this section applies to a child, that child may withdraw funds from his account in accordance with the provisions of subsections (4) and (5).

        This section applies to a child if—

        a child trust fund is held by the child,

        the child is over the age of 15, and

        the child is in full-time employment.

        Regulations may prescribe—

        the meaning of "full-time employment" for the purposes of this section, and

        the manner in which proof of full-time employment is to be provided for the account provider.

        A child to whom this section applies may apply to withdraw amounts from the fund, including the whole amount of the fund.

        On receipt of the proof of full-time employment prescribed by regulations under subsection (3)(b) and an application, the account provider must—

        release the amounts requested to be withdrawn, and

        inform the Inland Revenue in accordance with regulations.'

        Amendment No. 76, in page 2, line 44 [Clause 3], leave out 'as' and insert
        'in accordance with the provisions of section [early withdrawal by young person in full-time employment] or as otherwise'.
        Government amendments Nos. 33 and 34.
        Amendment No. 5, in page 3, line 3 [Clause 3], after second 'person', insert
        'so designated in accordance with the provisions of section [designation of responsible person by young parents] or a person'.
        Amendment No. 6, in page 3, line 8 [Clause 3], leave out '18, or in Scotland,'.
        Amendment No. 7, in page 3, line 9 [Clause 3], leave out', in Scotland,'.
        Government amendment No. 35.
        Amendment No. 9, in page 3, line 33 [Clause 5], leave out from 'or' to 'to' in line 34 and insert 'where subsection (2A) applies'.
        Amendment No. 10, in page 3, line 34 [Clause 5], at end insert
        '(2A) This subsection applies in the case of a child—

        who is such an eligible child because of section 2(3), or

        678

        in respect of whom a person has informed the Inland Revenue that he is the responsible person in accordance with the provisions of section [designation of responsible person by young parents](3).'.

        Government amendments Nos. 40 and 42.
        Amendment No. 77, in page 10, line 39 [Clause 20], after '3(4)(d)', insert
        'or by section [early withdrawal by young person in full-time employment]'.
        Government amendment No. 49.
        Amendment No. 28, in page 16, line 15 [Clause 30], after 'Act', insert
        'except section [reduction of age of majority in respect of child trust funds]'.
        Amendment No. 29, in page 16, line 16 [Clause 30], at end insert—
        '(2) Section [reduction of age of majority in respect of child trust funds] extends to Northern Ireland, but does not extend to Scotland.'.
        Mr. Osborne: I wish to speak to new clauses 4 and 5 and their consequential amendments, and I am sure that the hon. Member for Yeovil (Mr. Laws) will speak to new clause 11.
        New clause 4 would give children aged 16 and 17 the power to manage their own child trust fund accounts, although it would not give them the power to make withdrawals from them. In effect, it would extend to children aged 16 and 17 in England, Wales and Northern Ireland the same rights that the Bill gives to 16 and 17-year-olds in Scotland, owing to a quirk of Scottish law.
        The Bill's current drafting gives rise to all sorts of anomalies that we discussed in Committee. If people lived just over the border in England and opened a child trust fund account in a local village bank in Scotland, could the child manage it at the age of 16 or 18? If I walked into a branch of the Royal Bank of Scotland and opened an account for my daughter, could she manage that at the age of 16 or 18? If people born in Edinburgh moved to London on their 16th birthday—or at any other point—how would that affect the management of their child trust funds? When I read the Bill, I thought that the provisions would be a recipe for chaos and administrative complexity and that the situation would force providers to keep track of their Scottish and English customers.
        Mr. Weir: I am interested in what the hon. Gentleman is saying, but is it not something of a red herring? The situation already exists because the age of majority in Scotland has been 16 for as long as anyone can remember. Financial institutions already face the problem with existing policies and investments, but it does not seem to have caused a difficulty until now.
        Mr. Osborne: The hon. Gentleman makes a fair point, but the Government have caved in by accepting my proposal, so they obviously think that there is merit in what I am suggesting.
        I repeat a point that I made in Committee that goes beyond the technical aspects of the situation. It would be wrong to deprive 16 and 17-year-olds in England, Wales and Northern Ireland of the chance to manage their accounts. Surely one of the objectives of child trust

        679
        funds is to improve financial education for our children, and one of the best ways to do that would be to involve them directly in the management of their own accounts—that could be tied in with school lessons.
        The potential for damage to accounts and poor investment would be limited. For a start, most of the accounts will be lifestyle accounts, so risk will be minimised by the time that children reach 16. Indeed, given that children will have attended classes at school in which they will have discussed the accounts, they may well be better informed and able to make better choices than their parents.
        The Minister seemed convinced by the force of our arguments in Committee, but she was worried that we would undermine the foundations of contract law in the United Kingdom—that was certainly not my intention.
        She said in Committee:
        "this is not to do with anomalies between the general law in England and that in Scotland, but with whether, in England, we want children under 18—perhaps those over 16—to have some say in the management of their accounts. I put it to the Committee that there are real difficulties in changing contract law on that point. I certainly undertake to consider whether it is a simple issue, but I suspect that it is much more complicated than hon. Members appreciate. If the hon. Gentleman wishes, I shall come back to him on Report to give an update on the complexities of changing contract law."— [Official Report, Standing Committee A, 6 January 2004; c. 74.]
        Thankfully, unless I have misunderstood, it seems to be not all that complex, because Government amendments Nos. 34 and 35 achieve exactly what I wanted and urged, and with considerably greater elegance than my amendment. Indeed, amendment No. 35 is a model of simplicity. It says:
        "Where a contract is entered into by or on behalf of a child who is 16 or over in connection with a child trust fund—

        held by the child, or

        held by another child in relation to whom the child has parental responsibility,

        the contract has effect as if the child had been 18 or over when it was entered into."
        It is extraordinary how the entire basis of contract law can be changed by a single sentence saying that the situation is as it would be if the child were 18. I am delighted that the Minister has with such elegance been able to overcome that problem.
        I wonder if the hon. Lady could clarify the situation of parents who are themselves 16 or 17 years old. The Bill as originally drafted had a cumbersome process by which the Inland Revenue would manage accounts for the children of 16- and 17-year-old parents. My new clause 5 was designed to allow parents under 18, or under 16 in Scotland, to designate an adult as the responsible person who could manage their child's account until the parents themselves became adult. I thought that they could designate, for example, a grandparent or another relative. It seemed sensible, and it would avoid having to involve the Inland Revenue, with all the administrative cost that that would entail.
        I should be grateful if the Minister would confirm, first, that I have understood her amendments correctly and that she is giving 16 and 17-year-olds the power to manage their own accounts, and, secondly, that the effect of subsection (6)(b) of Government amendment No. 34 is that parents aged 16 and 17 will be able to
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        manage their children's account. That deals with the thrust of my argument in both new clause 5 and new clause 4.
        I have one final point on parents aged under 16. Is the Minister saying that their accounts will have to be administered by the Inland Revenue? Does she hold open the prospect of allowing a parent under the age of 16 to nominate a grandparent or other relative to manage the child's account for them, and in a sense not force the Inland Revenue to step in? It is a small point, but there are, sadly, a relatively significant number of children born to people who are under the age of 16, so the situation will arise on a weekly basis.
        All in all, the Government seem to have listened to and accepted almost all the arguments that we advanced in Committee. I tabled the amendments merely to provoke a discussion; indeed, I tabled them before I had seen the Government amendments. I am delighted that the Government have listened. This was not a matter that any financial provider or institution put to me. When I was reading through the Bill, trying to dream up all kinds of amendments to keep the Committee busy, I came across it, and I am pleasantly surprised that the Government have recognised that there is a problem and that they are correcting it.
        Mr. Laws: I too welcome the Government new clauses and amendments in this group.
        It would have been daft if the Government had stuck to their previous position in respect of the management of accounts, so that those over the age of 16 could not manage their own accounts, particularly if the Government are saying that one of the benefits of the child trust fund account is that it is supposed to encourage people to be more financially aware and take responsibility for monetary matters. Yet we were in the ridiculous situation whereby, even at the ages of 16 and 17, people would not be able to manage their own accounts, while, even more daftly, in Scotland people could. There would have been a complete anomaly across the borders within the United Kingdom, so I am relieved that the Financial Secretary has tabled a very elegant and unbelievably simple amendment to correct the problem.
        New clause 11 and the associated amendments encourage the Government to go a little further than they may be willing to go. In their own amendments, the Government have given way to the case developed by the hon. Member for Tatton (Mr. Osborne), which we supported in Committee, for allowing children aged 16 and 17 to manage their own child trust fund accounts and, we hope, for allowing parents aged 16 and 17 to manage the child trust fund accounts of their children. It would be bizarre if that were not permitted under the Bill. Nevertheless, in respect of withdrawals, individuals aged 16 and 17 are treated as though they should have no responsibility and it should be a matter entirely for parents.
        When we discussed these matters previously, I reminded the Committee of the existing entitlements under the law at the age of 16. People of that age can leave education, enter full-time employment, have sex, smoke, play the national lottery, join a trade union, apply for a passport, pay tax, pay national insurance and, with parental consent, join the armed forces, get

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        married or leave home. We know that the Government are consulting on giving the vote to young people aged 16 and over. Under those circumstances, it seems bizarre that the Government are not considering allowing young people to access their child trust fund accounts at the age of 16, especially as one of the stated objectives of the account is to assist people starting off in employment.
        As the Minister knows, many young people leave school at 16 and do not go on to take A-levels or enter higher education. Many of them start their employment at 16 or 17. As the Government said earlier that they would like people to draw down their child trust fund account to provide the up-front capital for training or for the equipment that they might need in their places of work, it would be sensible to allow young people going into full-time work at 16 or 17 to draw down their child trust fund accounts.
        New clause 11 would allow young people who go into full-time work at the ages of 16 and 17 to draw down their child trust fund accounts so that they can use their moneys in the way that the Government intend—to help them as they start off in employment. It is a middle way between the extreme position that young people ought to be able to manage and access their child trust fund accounts at the age of 16, and the more moderate proposal tabled by the hon. Member for Tatton and accepted by the Government that would allow young people to manage their accounts but not access them at the age of 16.
        We suggest that young people who go into full-time work should be treated in a different way and be able to access their child trust fund accounts, and that the help that the Government intend should be available for people when they go into work should be available for this category of young people, who could make good use of the moneys at such an age.
        Ruth Kelly: As the hon. Member for Tatton (Mr. Osborne) explained, the main purpose of new clause 4 and the connected amendments is to reduce the age at which young people can have full legal control over their child trust fund accounts from 18 to 16. In Committee, he set out a case for allowing 16 and 17-year-olds in England, Wales and Northern Ireland to manage their child trust fund accounts, as 16 and 17-year-olds in Scotland will be able to. I do not believe that this is a devolution issue. The hon. Member for Angus (Mr. Weir) made an appropriate and fair point.
        This is not a problem for the Government, but I accept that it is an opportunity for us. As the hon. Members for Tatton and for Yeovil (Mr. Laws) pointed out, one aim of the child trust fund scheme is to improve people's financial education. In Committee, I accepted the argument that we should use the opportunity to consider whether children of 16 and 17 in England, Wales and Northern Ireland should also be able to manage their child trust fund accounts. The hon. Member for Tatton also argued that, following financial education classes, children of 16 and 17 could well be better placed to make informed decisions than their parents.
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        3.45 pm
        The hon. Gentleman was clear about his intention to restrict solely to child trust funds the change in the law allowing persons aged 16 and 17 in England, Wales and Northern Ireland to enter into contracts to buy or sell equities. I am persuaded by those arguments. Further to the points that he made, I can see that if young people take a responsible role in managing their accounts, that will encourage them to make better and more considered decisions about how to use those funds when they turn 18 and gain access to them. Lowering the age of majority for the child trust fund will help very young parents, who will be able to administer their own child's account once they are 16, not 18. However, new clause 4 and the related amendments are not drafted in the best way to achieve those objectives. I think that the hon. Member for Tatton would accept that the Government amendments will better allow 16 and 17-year-olds in England, Wales and Northern Ireland to manage their child trust fund accounts by making a simpler change to the Bill.
        The Government amendments give children aged 16 in England, Wales and Northern Ireland the legal capacity to give instructions for the management of their child trust fund accounts. That does not alter the rule that there can be no withdrawals from the account until the age of 18. We do not want to give children wider capacity to engage in all sorts of investment contracts—nor, I believe, do the Opposition. The advantage of the amendment is that it does not require the alteration of any other statute, so the drafting is more direct.
        I understand that the hon. Gentleman is concerned about the position of under-age parents and tabled new clause 5 to address the fact that parents under 18 would not be able to manage the child trust fund accounts of their children. Delegating parental responsibility would be a radical departure from general law, which provides that parental responsibility cannot, as a personal responsibility, be transferred. I hope that his concerns will be allayed by the Government amendments, which mean that parents over the age of 16 will be able to manage their children's accounts. Statistics show that the vast majority of under-age parents are between the ages of 16 and 18. However, it remains the case that, as I outlined in Committee, if a parent is under the age of 16, their child's account will be opened directly by the Inland Revenue and invested in a stakeholder product.
        Government amendments Nos. 33 and 34 ensure that, at any one time, only one person can give instructions about managing a child trust fund account. Where the child is aged 16 or over, it will usually be the child—otherwise, it will be a responsible person such as a parent or someone else with parental responsibility. That is to prevent possible confusion where more than one person has parental responsibility.
        On those grounds, I ask the hon. Member for Tatton to withdraw his new clause and associated amendments and to support the Government amendments.
        The amendments tabled by the hon. Member for Yeovil would allow 16-year-olds entering full-time employment to access their funds. On Second Reading, he argued that there was no obvious reason why those 16-year-olds should have to wait two years before accessing the funds in their child trust fund accounts,

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        and he argued that again today. I am afraid that, as he suspected, that is a step too far for the Government. We have heard persuasive arguments that children should have to wait until they are 21, or even 25, to gain access to the funds, so that they are mature enough to decide how to use them. I do not accept that. The age of 18 strikes an appropriate balance, because it recognises that a child has reached the age of maturity, but does not allow undue access before then.
        Mr. Laws: Does the Financial Secretary accept that young people who go into full-time work at the age of 16 assume enormous responsibilities, yet the Government's position is that they cannot exercise responsibility over the money in their child trust fund accounts and use it sensibly?
        Ruth Kelly: I would not argue that in any particular case, whether a child is entering full-time employment at 16 or full-time education, they may or may not be responsible enough to exercise and make reasonable judgments about their future. An appropriate balance must be struck for the majority of children between allowing them to have access to the funds to further their goals, and forcing them to wait until they are sufficiently mature to make those decisions in their best interests. I do not think that the particular category of children who enter full-time employment at the age of 16 should be singled out. We must decide what is the appropriate age of maturity at which such decisions can be sensibly made. A balance must be struck, and that balance should be struck at the age of 18. For those reasons, the hon. Gentleman should accept the Government's case.
        Mr. Osborne: This is an extraordinary moment that I must savour. I doubt whether in my time in opposition, which will of course be short-lived, I will again be able to point to an area of the law that I helped to change in such an obvious way. As a result of the Government amendments and the arguments that I advanced, 16 and 17-year-olds will now have the power to manage their own child trust fund accounts. I hope that that teaches them about providing savings for themselves, and that it helps them when they learn about child trust fund management in their classrooms. I look forward to 16 and 17-year-olds around the country writing to me to thank me for this new right that I have secured for them, but I suspect that I may have to wait a long time for the first letter.
        The Financial Secretary is right that the Government amendments are far simpler and more elegant than mine. I merely took her at her word when she said that the matter was complex, so I went off to think of some complex thing that I had to do. As it turns out, it is simple. I am genuinely delighted that the Financial Secretary has listened and responded—she is a model, and other Ministers should follow her example—and secured the agreement of senior members of the Government Whips Office. I beg to ask leave to withdraw the motion.
        Motion and clause, by leave, withdrawn.

      New Clause 6

        ADDITIONAL CONTRIBUTIONS BY INLAND REVENUE FOR CHILDREN IN CARE
        'If this section applies to a child The Inland Revenue must inform the account provider with whom a child trust fund is held by the child that this section applies to the child.

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        If the account provider makes a claim to the Inland Revenue in accordance with regulations, the Inland Revenue must pay to the account provider such amount as is prescribed by regulations.

        The amount prescribed by regulations under subsection (2) shall be calculated so as to represent a percentage of the average value of subscriptions to child trust funds made during the preceding financial year.

        On receipt of payment the account provider must credit the child trust fund with the amount of the payment.

        This section applies to a child if—

        a child trust fund is held by the child, and

        the child was first an eligible child by virtue of section 2(1)(b).'.—[Mr. George Osborne.]

        Brought up, and read the First time.
        Mr. George Osborne: I beg to move, That the clause be read a Second time.
        Mr. Deputy Speaker: With this, it will be convenient to discuss the following: New clause 10—Additional contributions by Inland Revenue for children in care (No. 2)—

        'If this section applies to a child the Inland Revenue must inform the account provider with whom a child trust fund is held by the child that this section applies to the child.

        If the account provider makes a claim to the Inland Revenue in accordance with regulations, the Inland Revenue must pay to the account provider in respect of each year during which this section applies to the child such amount as is determined in accordance with the provisions of subsection (3).

        That amount shall be twelve times the minimum amount prescribed by regulations for any subscription.

        On receipt of the payment the account provider must credit the child trust fund with the amount of the payment.

        This section applies to a child if—

        a child trust fund is held by the child, and

        the child is an eligible child by virtue of section 2(1)(b).'.

        Amendment No. 69, in page 4, line 34 [Clause 8], at end insert—
        (1A) The amount prescribed under subsection (1) in respect of children to whom section [additional contributions by Inland Revenue for children in care (No. 2)] applies at the time the initial contribution falls to be made shall be four times the amount prescribed in respect of other children.'.
        Amendment No. 14, in page 6, line 31 [Clause 11], after '10', insert
        or [additional contributions by Inland Revenue for children in care]'.
        Amendment No. 70, in page 6, line 31 [Clause 11], after '10', insert
        or [additional contributions by Inland Revenue for children in care (No. 2)]'.
        Amendment No. 17, in page 10, line 27 [Clause 19], leave out 'and'.
        Amendment No. 18. in page 10, line 31 [Clause 19], at end insert
        and
        (d) that the Inland Revenue was required under regulations under section [additional contribution by Inland Revenue for children in care] to make a payment in respect of the child but either the payment had not been made or, if it had, the amount of the payment had not been credited to the child trust fund held by the child.'.
        Amendment No. 71, in page 10, line 31 [Clause 19], at end insert
        and
        (d) that the Inland Revenue was required under regulations under section [additional contributions by Inland Revenue for children in care (No. 2)] to make a payment in respect of the child but either the payment had not been made or, if it had, the amount of the payment had not been credited to the child trust fund held by the child.'.
        Amendment No. 21, in page 11, line 3 [Clause 20], after '10', insert
        [additional contributions by Inland Revenue for children in care]'.
        Amendment No. 72, in page 11, line 3 [Clause 20], after '10', insert
        [additional contributions by Inland Revenue for children in care (No. 2)]'.
        Amendment No. 22, in page 11, line 9 [Clause 20], after '10', insert
        or section [additional contributions by Inland Revenue for children in care]'.
        Amendment No. 73, in page 11, line 9 [Clause 20], after '10', insert
        or section [additional contributions by Inland Revenue for children in care (No. 2)]'.
        Amendment No. 23, in page 11 [Clause 20], leave out line 33 and insert
        9(3) or [additional contributions by Inland Revenue for children in care]'.
        Amendment No. 74, in page 11 [Clause 20], leave out line 33 and insert
        9(3) or [additional contributions by Inland Revenue for children in care (No. 2)]'.
        Amendment No. 24, in page 13, line 3 [Clause 22], after '10', insert
        or [additional contributions by Inland Revenue for children in care]'.
        Amendment No. 75, in page 13, line 3 [Clause 22], after '10', insert
        or [additional contributions by Inland Revenue for children in care (No. 2)]'.
        Mr. Osborne: I suspect that I will not make as much progress with this new clause as I did with the previous one, but it is worth trying because the issue that I am trying to address is children in care. The issue was raised on Second Reading, and gave rise to one of our best debates in Committee, in which more than the usual number of Committee members participated. Unfortunately, it is one of the few areas in which the Financial Secretary has not been prepared publicly to indicate any significant change, although she was careful not to rule out change in the future. I hope that we can secure a firmer commitment from her today—we shall see.
        As I said in Committee, the chances of children in care are among the poorest in our society. When I was preparing for this debate, I went through the statistics, which are indeed striking. Only 53 per cent. of the 6,400 young people who left care last year had at least one GCSE or GNVQ, compared with 95 per cent. of all
        686
        children. Only 8 per cent. of children in care achieved at least five good GCSE grades, compared with 50 per cent. of all children. Only 56 per cent. of children leaving care remain in full-time education at year 11, compared with 72 per cent. of all school leavers.
        The Office for National Statistics says, rightly and sensibly, that
        "educational achievement is felt to be an important indicator of children's life chances".
        Its words are sadly borne out by the example of children in care, whose poor educational achievement is such that 24 per cent. of those who leave care are unemployed by the September after they leave school, compared with 6 per cent. of all school leavers. In the past year, 10 per cent. of children aged 10 or over in care were cautioned or convicted—three times the rate for children of their age—and 49 per cent. of children in care end up in prison at some point.
        The record is depressing and we should all feel some shame. The state assumes the ultimate responsibility for bringing up children in care, so it is depressing that we have such poor results. Many of the reasons for their poor life chances and educational attainments are beyond the scope of the Bill. They are to do with the children's background, the emotional disturbance and possible abuse that they may have suffered in their families, and their upbringing in local authority care. However, perhaps another reason is that they have so little stake in society.
        It is undeniable that, at 18, almost all children in care lack anything like the sort of financial support on which most people can count from their families as they start work or seek higher education. The Bill goes to considerable lengths to give children in care some sort of start in life. I fully commend the Government for their efforts to ensure that those children get a child trust fund that is properly set up at the right time and that they receive the full £500 initial contribution. However, I am sure that the Financial Secretary agrees that, apart from the Government top-up contribution, not many people, if any, will make additional contributions to the child trust funds of children in care. I do not claim that there will not be instances of people making contributions, but I am sure that the generalisation is correct and that those children are unlikely to enjoy significant contributions to their child trust funds.
        By the time that children in care reach the age of 18, they will have approximately £1,000 and perhaps a little more in their child trust fund. I do not claim that £1,000 is insignificant and I do not dispute the reports and statistics that the Financial Secretary deployed in Committee and when she appeared before the Treasury Sub-Committee. They showed that even £1,000 can make a significant difference to people's attitude to saving and is a substantial asset for people on low incomes. It is also a vast improvement on what many children in care currently have.
        As the hon. Member for Lancaster and Wyre (Mr. Dawson) said, some local authorities give children a sum of money on leaving care, but others give them, as he memorably put it, no more than a bin bag in which to take their clothing. One of the great advantages of child trust funds is that, for the first time, all children in care will have a substantial asset by the time they reach 18.

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        We could do more, or at least look to do more. New clause 6 would require the Inland Revenue to make additional contributions, which would be pegged as a percentage of the average value of child trust fund subscriptions in the previous year. I suggest that partly because if child trust funds are a success and people use them, the contributions to children in care will also increase. If it is clear that many people are making contributions to their children, it is fair that children in care should not be left behind.
        I freely concede that the other reason for pegging the contributions as a percentage of the average value of child trust fund subscriptions in the previous financial year is that I had to suggest a new device, different from the one that I tabled in Committee. That proposal would have put a proportion of child benefit—otherwise forgone for children in care—into a child trust fund. I believe that that probably has more elegance and merit than my current proposal, but I had to change it.
        I accept that the new clause carries a financial cost, which depends on the size of the contribution. We cannot therefore include an accurate figure. If the proposal that I tabled in Committee were implemented and fully taken up—if all forgone child benefit were paid into the account of all 60,000 children in care for the relevant year—the cost, according to the Library, would be £33.5 million. However, the sum that we would pay in under the new clause could be far less than the £560 that the proposal that I tabled in Committee would entail. Children tend to move in and out of care, and would not necessarily receive the full amount during a year. Therefore, £33 million is at the top end of what the proposal might cost; I suspect that it would cost significantly less. I do not want to be seen to be profligate, so I have left the amount to be decided by future regulations and made it subject to affordability.
        4 pm
        My proposal in Committee received general support, not least from the hon. Member for Lancaster and Wyre, who spoke with considerable experience and knowledge, and mentioned a lady who had brought the matter to his attention. He made the important point—perhaps he will seek to catch your eye today, Mr. Deputy Speaker—that local authorities will have an important duty to help to educate and work with children in care so that they are not simply handed a large lump sum at the age of 18, with none of the educational equipment needed to manage their account. He tabled an amendment that, unfortunately, could not be selected for technical reasons, but his point was well made.
        Unfortunately, the Minister was not quite as enthusiastic as the hon. Member for Lancaster and Wyre. She said on Second Reading that local authorities might consider making contributions to child trust funds. That is certainly the case, but I was looking, as were other hon. Members, to central Government to do more themselves. In Committee, the Minister used a rather Whitehall argument to knock down my suggestion that we pay child benefit into the child trust funds of children in care, saying that child benefit was used to support a family looking after children, not given to the child itself. That was a Sir Humphrey
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        answer, but it knocked down my amendment. Another advantage, therefore, of the change that I have made to the proposal in the new clause is that it would allow the Government to set an amount and pay that into the child trust funds of children in care. I have tried to deal with the Minister's objections.
        When we discussed the matter in Committee, the Minister said:
        "I would not rule out any development in this area in future. As I have made it clear throughout the Committee stage and on Second Reading, this is an evolving policy, and it will develop into all sorts of areas. The most important issue for us is to get the policy up and running, see how it works in practice and monitor its development…However, I absolutely accept the principle that they"—
        children in care—
        "are a disadvantaged group of children and that we should work to maximise their opportunities."
        She went on to say:
        "I am not against the matter in principle and there are interesting possibilities. I said that I am not in a position today to say that that is a policy we will pursue."—[Official Report, Standing Committee A, 13 January 2004; c. 132, 137.]
        I hope that the Minister is able to say a little more now that we have reached Report stage, and at least say that she is working behind the scenes with her officials to examine the feasibility of doing something to help children in care. Perhaps she will agree, as she has over the matter raised by my hon. Friend the Member for Witney (Mr. Cameron), to look at this proposal and, providing that there are not overriding practical or financial objections, consider introducing it. I am not looking to her to give a cast-iron commitment today, but I would love her to say that she is considering my proposal and working behind the scenes with Treasury officials to see whether it is feasible.
        Mr. Dawson: It is a pleasure to follow the hon. Member for Tatton (Mr. Osborne), and I agree with everything that he has said. The spirit behind new clause 6 is generous. I demur in just one respect. It is sometimes too easy for Members of Parliament to focus on the difficulties of children in care. It is right that they should, but we should not let those very serious, and sometimes quite dismal, facts overwhelm us or blind us to the reality that young people come through the care system and succeed. In only a few weeks' time, on 24 February in the Attlee suite, we shall have a celebration of children and young people in care, and I honestly hope that all hon. Members will come along to what will be a joyous and optimistic occasion.
        I commend my hon. Friend the Minister for the way in which she has responded to this issue, not only in Committee but when she and her officials attended the January meeting of the all-party group for children and young people in care. Anyone who was in that room will have enjoyed the spirited, well informed, thoughtful and, indeed, surprising debate. I shall go into further detail on that later.
        I return to the crux of the new clause. There can be no doubt that young people leaving care will be among the most disadvantaged 18-year-olds in our society. They will have had life experiences that would have floored all of us in the House. They will have experienced huge

        689
        difficulties throughout their lives, including family breakdown, abuse, neglect and extreme poverty. They could well have experienced serious dislocation and disruption while in the care system, and they could have been through a large number of homes and schools.
        The Government have done a great service to young people leaving care through the introduction of the Children (Leaving Care) Act 2000, which has placed statutory duties on local authorities in respect of young adults up to the age of 21, or the age of 24 if they are still in education. Regrettably, however, the situation remains patchy across the country. We have pockets of extremely good practice where young people are supported very well indeed but, sadly, there are other parts of the country where they are supported very poorly.
        An important way of addressing that problem will be through the new children's legislation arising from the Green Paper, "Every Child Matters". I look forward to the Bill coming before the House and to the profound cultural and organisational changes that will be required to improve the lot of children and young people in care. Another important way to improve their circumstances, and those of every child in the country, will be to ensure that they have a good child trust fund, that they are able to manage it well, that they understand the significance of having their own money and that they are able to put the money to the best possible use.
        Those young people will face challenges that most other young people will not face. Even if they remain in care into adulthood, they will still embark on adulthood with little of the support that millions of other young adults rely on—extended families, resources, advice, assistance and somewhere to go when they are in trouble. Many young people leaving care will be left to their own devices, and will have no one else to rely on. It is therefore extremely important that we assist them to build up their resources. It is good that the Government will be giving them the full extent of what will be available under the child trust fund scheme. It is important, as I have said, that local authorities and people working with young people in care understand how to help them manage the new assets, as a good parent would do. It is essential that local authorities' leaving care plans take full account of young people's need to have substantial trust funds.
        It is essential, too, that the Government contribute significant extra sums to the trust funds. It is a naive but none the less compelling argument that as young people in care do not have the benefit of child benefit, which ceases to be paid to their parents a few weeks after they go into care, there should be regular contributions to their trust funds. It is important that local authorities, as good corporate parents, are encouraged to contribute to the funds. The situation is patchy, but the Government have a tremendous commitment to children and young people in care, so they may accept that the only way to ensure that all young people in care receive significant contributions to their trust funds and are able to make the very best of them is to make regular payments from a central source.
        That point was very much accepted by young people who attended the meeting in January. However, rather surprisingly, they said that they would not wish to have
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        that money until they were 21. They thought that young people leaving care at 18 would be more vulnerable if a significant asset were put in their hands at the precise time when, perhaps in contrast to other young people at that age, they would be making other major life changes, such as leaving home. They also said, perhaps less surprisingly, that they wanted local authorities to pay very little attention to the amount in their trust funds. They were concerned that if local authorities took account of trust funds they would feel entitled to reduce the money available to them through a leaving care grant and support into higher education, as well as practical and emotional support to which they would otherwise be entitled. They thought that the resources available to them might be diminished and undermined by the fact of their having a child trust fund, which is a tragedy. It would be an indictment of local authorities if such circumstances prevailed.
        Young people in care believe that the substantial assets, such as compensation for criminal injuries, that some of them have received have reduced the amount of support that local authorities were prepared to make available to them. That may not be the Treasury's responsibility, but the Department for Education and Skills certainly needs to take that point on board. Young people's reticence about the age at which they should receive trust funds is understandable, as it is entirely related to the amount of support that they believe will be available to them from the local authority, perhaps provided by a residential worker, foster carer or social carers, who can help young people to understand trust funds and manage them. The Government and local authorities clearly have a huge responsibility to ensure that the people who work with young people in care do so with alacrity, skill and a genuine understanding of the importance of trust funds to them.
        4.15 pm
        A great deal more needs to be done to ensure that the funds work well for young people in care. Nevertheless, anyone who was at last month's meeting or will be at the one later this month will have met, or will meet, young people with intelligence, ability and, in some cases, extraordinary resilience. I believe that they will use their trust funds well, and will benefit from having an asset over which they have complete control.
        That is an important message for young people leaving care. The Government should complement it by assuring those young people that they are prepared to consider whether, in principle, they could make regular payments to the trust fund of every child in care—above and beyond what goes to other young people, above and beyond what they or their parents might contribute, and above and beyond what local authorities might contribute. They should say that, because the state owes a duty of care to such children, they will support them even better.
        Mr. Laws: I agree with what has been said by the hon. Members for Lancaster and Wyre (Mr. Dawson) and for Tatton (Mr. Osborne). There seemed to be widespread agreement in Committee that the Government had a particular responsibility to look after children in care, given that they were essentially in loco

        691
        parentis. It was felt that the children should not lose out even more in relation to the value of trust fund accounts on maturity. That might well happen if no contributions were made by relations, as they would probably be in the case of most other children.
        The problem in Committee was the lack of amendments commanding the support of the Committee as a whole and, in particular, the Financial Secretary, perhaps for understandable reasons. Our amendment focused on the issue of the initial contribution. We accepted that it would be defective if we were to deal with children who might go into care later in their lives.
        Either the hon. Member for Tatton or the hon. Member for Witney (Mr. Cameron) proposed an annual contribution tied to the level of child benefit. Although the hon. Member for Tatton might regard it as something of a Sir Humphrey excuse, I have some sympathy with the Minister's reservations about mixing up a benefit designed for a particular purpose with a contribution to a child trust fund account designed for a very different purpose.
        We wanted to table amendments that would not just get past the hon. Member for Tatton and the Clerk, but meet with the Financial Secretary's approval. I agree with the hon. Member for Lancaster and Wyre that it would not be appropriate for us to rely on discretionary contributions from local authorities, and that if we did so, money for children in care might filter into trust fund accounts to which they would have no access until later in their lives. We certainly would not want to divert money that would go to such children anyway.
        New clause 10 and amendments Nos. 69 and 70 hold on to our first proposal that the initial contribution to the accounts of children in care should be twice that for any other child—in other words, four times the standard contribution and double the amount that would go to children from families on lower incomes. In order to address the annual contribution issue, we have added the proposal that an annual contribution should be linked not to child benefit, but to the minimum subscription that can be put into child trust fund accounts from time to time, perhaps on a monthly basis.
        We discussed the reasonable minimum amount in Committee, and I will not anticipate that argument because we will deal with it in a separate group of new clauses and amendments. The Government have set the minimum subscription at £10, which, I am embarrassed to say, is slightly higher than the sum that I have been paying into my godchild's savings account and may cause me to revise my contribution upwards. Nevertheless, the minimum subscription is a useful benchmark by which to consider the contribution that the Government might feel is reasonable and appropriate.
        In addition to an enhanced initial contribution to the child trust fund accounts of children in care, we propose that the Government should also pay in, presumably on an annual basis but it could be biannual or quarterly, an amount linked to the minimum monthly contribution, assuming that the contribution were paid monthly. In other words, if the amount were paid for a full year, it would be 12 times the minimum subscription rate, which has been set at £10, so it would be £120.
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        Using back-of-the-envelope calculations and the figure that the hon. Member for Tatton cited earlier of 60,000 children in care, that proposal would incur a significantly lower annual cost than his proposal to link contributions to child benefit. The cost would be £7 million to £8 million, which is affordable given that the annual cost of the Bill is likely to be between £250 million to £260 million once it is fully up and running—presumably the cost will be significantly higher once further contributions are made when children reach seven, 11 and 14.
        Such an addition to the cost is affordable, and linking additional contributions for children in care to the minimum subscription is as a good a rough and ready measure as any that we might arrive at using another source. The additional contributions would be linked to the minimum subscription to child trust fund accounts for children who are not in care, where it would be reasonable for the Government to aspire to the idea of people adding such a contribution on to their own children's child trust fund accounts.
        As the hon. Member for Tatton implied earlier, I do not necessarily expect the Financial Secretary to give way on the matter today. The Government have not tabled counter-proposals on children in care that we can debate today, but the Financial Secretary's responses in Committee were helpful and I hope that she can reassure Liberal Democrat Members and some Labour Members that she will go away, examine the issue and introduce a workable proposal to allow additional contributions for that particularly vulnerable category of young people.
        Ruth Kelly: The Bill is about extending life chances, especially to those children who are particularly vulnerable and disadvantaged in our society. I accept that children in care undoubtedly fall into that category, despite their individual successes, to which my hon. Friend the Member for Lancaster and Wyre (Mr. Dawson) has drawn attention. I pay tribute to him for his work with young people in care, and he is right to celebrate their achievements.
        I accept the argument made by the hon. Member for Tatton (Mr. Osborne) that children in care are particularly disadvantaged. The new clauses and amendments seek to boost the child trust funds of those children in care with accounts opened by the Inland Revenue in the absence of a child benefit claim. The hon. Gentleman suggests that few additional contributions will be made to those accounts, but I would not jump to that conclusion. It will be 15 years at least between the setting up of the accounts and the time that the first ones mature, which is a considerable length of time. I do not know how the accounts will evolve in the future, but I suspect that we will see creative and imaginative thinking on how we can best serve the most vulnerable groups in society. I am not convinced that fewer contributions will be made to the accounts of children in care.
        New clause 6 proposes that the Inland Revenue should contribute a sum related to the average value of contributions made to child trust funds in the preceding financial year, whereas new clause 10 would require the Inland Revenue to pay 12 times the minimum contribution level set out in the regulations. It is all too

        693
        easy, as my hon. Friend the Member for Lancaster and Wyre suggested, to point to disadvantaged children and not recognise the successes. I would argue that it is also far too easy to point to the Government and claim that the answer always lies in more financial contribution from the centre. I understand the case that has been made, and I was so attracted to the new clause tabled by the hon. Member for Witney and his thinking on the matter because he recognised that point. There are other ways in which the interests of vulnerable groups can be advanced, and he proposed a creative and interesting solution to advance the interests of disabled children, which I have committed to considering further. We have 15 years before the first accounts mature, and I am sure that we will see innovative thinking on other ways to advance the interests of other vulnerable groups during that time.
        It is true that children in care may be some of the most disadvantaged while they are in care, but the vast majority move out of care and have families to care for them and contribute to their child trust funds, as other children have. While children are in care, there is nothing to stop grandparents, other relatives and friends contributing to their accounts. Indeed, the new clause fails to address the category of children who have a child benefit claim set up for them. When a child is looked after by a local authority, payment of child benefit ceases after the first eight weeks, recognising the fact that the state, rather than the family, effectively maintains such children, including those placed with foster parents. That is right, as the Government provide for the cost of children being looked after through the revenue support grant paid to local authorities for personal social services expenditure. I do not believe that further Government endowments for those children are the best way to help them. Children move in and out of care and any Government payment would be hit and miss in its effect.
        My hon. Friend the Member for Lancaster and Wyre mentioned the important Green Paper, "Every Child Matters", and made a powerful case for engaging young people with their child trust fund plan. Local authorities should be encouraged to consider that account in the pathway plan that they develop with children leaving care. Financial considerations are already taken into consideration in the pathway plan, but I will ensure that specific consideration is given to the child trust fund account. We are already aware of some local authorities that take financial education seriously. For example, Warwickshire county council has introduced a scheme in which a savings account is opened for foster children to help to make them aware of the value of money as they build up savings. However, most financial education will still be delivered through the school curriculum, which is the best place for such education to take place because it reaches all children. In the coming months and years, we will consult various bodies and organisations on financial education and how we can make it real for all children, but especially for vulnerable children.
        Mr. Dawson: My hon. Friend is aware of the work of child-driven organisations such as A National Voice, a national organisation for young people in care, and of
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        the Careleavers Association, an organisation for adults—generally those over 25—who have experience of the care system. Together, they combine the experience of potentially millions of people. Can she assure me that those voices in particular will be heard in the ongoing discussions on the future of trust funds for children in, and leaving, care?
        4.30 pm
        Ruth Kelly: I hear what my hon. Friend says. I shall draw the point that he makes to the attention of the appropriate officials, and make sure that those voices are indeed heard. As part of our consultation, we intend to address the particular needs of looked-after children that may exist, and if possible to include some looked-after children in our consultation, so my hon. Friend's point is well made.
        Given the argument that I have set out, I hope that the hon. Member for Tatton will reconsider his new clauses and amendments.
        Mr. George Osborne: I am very glad that we have had this debate. When I tabled my new clauses and amendments, I was not confident that they would be selected, as we covered this ground in Committee. The Minister did not really open the door to allowing such a discussion on Report, so I was very grateful to Mr. Speaker for allowing us to debate these issues. Through her reply, the Minister has moved matters on, a point to which I shall return.
        I thank the hon. Member for Lancaster and Wyre (Mr. Dawson) for his contribution. I apologise to him if I painted an unnecessarily gloomy picture of children in care—I was trying to build my argument and to give force to what I was trying to achieve. He is of course right to point out that there are some outstanding examples of children in care thriving, of local authorities that do a very good job—of which Warwickshire is perhaps one—and of people working with children in care who do an excellent job. But there are also many examples of children who do not thrive in local authority care, and of local authorities that do not do a very good job and fail their children.
        The Minister said that she is not convinced that the child trust funds of children in care will receive fewer contributions than those of other children. I am glad that she is confident about that, but I do not share her confidence. I suppose that time will tell who is right and who is wrong, but it will not take 15 years. It will be clear after just a few years whether any contributions are being made to the child trust funds of children in care. I hope that the Minister will at least give a commitment to monitor the situation, and to look specifically at the child trust funds of children in care. I know that the Inland Revenue will keep track of this policy in general terms—
        Ruth Kelly indicated assent.
        Mr. Osborne: The Minister nods, but it will be worth looking specifically at what happens to the child trust funds of children in care. As she knows, there is considerable interest throughout the world in the entire child trust fund policy, so such research would benefit

        695
        not just the people of this country but those of other countries, should other Governments follow the example of child trust funds.
        I accept that asking central Government to put more money in is quite a crude mechanism. I suggested it because I am not particularly confident that all local authorities will put money in: there will be good local authorities and bad ones. Something of a postcode lottery could arise, as the hon. Member for Lancaster and Wyre said. As the hon. Member for Yeovil (Mr. Laws) suggests, there could be a fixed amount—I suppose that it would be £120, given that we now know that £10 is the minimum contribution; indeed, in that regard it turns out that the Financial Times was right—or an unspecified amount, to be determined in regulations. However, I accept that whether the amount is fixed or unspecified, such a mechanism is fairly crude.
        I was interested to hear what the Minister said about considering requiring local authorities, as part of the pathway plan, to consider child trust funds and how they can use them. That is a new development, which moves matters on. I should like to think that the Government looked at this issue and decided that that should happen because of our debates in Committee, on Second Reading and on Report, and because of the speeches not only of the hon. Member for Yeovil and myself, but of the hon. Member for Lancaster and Wyre. Because that has happened, I beg to ask leave to withdraw the motion.
        Motion and clause, by leave, withdrawn.

      New Clause 7

        PROHIBITION ON PUBLICITY IN PRE-ELECTION PERIOD
        'The Government shall not advertise or publicise by the distribution of leaflets or other literature the introduction of child trust funds during the pre-election period.

        In this section. the "pre-election period" means the period that—

        starts with—

        the calling of a General Election by the Prime Minister, or

        the day that falls twenty-five days before any Parliament shall cease to have continuance in accordance with the provisions of the Septennial Act 1715 (1 Geo 1 Stat 2 c 38),
        whichever is the earlier, and

        ends with the day of the ensuing General Election.'.—[Mr. Laws.]

        Brought up, and read the First time.
        Mr. Laws: I beg to move, That the clause be read a Second time.
        Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government amendments Nos. 44, 45 and 51.
        Amendment No. 26, in page 15, line 14 [Clause 27], leave out subsection (2).
        Amendment No. 27, in page 15, line 17 [Clause 27], at end insert—
        '(4) No order may be made under subsection (3) before the dissolution of the present Parliament.'.
        Amendment No. 81, in page 15, line 17 [Clause 27], at end insert—
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        '(4) No order may be made under subsection (1) before the dissolution of the present Parliament.'.
        Government amendment No. 52.
        Mr. Laws: The Liberal Democrat new clause 7 deals with the prohibition of publicity and advertising in the pre-election period. It is a particularly sensitive and important issue, because of the timing of the payment by the Government of the initial amounts that will go into the child trust fund accounts. That will happen for those entitled to it by the likely date of the general election, and the Government are also paying out in 2005 all of the amounts to which individuals are entitled backdated to 1 December 2002. That might give rise to a particular temptation on the part of the Government in what might be the run-up to the general election in spring 2005 to devote much publicity and advertising to that particular disbursement of funds in the expectation that the effect may not be wholly unfavourable for the general election.
        We debated some aspects of the issue in Committee. I drew the Committee's attention to the Cabinet Office report entitled "Information Activities during a General Election", which specifies some of the existing limitations on Government advertising in the run-up to election periods. Paragraph 10(g) of the paper, under a section entitled "Paid Media", states:
        "New advertising campaigns will in general be postponed and running campaigns closed. However, some advertising (for example recruitment, health and safety) might be specifically approved to continue by the Head of the GICS in consultation with the Central Secretariat, Cabinet Office."
        An additional later section appears to go further than advertising campaigns alone, stating:
        "In addition, it has always been recognised that special care must be taken during the course of an Election since information material produced with complete impartiality which would be accepted as objective in ordinary times, may excite criticism during an Election period when feelings are running high."
        We debated some of the issues in Committee and some of the Financial Secretary's responses were to some extent contradictory. Towards the end of her comments, she said:
        "I was a little surprised that the hon. Member for Yeovil felt that new clause 11 was necessary. During any general election campaign the Government retain their responsibility to govern, and essential business must go on. It has long been the practice that, where possible, activities such as advertising are stopped for the duration of the pre-election period. The period starts when the Prime Minister calls a general election and asks the Queen for the dissolution of Parliament, and it ends once the result of the election is known. Under those rules, the operation of the child trust fund would continue during an election campaign, but any advertising surrounding its launch would cease."
        In other words, she seemed to believe that I merely wanted clarification and assurance that my new clause 11 was already the Government's practice. She meant that there was no need for concern about the Government hyping up the measure at a sensitive time because the Government would shut down advertising, as the new clause sought.
        However, when the hon. Lady concluded her speech, instead of accepting my new clause, which merely asked the Government to confirm that advertising should not take place during that period, she urged the Committee to reject the amendment. She said:

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        "Parents need a basic level of information to allow them to make sensible choices on behalf of their children".
        A little earlier, she had said:
        "It is essential to the operation of the policy that parents are well informed when they receive the voucher and have the opportunity to open a CTF account. That is at the heart of the financial education programme embedded in the Bill. Clearly, during such a period"2014;
        the run-up to the election—
        "the child trust fund information pack would be distributed to all parents, and I would be very surprised were the hon. Gentleman to suggest that we should not distribute such an information pack."—[Official Report, Standing Committee A, 20 January 2004; c. 232.]
        That raises a problem for the child trust fund account. Although the Government may seek to abide by the letter of the rules and regulations by ending what could be considered to be advertising campaigns, they will retain a strong incentive to inform people as much as possible about the child trust fund account. We need some clarification from the Minister about where the boundary between advertising and publicity will be drawn. That is why new clause 7 says:
        "The Government shall not advertise or publicise by the distribution of leaflets or other literature the introduction of child trust funds during the pre-election period."
        Of course, the election period may not cover the spring of 2005. The date about which everyone is speculating may not be the date of the general election, as the Government may decide to delay it further. The major launch of the child trust fund accounts may have happened already, and the problem may not arise. However, it is possible that a May 2005 election might take place just as the Government launch a major campaign to publicise the payments to be made for cohorts of children going back to 1 September 2002.
        If that happened, it would conflict with the advice given in the Cabinet Office paper to which I have already referred. Direct mail literature sent by the Government to inform people about the child trust fund account may cause concern in an election period. The Government need to be sensitive to this problem, as the number of people entitled to the payments is so large.
        I hope that the Minister will confirm that if the child trust fund scheme is launched in the run-up to a general election, there will be no advertising campaign. Also, I hope that she will set out the safeguards that will be put in place to ensure that none of the publicity or information material associated with the payments can be perceived to be political, or an attempt to underpin the Government's prospects in the campaign.
        Mr. George Osborne: We now come to the politics of the debate—a shame, given the constructive afternoon that we have had so far, in which hon. Members have worked together to improve the Bill. At the outset, let me say that I think that the Minister's motives in introducing the child trust funds are entirely pure. I have no doubt that she genuinely wants to encourage saving, to improve financial education and to build up the financial assets of those who are least well off in our society. However, she is surrounded by others who have impure thoughts and regard child trust funds as a clever election ploy.
        Mr. Richard Bacon: Where are they?
        4.45 pm
        Mr. Osborne: My hon. Friend asks where they are, but I can tell him that they are not here: they lurk in the shadows, surrounding the Minister in the Treasury and in Downing street. The timings involved in the child trust fund proposals are strikingly suspicious. The proposals were announced in the April 2001 Budget, just a month before what was then the expected date of that year's general election. The scheme is due to be launched in April 2005—just one month before the most likely date of the next general election. Government amendment No. 44 reveals for the first time the date of the scheme's implementation as 6 April 2005. That date is not totally unexpected, and will appear on the face of the Bill. Any flexibility that remained in the legislation to delay implementation if the processes for delivering child trusts are not ready will disappear.
        I am not a cynical person, and thought that curious timing—with the scheme's announcement one month before the last general election and its implementation one month before the likely date of the next general election—was just coincidence. Then I came across the minutes of the Institute for Public Policy Research summit held at 10 Downing street in 2002. I felt a bit like an anthropologist stumbling across a forgotten tribe in the forests of Papua New Guinea cut off from the modern world and unaware of what had been happening around them.
        The tribe at the IPPR summit were still talking in mystical terms about the third way—in fact, they were talking about the third way within the third way. They were still inviting Will Hutton to attend their events and listened to everything that he had to say. A huge wave of nostalgia washed across me and brought back memories of cool Britannia, the stakeholder speech in Singapore and the days when Alastair Campbell and the right hon. Member for Hartlepool (Mr. Mandelson) ran things—mind you, Alastair Campbell and the right hon. Gentleman probably still do run things.
        There was a presentation at that IPPR summit by Mr. Kevin Rudd, who I assume is still the Australian shadow Minister for Foreign Affairs. Maybe he has been promoted, or perhaps he has been sacked; I do not know what has happened to Mr. Rudd. I have not really kept up with the comings and goings on the Front Bench of the Australian Labour party. It is difficult enough keeping track of what goes on among shadow Ministers on my own party's Front Bench.
        I am not sure what Mr. Rudd was doing at the IPPR summit, but he gave the opening presentation to the assembled luminaries, including the Financial Secretary to the Treasury and the Home Secretary—I am not sure what he was doing there either.
        Ruth Kelly: What is wrong with that?
        Mr. Osborne: It was not his Bill. It is surprising that the Chancellor of the Exchequer was not present, but the Home Secretary was present. Mr. Rudd talked about child trust funds and asset-based welfare. The minutes of that meeting concluded:
        "Kevin finished his presentation with a potential problem. The long-term nature of the Child Trust Fund could mean that it does not fit well with the electoral cycle. It will need to be sold to the public as there are not necessarily any short-term gains to point to."

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        The Government, with their inevitable genius for spotting political tricks, solved Kevin's problem for him because they are about to send out 1.8 million child trust fund vouchers to parents just before the next general election.
        I am sure that such calculated political considerations did not enter the head of the Financial Secretary. Having worked with the hon. Lady in Committee, I genuinely do not think that she is one of those people always looking for a political advantage. The way in which she has engaged with Opposition Members during the passage of the Bill suggests that she does not always look for the party political advantage. Others probably do. I suspect that some of the timings relating to the Bill are motivated by the electoral cycle.
        If that is the case, the Financial Secretary would surely agree that it would undermine many of her more wholesome objectives in successfully launching and promoting child trust funds. The timetable imposed for child trust funds would force financial providers and the Inland Revenue into a tight corner. Only yesterday, the Financial Secretary published the regulations. In less than one year, the hon. Lady will be sending out the first vouchers. During that period, providers will have to design their products, prepare systems, organise marketing and otherwise prepare for distributing the vouchers. I think the indication from the Government is that it will happen in January.
        Even more worrying than the situation for the providers, in whom I have quite a lot of confidence, is the situation for the Inland Revenue. It, too, will have to get its systems up and running, and we already know what a mess it made of the introduction of tax credits. It is especially worrying that just after the introduction of the child trust funds, the Inland Revenue is to change its IT provider, and it is not yet clear who the new provider will be.
        Furthermore, there is the question of what will happen when the election is called. The hon. Member for Yeovil (Mr. Laws) dealt with that by repeating what the Minister said in Committee, but it is not reassuring to realise that the launch of child trust funds and their promotional material could be interfered with by the election timetable. A simple solution would be for the Minister to accept my amendment No. 27, or my amendment No. 81 if the acceptance of a Government amendment renders amendment No. 27 inoperable. If the Minister accepted my amendment, she would give the Inland Revenue and providers more time, she would avoid any risk that an election campaign would interfere with the launch, and she would prevent the party political row that would inevitably have taken place.
        That would not affect the success of child trust funds, because they do not mature for 18 years, so I commend my amendments to the House, and shall probably press amendment No. 81 to a vote if the Minister does not accept them.
        Ruth Kelly: The new clauses and amendments are cynicism writ large. The hon. Members for Yeovil (Mr. Laws) and for Tatton (Mr. Osborne) both seem to think that somehow the Prime Minister will choose the general election date based on the date of the launch of the child trust funds. I can reassure them, because I am sure that my right hon. Friend is not even aware of the implementation date for the child trust funds.
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        We are committed to implementation in spring 2005. As the hon. Member for Tatton pointed out, the manifesto pledge was made before the last election, so it is only right that we should try to introduce the policy during this term of government. The 2005 introduction date for the child trust funds was announced in the Budget in 2003. Parents of eligible children born since 1 September 2002 are waiting to open their child trust fund accounts, and we want that to happen at the earliest opportunity.
        The effect of new clause 7 would be to prevent any advertising of the child trust fund in a pre-election period. The hon. Member for Yeovil referred to the Government's responsibilities, and the point that I made in Committee about the fact that during any general election campaign the Government retain their responsibility to govern, and essential business must go on. It has long been the practice that once a general election is called, activities such as the advertising of policies are stopped, where possible, for the duration of the pre-election period. The proposal would thus have an impact not only on the child trust fund but also on the introduction of any Government policy during a general election campaign.
        I remind the hon. Member for Tatton that a general election can be called at any time up to—I believe—summer 2006. Were an election to be called, advertising would undoubtedly be stopped. He has urged me to set out, today, in this place, the precise contents of the information pack that would be sent to parents.
        Mr. Laws: If the Financial Secretary is willing to give us a guarantee that the child trust fund will not be advertised during a pre-election period, why did she oppose the new clause on that issue that we debated in Committee?
        Ruth Kelly: I think that the hon. Gentleman misinterprets the remarks that I made in Committee. I have always said that the basic information pack would be sent out to parents. It is integral to the policy that parents be fully informed, so that they can make a reasonable and informed judgment about the sort of account that they should open on behalf of their child. It is essential to the operation of the policy that financial education be built into that decision. However, the surrounding publicity and advertising would stop, exactly in line with the Cabinet Office guidelines. Of course, I can give the hon. Gentleman that assurance.
        Mr. Laws: I want the Financial Secretary to confirm what assurances she is giving to me. Is the first assurance that the child trust fund will not be advertised during the pre-election period? Can she give me a second reassurance that any material at all that is issued to promote the child trust fund account during that period will be considered very carefully indeed, to ensure that it is not outside the spirit of the existing Cabinet Office guidelines?
        Ruth Kelly: The hon. Gentleman makes his point, but he is deliberately misinterpreting the nature of my comments. Of course all advertising would cease. Of course there would be no generic marketing of the new policy during any general election campaign. Cabinet Office guidelines, from which he quotes, set out precisely

        701
        the rules that we would follow during a general election campaign, and we would follow them. I can give him that assurance. He asks for that commitment; I give him that commitment.
        The proposal to remove the provision that allows the child trust fund to be phased in would not be helpful for parents, providers or the Revenue, as allowing parents of children born before April 2005 to set up child trust fund accounts before the launch date will allow people to manage what would otherwise be a pronounced peak of work at launch. Providers have welcomed the proposal to phase in the launch.
        The Government amendments are technical, so I do not intend to speak to them unless hon. Members wish me to do so. I hope that the arguments that I have set out and the assurances that I have given will allow the hon. Gentleman to withdraw the motion.
        Mr. Laws: I am not sure whether I am fully reassured by the Financial Secretary, not least because she appears to continue to contradict herself. At times she indicates that there will be no advertising in the pre-election period, but the fact remains that in Committee, she resisted an amendment that asked for precisely that and no more than that. She criticises the Opposition amendments as "cynicism writ large". As the hon. Member for Tatton (Mr. Osborne) said, we are trying to protect her from the cynicism of others in the Government. She ought to welcome the measures that we are taking to try to protect her integrity.
        The Financial Secretary went on to say that we were somehow suggesting that the general election date had been fixed to match the launch of the child trust fund. That is not what we are suggesting at all; we are saying that it is fortuitous that the launch of the child trust fund and the payments under it seem to be matching the most likely date of a general election. That is our concern.
        We have made a little bit of progress today in getting the Financial Secretary to confirm that the child trust fund account will not be advertised during the general election campaign. I wish she was a little clearer in recognising that, as is indicated in the Cabinet Office paper on advertising information during an election period, there will still be tension between the Government's understandable desire to give information about the child trust fund to people during its launch and the possibility that that information could be given during a pre-election period, when people are bound to be looking carefully at what any information on the child trust fund says and the way in which that might seek to promote the Government. Obviously, the comments from various IPPR seminars cited by the hon. Gentleman are relevant. I note that he may wish to press one of his amendments to a Division.
        Mr. Osborne: I am told that apparently, I should indicate—now is a good time to do so—that we shall seek a Division, probably on amendment No. 81 if an earlier Government amendment is accepted.
        Mr. Laws: After that indication, I beg to ask leave to withdraw the motion.
        Motion and clause, by leave, withdrawn.

      Clause 2

        ELIGIBLE CHILDREN
        Ruth Kelly: I beg to move amendment No. 31, in page 2, line 4 [Clause 2], leave out
        'by a directly applicable Community provision'
        and insert
        'because of a directly applicable Community provision or an international agreement'.
        Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 32, 46 to 48, 50 and 53 to 55.
        Ruth Kelly: Unless the House wishes me to discuss these purely technical, drafting and minor amendments further, I am happy to ask the House to accept them.
        Amendment agreed to.
        Amendment made: No. 32, in page 2, line 8 [Clause 2], after 'provision' insert 'or an international agreement'. —[Ruth Kelly.

      Clause 3

        REQUIREMENTS TO BE SATISFIED
        5 pm
        Mr. Laws: I beg to move amendment No. 56, in page 2, line 31, at end insert—
        '(1A) Regulations shall not require account providers to provide equity-based accounts, and shall make provision for cash deposit accounts, including provision for such accounts provided by building societies.'.
        Mr. Deputy Speaker: With this it will be convenient to discuss the following: Amendment No. 82, in page 2, line 31 [Clause 3], at end insert—
        '(1A) Regulations under subsection (1) may not impose a requirement that the charge levied by the account provider must be set at less than 1.5 per cent. of the total value of the relevant funds under management by the account provider, divided by the number of child trust funds held with the account provider.'.
        Amendment No. 57, in page 2, line 33 [Clause 3], at end insert—
        '(2A) An account is not a child trust fund account unless it permits subscriptions of amounts of no more than £5.
        (2B) The minimum amount in subsection (2A) may be increased by regulations if the Treasury is satisfied that the increase is no greater than is required to maintain the value of the amount in real terms.'.
        Government amendments Nos. 36 to 39 and 41.
        Amendment No. 59, in page 4, line 5 [Clause 6], at end insert—
        '(1A) An account may only be selected in accordance with subsection (1) if it is an account of a description which has been designated by the Financial Services Authority in a manner prescribed by regulations as a low risk account.'.
        Government amendment No. 43.
        Amendment No. 60, in page 4, line 20 [Clause 6], at end insert—
        '(6) Regulations shall designate a person to act generally in the stead of a responsible person in the management and oversight of provider risk and investment risk for child trust funds opened by the Inland Revenue under this section.'.

        703
        Amendment No. 78, in page 4, line 27 [Clause 7], at end insert—
        '(2) No charge may be levied in respect of a transfer undertaken in accordance with the provisions of regulations under this section.'.
        Mr. Laws: The group of amendments deals with a whole series of issues relevant to the supervision of account providers and the selection and opening of accounts. I shall speak especially to amendments Nos. 56, 57, 59, 60 and 78. I am afraid that I shall cover some ground that we covered in Committee in the hope that we will receive assurances from the Financial Secretary.
        Amendment No. 57 addresses whether stakeholder and child trust fund accounts could be cash-based accounts rather than being required to be equity-based accounts. We have two worries about that aspect of the Bill, the first of which relates to choice and an issue raised by the Building Societies Association. Is it appropriate for the Government to rule out providers that could offer only cash-based accounts and thus perhaps rule out several building societies that might find it expensive to make provision for equity accounts? Associated with that is a concern that we expressed in Committee about whether the stakeholder accounts should all have an equity component, and whether that would be appropriate for many people who would end up with such accounts, especially if the Inland Revenue made a decision about the selection of them.
        Amendment No. 57 deals with the minimum subscription amount, and I certainly hope that the Financial Secretary will address our worry today. In Committee, we referred several times to the illustrative projections of the final proceeds of child trust fund accounts that were put out by the Government and referred to by her in the House and in front of the Treasury Sub-Committee. It was clear at that stage that the Government envisaged that the minimum subscription amount would be as low as possible, thus allowing people on low incomes to contribute easily to child trust fund accounts. Many examples cited by the Financial Secretary involved a minimum subscription of £5.
        We debated in Committee an article in the Financial Times that indicated that the Government had changed their mind about the £5 minimum subscription, and we became more concerned about that as our discussions evolved due to the Financial Secretary's unwillingness to confirm that £5 was still the Government's target. We now discover from the regulations that the Government have decided to plump for a minimum subscription of £10, although it will obviously be left open to account providers to choose a lower figure if they wish.
        I understand the difficult balancing act that the Government must execute in balancing account providers' desire for a reasonable return on their commitments with the Government's desire to ensure that child trust fund accounts are as accessible as possible for those on low incomes who are saving for children. I am worried that it has been necessary for the Government to move away from the £5 minimum subscription. Although many people may believe that the £10 figure is pitched at a low level, one must put that in the context of a situation in which a huge proportion of our population save little or nothing, as the Government have indicated. A huge proportion of people—even those in employment—have low incomes. Saving £10
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        regularly, particularly for families with two, three or even four children, could be an onerous financial responsibility. I would have preferred the Government to maintain their apparent commitment to the £5 minimum subscription. Has the Financial Secretary had any indication that any providers might be willing to accept regular subscriptions of less than the £10 minimum set down by regulation?
        We had prolonged debate in Committee about the stakeholder accounts, and in particular those where the Inland Revenue and the Government would be acting in loco parentis—for example, for children in care. I had a particular concern that the Government's eagerness to ensure that everybody should be able to benefit from the potential returns in the equity market might lead to that particularly vulnerable group of young people automatically having to have equity accounts.
        Last weekend, I received a letter from a company of investment managers and tax and trust consultants based in my constituency. In the penultimate paragraph, it reminded me of the quarterly performance of the funds managed by the group and stated:
        "Stock market investing is risky. Please remember that the value of investments and the income from them may fall as well as rise and there is no guarantee that you will get back the amount of your original investment. Past performance is not a reliable guide to future performance."
        That final sentence relates to a matter of particular concern to many of us, because it seems that the Government have decided that past performance is a reliable guide to future performance, and that the very high returns in the equity market seen since the second world war will continue. Returns in the post-war period have sometimes been extremely adverse in some markets—for example, in the Japanese equity market. We also know that before the second world war, there were long periods when returns in the equity market were considerably less buoyant than those that the Financial Secretary and the Government allude to in the material that has surrounded the Bill.
        We also have the uncertainty about the potential yield on cash-based accounts. When interest rates are rising, the responsible individuals might well put the child trust fund assets into longer-maturity deposits, where there could be a significant pick-up along the yield curve. In other words, the yields that the Government seem to think are achievable only in the stock market could be achievable by putting money into longer-term deposits for periods of years.
        I am not yet convinced that the Government have put in place adequate safeguards for prolonged periods when the returns from the equity market may be negative. Short periods are allowed for to some extent in the Government's provisions for dealing with these accounts as they approach maturity, but equity market returns have been negative for a prolonged period in some foreign markets over the last 20 years.
        The Government need to consider safeguards to be put into place where equity markets are in long-term decline. They should also bear in mind something that the Financial Secretary acknowledged on Second Reading: there is often a relationship between the amount of individuals' financial assets and the extent of the risk that they are willing to take. Individuals with large child trust fund accounts—where, for example,

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        parents and relatives are making large payments into the accounts or there is an affluent family background—may well be willing to accept more risk for the accounts. They know that if they endure large losses in parts of those accounts they will still have other financial assets, either in the child trust fund account or outside it.
        Individuals in a weaker financial position, particularly some of those for whom the Government are acting in loco parentis, might well have a much higher risk aversion. If they had had the opportunity, they might far rather have taken guaranteed returns of 5 or 6 per cent. in a cash-based account or an account linked to Government stocks than have taken a potentially much larger risk in an equity-based account, for a return that, over a significant period of time, might not be significantly higher. I am sure that all hon. Members can understand that. When we have fewer financial assets, we are all generally less inclined to take high risks with those assets than when we have a lot of money to play with.
        No doubt the Minister is motivated by legitimate concerns and a desire to make sure that people whose child trust fund accounts are managed by the Government should do as well as possible, but she needs to put in place adequate safeguards for those individuals. Some of those people, particularly if the accounts do badly, may not appreciate her taking larger risks with that money in terms of equity investment than they would have chosen to take, given that the money in their child trust fund accounts could represent a large proportion of their financial assets.
        That is why we tabled amendments Nos. 59 and 60, which seek more advice and information from the Government about the safeguards that they envisage putting in place for child trust find accounts, particularly stakeholder accounts, into which the Government may put money in loco parentis. Will there be a more explicit role for the Financial Services Authority in examining the risk characteristics of those accounts? In particular, where vulnerable individuals will not be taking decisions about the equity allocation themselves, or where their parents are not taking such decisions, but the Government are doing so instead, will the FSA have any role in ensuring that the risks are reasonable, and in policing those risks over time?
        In Committee, we had a not entirely enlightening debate about the individual who would act on behalf of children in care, for example, in respect of child trust fund accounts. Our discussion was predicated on the basis that the Solicitor-General would have a large role in that, but I think that the Government had in mind the Official Solicitor. The Financial Secretary has since confirmed that. In her comments to the Committee and to me subsequently, I believe that she was indicating that the Official Solicitor might play some role on behalf of children in care in respect of provider risk and investment risk, but I am not sure how far she will be able to ask the Official Solicitor to go down that route, especially as I assume that the Official Solicitor does not have the expertise to make judgments about provider and market risk.
        Will the Financial Secretary clarify the responsibilities that the Official Solicitor will have in respect of accounts where the Government are acting in
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        loco parentis? Will there be any attempt to ensure that the Official Solicitor or any other agent of the Government will manage and keep an eye on the provider risk and the investment risk inherent in the child trust fund accounts?
        Our final amendment in this group, amendment No. 78, deals with the absence of charging in respect of transfers from one child trust fund account to another or one class of account managed by a single provider. That point has been addressed by the Financial Secretary in Government amendments. I am pleased that the clarification that she provided in Committee has been backed up by those amendments.
        Mr. Adrian Bailey: I shall explore some of the issues raised by the hon. Member for Yeovil (Mr. Laws) and, somewhat tangentially, by the hon. Member for Angus (Mr. Weir). First, I should declare an interest. I am chair of the all-party group on building societies and financial mutuals, and in another capacity, I am chair of the Labour and Co-operative group of Members of Parliament, so I have a specific interest in mutuality in the provision of financial services.
        This is a very good and well-intentioned Bill that has the long-term potential to transform the prospects of people who have hitherto been unable to access the personal wealth-creating processes that are available. I want to make a few comments about how we can maximise that potential.
        5.15 pm
        In the long term, the Bill's success will depend on its ability to attract low-income families into the habit of saving for their children. There is little point in the Government merely introducing yet another savings plan for middle-class children, because there are already plenty of those. Traditionally, because of their strong community roots and perceived safety, building societies have been the main source of savings products for low-income, working-class people—particularly in the context of children's savings, where they have played a pioneering role. The movement is concerned about the fact that the regulations stipulate that any provider must be able to offer both savings and equity-based products, which means that some 17 of the 63 building societies will be excluded because they cannot offer the latter.
        There are two possible responses. The first would be that those building societies should look to make the necessary arrangements to offer equity-based products. However, to secure e necessary compliance from the Financial Services Authority, they would have to enter into arrangements that would cost them considerable sums, making the whole process economically unfeasible. That most affects smaller building societies with the closest roots in particular communities, which means that those communities could be disadvantaged.
        The other response would be to ensure that financial providers that can offer equity-based products can move into the market. One potential obstacle to their doing so was removed by today's announcement of the cap in the regulations allowing them to charge up to 1.5 per cent. in management charges. If that had been set at a lower rate, they would have found it financially uncompetitive to offer such products.

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        Even in this context, low-income people have natural reservations about entering into equity-based savings schemes, because they tend to put a premium on safety and perceive mutuals to be more likely to deliver that. I am seriously worried that if equity-based providers do not want to target low-income people in certain areas, and no mutual is capable of delivering a savings product there, we could end up with deserts without provision. I hope that the Minister will monitor that position carefully.
        I am worried about other issues. First, as things stand, credit unions will also be excluded from the provisions, because they cannot provide equity-based products. There is a certain irony in savings institutions that have pioneered the savings habit among the lowest-income people, and in some cases with children, being excluded. For example, the Glasgow credit union, with 17,500 members and £40 million of assets, is very keen to launch a deposit-only child trust fund. The Leeds City credit union, with 14,000 members, £11.5 million of assets and, above all, a schools programme with 2,000 young savers, would also be potentially excluded. I hope that the Financial Secretary will examine how the scheme works with a view to trying to bring on board those institutions that have developed that savings ethic among low-income, working-class children.
        Secondly, under the default provisions, people who do not take up the provisions will almost certainly have their accounts put with an equity provider by the Inland Revenue. Those will tend to be people on lower incomes who will be even less confident about dealing with an equity provider. As a result, I do not believe that the potential of such a role will be fulfilled. Thirdly, the minimum £10 monthly requirement to save, which has been mentioned previously, could be a deterrent to people on very low incomes, who would not be able to fulfil their full savings potential.
        In total, the Bill is excellent. However, certain areas need to be monitored closely to ensure that the policy is reaching those people whom we most want to help and whom we feel will most benefit. I am reassured first by the Financial Secretary's history of support for mutuality—her contribution in relation to Private Members' Bills is recognised and acknowledged—and by her comments today and in Committee that the Government will review and monitor the working of the legislation to ensure that it achieves the objectives that have been set out. If the concerns that I have raised appear to be materialising, I hope that she will take steps to ensure that the Bill's full potential is fulfilled.
        Mr. Weir: I am pleased to follow the hon. Member for West Bromwich, West (Mr. Bailey) and I agree almost entirely with his comments.
        I raised this matter both on Second Reading and in Committee, because I am concerned that many small building societies will not be able to offer child trust funds. We have seen almost a flight from mutuality over the past few years, and the main Scottish mutual life insurer, Standard Life, is now seriously considering going down the plc route, too, which will remove most mutuality from the life assurance business, at least in the Scottish context.
        In Scotland, only two building societies remain: the Dunfermline building society and the smaller Scottish building society. Under the Bill, the Scottish building
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        society will not be able to offer a child trust fund. That is a shame, because over the past few years it has opened agencies in many small towns from which many of the bigger building societies have pulled out, with some following plc status and some closing agency networks. I am not sure whether it is common in England, but in many small Scottish towns it is common for a solicitor, accountant or other professional to have an agency from a smaller building society.
        There is a bigger issue, however. As I have said previously, many people consider the traditional building society account to be a safe investment. The Financial Secretary said in Committee that the provider's main mechanism for selling funds was a direct offer, with little or no face-to-face advice. That concerns me greatly, as I suspect that many people who receive such an offer will not read all the small print and all the documents that come with it. That strengthens the case for allowing people to invest in something with which they feel comfortable—an ordinary deposit-based building society. I understand the Financial Secretary's argument—we have been through it several times—about equity-based investment working over a longer period, but it will not necessarily persuade many people who view the money as a significant sum that they would not otherwise get.
        I understood that one of the objects of the child trust fund was to encourage people to save more for the future and to encourage financial acumen. I have a horrible fear that, if we do not give people the option of saving in a way with which they are comfortable, the object will fail. If people are forced by circumstance to have an equity-based investment that they do not understand, they are unlikely to put more funds into it. The problem would be compounded for those on lower incomes by the nature of most of the equity-based funds.
        We have heard today that, according to the regulations, a minimum investment is expected to be £10 a month—a substantial commitment for anyone who has more than one child and exists on a low income. The beauty of an ordinary deposit based account is that one can put in money when one can afford it. Families on lower incomes thus have the option of investing for their children's future when they can do so, without committing themselves to the regular investment that equity-based accounts require. We therefore exclude people from what I accept, as a supporter of the Bill, to be a good system.
        For many people, equity-based funds will be fine, but others will be excluded—the very people whom we need to reach to improve their financial acumen and get them to save for the future. That is a serious defect in the Bill. and I ask the Financial Secretary to reconsider yet again, but I am not confident that she will do so.
        Mr. George Osborne: I shall speak about my remarkably prescient amendment No. 82. Before I do that, I want to point out that one of the most serious handicaps that hon. Members experienced in scrutinising the Bill is the absence of the detailed regulations on which most legislation greatly depends. Indeed, the success of child trust funds will depend on regulations. It is worth remembering that at the beginning of the process, the Treasury Sub-Committee stated:

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        "The Child Trust Funds Bill was introduced into the House without the relevant regulations covering important aspects including the proposed sales regime. We consider that these must be produced in time for the standing committee to consider them thoroughly."
        Of course, they were not produced. The White Paper promised them before the end of last year, but they did not appear then or during our Committee proceedings. Indeed, they appeared only yesterday—too late for any amendments that the hon. Member for Yeovil (Mr. Laws) or I could have tabled to be selected. That is a shame.
        However, I struck gold because I tabled amendment No. 82, which suggested that the charge cap should be 1.5 per cent. Yesterday, the Government announced their decision to abandon the 1 per cent. charge cap, which they set out in their response to the Sandler review and in the White Paper. They decided instead to set a charge cap of 1.5 per cent. That is a U-turn, albeit not as dramatic as the Prime Minister's U-turn on an inquiry into weapons of mass destruction. However, most of the press comments on it today.
        It would be churlish not to welcome the decision, not least because I predicted it and tabled amendments to that effect in Committee. I have also tabled a similar amendment on Report. I propose a charge cap of 1.5 per cent. on, as I conceded in Committee, a remarkably unscientific basis. I took the 1 per cent., to which the Government appeared to be sticking, and the 2 per cent., for which most of the industry were calling, and suggested that we split the difference. Although unscientific, it was considerably cheaper than commissioning Deloitte and Touche to devise the same answer. Nevertheless, the Government and I reached the same conclusion by different routes.
        5.30 pm
        The Financial Secretary has been right to listen to the arguments advanced by the financial providers and by me and others during the passage of the Bill. With a charge cap of 1 per cent. there would have been very few child trust fund providers, most of whom would probably have cherry-picked at the more prosperous end of the market. The Government were right to swallow their pride and get themselves off the hook that they had put themselves on last July over Sandler. I agree with what the Minister said in her written ministerial statement yesterday:
        "The Government's decision on the charge cap is in the best interests of consumers, as it encourages as wide a selection of providers as possible to offer child trust fund accounts. A large number of providers will encourage competition and ensure the best value for consumers."—[Official Report, 2 February 2004; Vol. 417, c. 25WS.]
        I agree with every word of that.
        I shall be interested to see whether the Minister follows a similar logic with other stakeholder products over the coming months. Ignoring what she has said before, I would urge her to look at stakeholder pensions, for example. Pensions are not part of my shadow Front-Bench portfolio, but one of the things that almost every provider said to me when I was talking to them about child trust funds was that they did not want to go down the route that they took with stakeholder pensions,
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        which are not working. They cited the 1 per cent. charge cap on stakeholder pensions as a particular problem, but that is an issue for another day. I hope that the Minister will approach the question of charges for stakeholder products with the same open mind with which she has approached child trust funds.
        Government amendment No. 39 represents another welcome U-turn, because it opens the door to allowing parents to open accounts by means other than physically handing in a paper voucher to a provider. It will allow them, for example, to open an account by telephone or on the Internet. I know that it will be possible to open an account in that way anyway, and I am sure that many providers will offer that service, but the amendment will mean that they will not then physically have to send in their voucher.
        In amendment No. 39, the Minister has given herself some room for the future, because she has removed from the Bill the requirement to provide a voucher to the financial provider and has at least opened the door to other methods. That is sensible, because we expect child trust funds to be with us for some time and, with all the developments that are taking place in technology, she would have been foolish to tie herself to a paper-based system. It is a shame, however, that she has not bitten the bullet and abandoned the idea of a paper-based scheme right from the start. I notice that on page 6 of the regulations there is still a requirement for the applicant to give the voucher relating to the named child to the account provider.
        All the providers and trade representatives whom I have spoken to made the point that the voucher was a cumbersome, bureaucratic and unnecessary feature. I do not accept the argument advanced by the Inland Revenue that it is all to do with the prevention of fraud. There are many sophisticated ways of preventing fraud by electronic means these days, and far larger sums of money are transferred electronically than will ever be transferred in the entirety of the child trust fund system, let alone in any individual account.
        Will the Minister assure us that she will monitor the way in which the system is working? I understand why she does not want to change it now—not least because she has already published the regulations—but will she do all that she can to allow providers to offer an entirely telephone or internet-based system, perhaps once the funds are up and running, when the system is working fine and when she has reassured herself that the scope for fraud is limited?
        Ruth Kelly: I shall deal with the Opposition amendments first. The child trust fund account is a long-term investment for 18 years. Although the value of shares can go down as well as up, the historical evidence is that shares provide the best returns on such a long-term investment.
        In Committee, we had lengthy debates with the hon. Member for Yeovil (Mr. Laws), among others, about the historical returns on equities in this country and other countries, and I do not intend to repeat those arguments here. Amendment No. 56 proposes that account providers need not provide equity-based accounts. The Government's position, however, is that all children should have the opportunity to benefit from the generally higher returns on equities over the longer

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        term. The child trust fund stakeholder account that all providers will be required to offer will be equity based and risk controlled, and the charge cap will ensure that they provide value for money. Amendment No. 56 also proposes that provision be made for cash deposit accounts, including those provided by building societies. Draft regulations for the child trust fund ensure that parents may indeed invest in cash deposit accounts, including those offered by building societies, if they wish to do so.
        I turn now to arguments advanced by my hon. Friend the Member for West Bromwich, West (Mr. Bailey), who has sustained a long-term interest in these matters, both before and after he became a Member of Parliament, and by the hon. Member for Angus (Mr. Weir). My hon. Friend argued that the success of the child trust fund depends on the savings that low-income families contribute to the fund. I do not dispute that. One indicator of success will be the savings contributed to the funds, but I am sure that he will accept, as I argued several times in Committee, that there is more than one factor in the success of the accounts. Other factors include the size of the asset that has built up for the child and is available to them at 18; the financial education attached to that, including the understanding of risk and reward; and whether responsible choices are made by the child at the age of 18. All those factors are important to the development of the policy. However, I accept my hon. Friend's argument that certain building societies, particularly some of the smaller ones, have special relationships with low-income communities. They may have deeper community roots, and indeed are highly regarded by some low-income communities as a particularly safe source for their funds. Families and individuals may well have well developed relationships with particular providers.
        I respect the arguments made by hon. Friend, and I hope that I can reassure him that I have considered the issue seriously. Most building societies, I am told by the Building Societies Association, will indeed be able to offer the stakeholder fund as well as the cash-based account. More importantly, given changes to the rules under which the Financial Services Authority operates and the depolarisation changes that it is bringing into effect, it will become possible for smaller building societies to team up with partner firms, which could provide the stakeholder account while the building societies provide a cash-based account. They will therefore be able to offer a range of accounts to people in low-income communities if they think that there is demand for them and apply for authorisation if they have not already done so. It is important that individuals and families in low-income communities are given the opportunity to have an equity-based account. Indeed, it would extremely negative if they did not have that opportunity and, as a result of living in a particular geographic location or having a particular relationship with a financial institution, were deprived of the growth opportunity available through a stakeholder account.
        Mr. Laws: On the point made by the hon. Member for West Bromwich, West (Mr. Bailey) about whether smaller building societies would have the capability to offer cost-effective delivery of equity-based accounts, will the Minister confirm that the discussion with the FSA to allow smaller building societies to team up with
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        larger building societies took place recently? Clearly, when the Building Societies Association wrote to Committee members on 15 December, it did not believe that such delivery would be possible, and said that 17 of the 65 building societies would not be able to offer the equity-based account.
        Ruth Kelly: I understand that, while 17 societies would not be able to offer stakeholder accounts on their own, if the demand existed there would be no reason for them not to team up with the partner firms. The FSA's change in the polarisation rules is a relatively new development and I do not know the extent to which it had been factored into the thinking of the Building Societies Association when it wrote to MPs, but the fact remains that if societies see a demand they will be able to offer accounts to individuals and families with whom they have a relationship.
        The hon. Member for Tatton (Mr. Osborne) was pleased that we had decided to set the charge cap at 1.5 per cent. I am delighted that he foresaw that. I have always made it clear to Members, and to people outside, that decisions on the charge cap in relation to stakeholder products will reflect the economics of those products. It will be a case of "what works" in each case.
        I also made clear, in my written statement to the House, that the economics of the child trust fund were different from those of other stakeholder products. For a start, lower minimum contributions are required. The nature of the contributions is likely to be very different from the nature of, for instance, a stakeholder pension: the contributions are likely to be less regular and of lower value. The market is also structured very differently. We want to encourage diverse providers into the market to ensure that consumers' needs are met, and that includes encouraging building societies.
        All those factors were taken into account by the research report given to us by Deloitte and Touche. We concluded, on the basis of the evidence, that a 1.5 per cent. charge was appropriate in this case. I should emphasise that that is a maximum—a cap on the amount that a firm offering stakeholder products can charge. It is desirable and, I hope, likely that providers will compete below the cap. Indeed, I have negotiated with providers who have told me of their commitment to 1 per cent. The 1.5 per cent. provision is a backstop to ensure that there is enough competition for low-income consumers in particular to feel that their interests are being met. Similar considerations apply to the minimum contribution level. The figure of £10 specified in the draft regulations is also a backstop. Again, I expect competition to drive it down if the demand is there. Firms have told us that they would accept lower levels, particularly if regular payments were made.
        I have also made it clear that firms must state their minimum contribution up front. If they intend to set it at £10, that must be made clear to parents when they open accounts. Parents can of course switch at any time, free of charge, if they decide that the account does not suit them.
        The draft regulations also specify the risk controls that will apply to stakeholder accounts. The provider will be required to diversify investments and to move over time into cash-based assets as a fund nears maturity in order to lock in the gains made from equities in the early years.

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        I find the argument advanced by the hon. Member for Yeovil rather strange. I fail to understand his logic. It is difficult to see what purpose would be served by asking for additional risk controls to be set by the FSA, over and above what is already proposed. Additional provision would over-complicate accounts. If the hon. Gentleman wants the FSA to consider parents' individual circumstances and decide whether an equity account would meet their needs better than a cash account, I can tell him that that would be inappropriate.
        5.45 pm
        Amendment No. 60 would amend the regulations to designate a responsible person for child trust funds opened by the Inland Revenue. The hon. Member for Yeovil has assumed that where the Inland Revenue opens a child trust fund account for a child, there will not be a responsible person willing to consider which provider or which investment is best.
        We will, of course, encourage parents—or someone with parental responsibility—to ensure that they take full responsibility for a child's account, and that important point will be a key message in our information and guidance on the child trust fund. We will monitor take-up by parents closely, and if large numbers of them are not using their children's child trust fund voucher we will call them to encourage them to do so. Parents can even take responsibility for the account after the Revenue has opened it. We know that some parents lead such busy lives that they may be so preoccupied with other matters that they fail to open the account before the child reaches the age of one. In that case, however, it is possible that later on in the child's life the parents will decide to activate their parental choice, switch provider and take full parental control of the fund. Nevertheless, the stakeholder account has been designed to offer the best prospects to children over the long term, even if there is no active management.
        The hon. Member for Yeovil is concerned about children in care, looked after children and the role of the Official Solicitor. We have not yet finalised the possible role of the Official Solicitor, with whom we are still negotiating, but I can confirm that we have discussed the need for the Official Solicitor to consider whether the account is performing poorly. The hon. Gentleman's concerns about an equity market slump or liquidity crisis that have driven him to make his many and varied comments would be the sorts of the concerns that the Official Solicitor, if he or she were to accept that role, should consider.
        Mr. Laws: The Financial Secretary is teasing me, but at the same time she appears to be indicating that the Government might take up my suggestion, so I am not sure whether she is in favour of it. Does she envisage a situation in which the Official Solicitor could consider provider risk and investment risk for the accounts of children in care? Is that what she is trying to persuade the Official Solicitor to do?
        Ruth Kelly: I am arguing that the Official Solicitor would act in loco parentis and take into account the same considerations as one might expect a parent to take into account.
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        On the Government amendments, I remain of the opinion that giving a voucher with the child's name on it to providers is the key to the operation of the policy, but it is also the key to operational efficiency and the most effective fraud deterrent as well. Possession of the voucher will enable providers to get Government payments into children's accounts as quickly as possible because they will be able to transfer the data encoded on the voucher to the Inland Revenue without risking the inevitable errors created by the manual transfer of such information and the need to return the claim for correction.
        We have learned from our experience of individual savings accounts, which has benefited the child trust fund policy. It is not unlikely that the same type of errors that have arisen in relation to ISAs will be made with child trust funds. We want to minimise delays due to wrongly opened accounts and inaccurate information, and data transfer using the voucher will help to achieve that. I am convinced that that is essential to ensure that the process for claiming Government endowments runs quickly and smoothly. However, I accept that we should retain an element of flexibility on that point in the future and that it would be sensible to amend the Bill so that that requirement is in the regulations rather than in primary legislation. I have no evidence to suggest that the impact on fraud will somehow lessen or go away in years to come, but it is sensible to retain an element of flexibility.
        I hope that my arguments have reassured both my hon. Friends and Opposition Members, and that they will withdraw their amendments.
        Mr. Laws: I am grateful to the Financial Secretary for her comments on several different amendments that deal with distinct issues in the Bill. I am pleased that she has offered a little more insight into the role of the Official Solicitor. However, this is a particularly critical issue, given that we are dealing with children in care, whose interests need to be properly looked after by the Government. I should therefore be very grateful if the Financial Secretary could update us on this issue, once her Department has agreed with the Official Solicitor just how proactive he or she is going to be. I do not know whether the Financial Secretary will succeed in persuading the Official Solicitor to take on what could be quite interesting investment responsibilities.
        The hon. Member for West Bromwich, West (Mr. Bailey) raised a number of important points about making the child trust fund account accessible to low-income savers, rather than simply making it another savings option and savings break for the more affluent in society. I very much agree with what he said, and I hope that the Government will review some of the key issues that we have covered, including the minimum subscription amount, to see whether their decisions are making accounts more inaccessible to those from lower-income backgrounds.
        Finally, I was very pleased to hear the Financial Secretary's comments on building societies. I assume that somebody at the Financial Services Authority will be available to talk to the Building Societies Association about the question of smaller societies twinning with larger ones, if they so wish. On that basis, I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.

      Clause 3

        REQUIREMENTS TO BE SATISFIED
        Amendments made: No. 33, in page 2, line 45, leave out from 'that' to end of line 46 and insert
        'instructions may be given to the account provider with respect to its management only by the person who has the authority to manage it.'.
        No. 34, in page 3, line 3, leave out subsection (6) and insert—
        '(5A) The person who has the authority to manage a child trust fund held by a child—

        if the child is 16 or over, is the child, and

        if the child is under 16, is the person who has that authority by virtue of subsection (5B).

        (5B) If there is one person who is a responsible person in relation to the child, that person has that authority; and if there is more than one person who is such a person which of them has that authority is to be determined in accordance with regulations.
        (6) For the purposes of this Act a person is a responsible person in relation to a child under 16 if the person has parental responsibility in relation to the child and is not—

        a local authority or, in Northern Ireland, an authority within the meaning of the Children (Northern Ireland) Order 1995 (S.I. 1995/755 (N.I.2)), or

        a person under 16.'.

        No. 35, in line 14, at end insert—
        '() Where a contract is entered into by or on behalf of a child who is 16 or over in connection with a child trust fund—

        held by the child, or

        held by another child in relation to whom the child has parental responsibility,

        the contract has effect as if the child had been 18 or over when it was entered into.'. — [Ruth Kelly.]

      Clause 5

        OPENING BY RESPONSIBLE PERSON
        Amendments made: No. 36, in page 3, line 35, leave out from 'may' to end of line.
        No. 37, in line 37, leave out second 'the' and insert 'an'.
        No. 38, in line 39, at end insert—
        '() The application is to be made in accordance with regulations.'.
        No. 39, in line 40, leave out
        'On receipt of the voucher'
        and insert
        'When the application has been made'.
        No. 40, in line 43, at end insert—
        '() If the child is 16 or over, the references in subsections (2) and (3) to a responsible person are to the child.'. —[Ruth Kelly.]

      Clause 6

        OPENING BY INLAND REVENUE
        Amendments made: No. 41, in ago, 4, line 3, leave out from 'selected' to end of line 5 and insert
        'in accordance with regulations a child trust fund of a description so selected.
        () The application is to be made in accordance with regulations.'.
        716
        No. 42, in line 17, at beginning insert
        'the child is under 16 and'.
        No. 43, in line 20, leave out 'by the Inland Revenue' and insert 'in accordance with regulations'. —[Ruth Kelly.]

      Clause 9

        SUPPLEMENTARY CONTRIBUTION BY INLAND REVENUE
        Amendments made: No. 44, in page 5, line 29, leave out
        'fell before the appointed day'
        and insert
        'is earlier than 6th April 2005'.
        No. 45, in line 41, leave out 'fell before' and insert 'is earlier than'.
        No. 46, in page 6, line 7, at end insert 'or an international agreement'.
        No. 47, in line 7, at end insert
        'or, in the case of a child to whom section 2(3) applies or section 2(5) has applied, such day as is prescribed by regulations.'. —[Ruth Kelly.]

      Clause 19

        PAYMENTS AFTER DEATH OF CHILD
        Amendment made: No. 48, in page 10, line 23, leave out from 'that' to 'had' in line 24 and insert
        'section 9 applied to the child (or would have'. —[Ruth Kelly.]

      Clause 22

        RIGHTS OF APPEAL
        Amendment made: No. 49, in page 13, line 8, leave out
        'is a responsible person and'—[Ruth Kelly.]

      Clause 24

        TEMPORARY MODIFICATIONS
        Amendment made: No. 50, in page 14, line 21, leave out from beginning to 'the' in line 23 and insert—

        the Social Security Act 1998 (c. 14) (social security appeals: Great Britain),

        '.—[Ruth Kelly.]

      Clause 27

        COMMENCEMENT
        Amendment made: No. 51, in page 15, line 12, leave out from '31)' to end of line 17 and insert
        'comes into force in accordance with provision made by order.'. — [Ruth Kelly.]
        Amendment proposed: No. 81, in line 17, at end insert—
        '(4) No order may be made under subsection (1) before the dissolution of the present Parliament.'. —[Mr. George Osborne.]
        Question put, That the amendment be made.
        The House divided: Ayes 193, Noes 328.

        Division No. 42]

        [5:52 pm

        AYES

        Ainsworth, Peter (E Surrey)

        Green, Matthew (Ludlow)

        Allan, Richard

        Greenway, John

        Arbuthnot, rh James

        Grieve, Dominic

        Atkinson, David (Bour'mth E)

        Gummer, rh John

        Atkinson, Peter (Hexham)

        Hague, rh William

        Bacon, Richard

        Hammond, Philip

        Baker, Norman

        Hancock, Mike

        Barker, Gregory

        Harris, Dr. Evan (Oxford W & Abingdon)

        Baron, John (Billericay)

        Barrett, John

        Hawkins, Nick

        Beggs, Roy (E Antrim)

        Hayes, John (S Holland)

        Beith, rh A. J.

        Heald, Oliver

        Bellingham, Henry

        Heath, David

        Beresford, Sir Paul

        Heathcoat-Amory, rh David

        Blunt, Crispin

        Hendry, Charles

        Boswell, Tim

        Hermon, Lady

        Bottomley, Peter (Worthing W)

        Hoban, Mark (Fareham)

        Bottomley, rh Virginia (SW Surrey)

        Holmes, Paul

        Horam, John (Orpington)

        Brady, Graham

        Howarth, Gerald (Aldershot)

        Brake, Tom (Carshalton)

        Hunter, Andrew

        Brazier, Julian

        Jack, rh Michael

        Breed, Colin

        Jackson, Robert (Wantage)

        Brooke, Mrs Annette L.

        Jenkin, Bernard

        Browning, Mrs Angela

        Jones, Nigel (Cheltenham)

        Bruce, Malcolm

        Keetch, Paul

        Burns, Simon

        Kennedy, rh Charles (Ross Skye & Inverness)

        Burnside, David

        Burstow, Paul

        Key, Robert (Salisbury)

        Burt, Alistair

        Kirkwood, Sir Archy

        Cable, Dr. Vincent

        Knight, rh Greg (E Yorkshire)

        Calton, Mrs Patsy

        Laing, Mrs Eleanor

        Cameron, David

        Lait, Mrs Jacqui

        Campbell, rh Sir Menzies (NE Fife)

        Lamb, Norman

        Lansley, Andrew

        Carmichael, Alistair

        Laws, David (Yeovil)

        Cash, William

        Leigh, Edward

        Chapman, Sir Sydney (Chipping Barnet)

        Lewis, Dr. Julian (New Forest E)

        Liddell-Grainger, Ian

        Chidgey, David

        Lidington, David

        Chope, Christopher

        Lilley, rh Peter

        Clappison, James

        Llwyd, Elfyn

        Clarke, rh Kenneth (Rushcliffe)

        Loughton, Tim

        Clifton-Brown, Geoffrey

        Luff, Peter (M-Worcs)

        Collins, Tim

        McIntosh, Miss Anne

        Conway, Derek

        Mackay, rh Andrew

        Cotter, Brian

        McLoughlin, Patrick

        Davey, Edward (Kingston)

        Malins, Humfrey

        Davies, Quentin (Grantham & Stamford)

        Maples, John

        Maude, rh Francis

        Djanogly, Jonathan

        Mawhinney, rh Sir Brian

        Doughty, Sue

        Mercer, Patrick

        Duncan, Peter (Galloway)

        Mitchell, Andrew (Sutton Coldfield)

        Duncan Smith, rh lain

        Evans, Nigel

        Murrison, Dr. Andrew

        Ewing, Annabelle

        Norman, Archie

        Fabricant, Michael

        Oaten, Mark (Winchester)

        Fallon, Michael

        O'Brien, Stephen (Eddisbury)

        Flight, Howard

        Öpik, Lembit

        Flook, Adrian

        Osborne, George (Tattoo)

        Forth, rh Eric

        Ottaway, Richard

        Foster, Don (Bath)

        Page, Richard

        Francois, Mark

        Paice, James

        Gale, Roger (N Thanet)

        Paterson, Owen

        Garnier, Edward

        Portillo, rh Michael

        George, Andrew (St. Ives)

        Price, Adam (E Carmarthen & Dinefwr)

        Gibb, Nick (Bognor Regis)

        Gidley, Sandra

        Prisk, Mark (Hertford)

        Gillan, Mrs Cheryl

        Pugh, Dr. John

        Goodman, Paul

        Redwood, rh John

        Gray, James (N Wilts)

        Reid, Alan (Argyll & Bute)

        Grayling, Chris

        Rendel, David

        Green, Damian (Ashford)

        Robathan, Andrew

        718

        Robertson, Angus (Moray)

        Taylor, Ian (Esher)

        Robertson, Hugh (Faversham & M-Kent)

        Taylor, John (Solihull)

        Taylor, Matthew (Truro)

        Robertson, Laurence (Tewk'b'ry)

        Tayor, Dr. Richard (Wyre F)

        Roe, Mrs Marion

        Taylor, Sir Teddy

        Rosindell, Andrew

        Teather, Sarah

        Ruffley, David

        Thomas, Simon (Ceredigion)

        Russell, Bob (Colchester)

        Thurso, John

        Salmond, Alex

        Tonge, Dr. Jenny

        Sanders, Adrian

        Tredinnick, David

        Sayeed, Jonathan

        Trend, Michael

        Selous, Andrew

        Turner, Andrew (Isle of Wight)

        Shephard, rh Mrs Gillian

        Tyler, Paul (N Cornwall)

        Simmonds, Mark

        Tyrie, Andrew

        Simpson, Keith (M-Norfolk)

        Walter, Robert

        Smith, Sir Robert (W Ab'd'ns & Kincardine)

        Waterson, Nigel

        Webb, Steve (Northavon)

        Soames, Nicholas

        Weir, Michael

        Spelman, Mrs Caroline

        Whittingdale, John

        Spicer, Sir Michael

        Wiggin, Bill

        Spink,Bob (Castle Point)

        Wilkinson, John

        Spring, Richard

        Williams, Hywel (Caernarfon)

        Stanley, rh Sir John

        Williams, Roger (Brecon)

        Steen, Anthony

        Wilshire, David

        Streeter, Gary

        Wishart, Pete

        Stunell, Andrew

        Young, rh Sir George

        Younger-Ross, Richard

        Swayne, Desmond

        Swire, Hugo (E Devon)

        Tellers for the Ayes:

        Syms, Robert

        Mr. Mark Field and Angela Watkinson

        Tapsell, Sir Peter

        NOES

        Abbott, Ms Diane

        Campbell, Alan (Tynemouth)

        Ainger, Nick

        Campbell, Mrs Anne (C'bridge)

        Alexander. Douglas

        Campbell, Ronnie (Blyth V)

        Allen, Graham

        Caplin, Ivor

        Anderson, rh Donald (Swansea E)

        Caton, Martin

        Anderson, Janet (Rossendale & Darwen)

        Cawsey, Ian (Brigg)

        Challen, Colin

        Armstrong, rh Ms Hilary

        Chapman, Ben (Wirral S)

        Atherton, Ms Candy

        Chaytor, David

        Atkins, Charlotte

        Clark, Mrs Helen (Peterborough)

        Austin, John

        Clark, Dr. Lynda (Edinburgh Pentlands)

        Bailey, Adrian

        Baird, Vera

        Clark, Paul (Gillingham)

        Banks, Tony

        Clarke, rh Tom (Coatbridge & Chryston)

        Barnes, Harry

        Barron, rh Kevin

        Clelland, David

        Battle, John

        Clwyd, Ann (Cynon V)

        Bayley, Hugh

        Coffey, Ms Ann

        Beard, Nigel

        Cohen, Harry

        Beckett, rh Margaret

        Coleman, Iain

        Begg, Miss Anne

        Colman, Tony

        Bell, Sir Stuart

        Cook, Frank (Stockton N)

        Bennett, Andrew

        Cook, rh Robin (Livingston)

        Berry, Roger

        Cooper, Yvette

        Best, Harold

        Corbyn, Jeremy

        Betts, Clive

        Corston, Jean

        Blackman, Liz

        Cox, Tom (Tooting)

        Blizzard, Bob

        Cranston, Ross

        Borrow, David

        Crausby, David

        Bradley, rh Keith (Withington)

        Cruddas, Jon

        Bradley, Peter (The Wrekin)

        Cryer, Ann (Keighley)

        Brennan, Kevin

        Cryer, John (Hornchurch)

        Brown, rh Nicholas (Newcastle E Wallsend)

        Cummings, John

        Cunningham, rh Dr. Jack (Copeland)

        Brown, Russell (Dumfries)

        Browne, Desmond

        Cunningham, Jim (Coventry S)

        Bryant, Chris

        Cunningham, Tony (Workington)

        Buck, Ms Karen

        Curtis-Thomas, Mrs Claire

        Burden, Richard

        Dalyell, Tam

        Burnham, Andy

        Darling, rh Alistair

        Byers, rh Stephen

        Davey, Valerie (Bristol W)

        Cable, Dr. Vincent

        David, Wayne

        Cairns, David

        Davidson, Ian

        719

        Davies, rh Denzil (Llanelli)

        Jackson, Glenda (Hampstead & Highgate)

        Davies, Geraint (Croydon C)

        Dawson, Hilton

        Jackson, Helen (Hillsborough)

        Dean, Mrs Janet

        Jamieson, David

        Denham, rh John

        Johnson, Alan (Hull W)

        Dhanda, Parmjit

        Jones, Helen (Warrington N)

        Dismore, Andrew

        Jones, Jun Owen (Cardiff C)

        Dobbin, Jim (Heywood)

        Jones, Kevan (N Durham)

        Dobson, rh Frank

        Jones, Lynne (Selly Oak)

        Donohoe, Brian H.

        Jones, Martyn (Clwyd S)

        Doran, Frank

        Joyce, Eric (Falkirk W)

        Dowd, Jim (Lewisham W)

        Keeble Ms Sally

        Eagle, Angela (Wallasey)

        Keen, Alan (Feltham)

        Eagle, Maria (L'pool Garston)

        Keen, Ann (Brentford)

        Edwards, Huw

        Kelly, Ruth (Bolton W)

        Ellman, Mrs Louise

        Kemp, Fraser

        Ennis, Jeff (Barnsley E)

        Khabra, Piara S.

        Etherington, Bill

        Kidney, David

        Farrelly, Paul

        Kilfoyle, Peter

        Fisher, Mark

        King, Andy (Rugby)

        Flint, Caroline

        Knight Jim (S Dorset)

        Flynn, Paul (Newport W)

        Kumar, Dr. Ashok

        Follett, Barbara

        Ladyman Dr. Stephen

        Foster, rh Derek

        Lammy, David

        Foster, Michael (Worcester)

        Laxton, Bob (Derby N)

        Foster, Michael Jabez (Hastings & Rye)

        Lazarowicz, Mark

        Lepper, David

        Foulkes, rh George

        Leslie, Christopher

        Francis, Dr. Hywel

        Levitt, Tom (High Peak)

        George, rh Bruce (Walsall S)

        Lewis, Ivan (Bury S)

        Gerrard, Neil

        Liddell, rh Mrs Helen

        Gibson, Dr. Ian

        Linton, Martin

        Gilroy, Linda

        Love, Andrew

        Godsiff, Roger

        Lucas, Ian (Wrexham)

        Goggins, Paul

        Luke, Iain (Dundee E)

        Griffiths, Jane (Reading E)

        Lyons, John (Strathkelvin)

        Griffiths, Win (Bridgend)

        McAvoy, Thomas

        Grogan, John

        McCartney, rh Ian

        Hain, rh Peter

        McDonagh, Siobhain

        Hall, Mike (Weaver Vale)

        MacDonald, Calum

        Hall, Patrick (Bedford)

        McDonnell John

        Hamilton, David (Midlothian)

        MacDougall, John

        Hamilton, Fabian (Leeds NE)

        McFall, John

        Hanson, David

        McGuire, Mrs Anne

        Harman, rh Ms Harriet

        McIsaac, Shona

        Harris, Tom (Glasgow Cathcart)

        McKechin, Ann

        Havard, Dai (Merthyr Tydfil & Rhymney)

        McKenna, Rosemary

        McNamara, Kevin

        Healey, John

        McNulty, Tony

        Henderson, Doug (Newcastle N)

        Mactaggart Fiona

        Henderson, Ivan (Harwich)

        McWalter, Tony

        Hendrick, Mark

        McWilliam, John

        Hepburn, Stephen

        Mahmood, Khalid

        Heppell, John

        Mahon, Mrs Alice

        Hesford, Stephen

        Mallaber, Judy

        Hewitt, rh Ms Patricia

        Mann, John (Bassetlaw)

        Heyes, David

        Marris, Rob (Wolverh'ton SW)

        Hill, Keith (Streatham)

        Marsden, Gordon (Blackpool S)

        Hinchliffe, David

        Marshall, David (Glasgow Shettleston)

        Hoey, Kate (Vauxhall)

        Hood, Jimmy (Clydesdale)

        Marshall, Jim (Leicester S)

        Hoon, rh Geoffrey

        Martlew, Eric

        Hope, Phil (Corby)

        Meacher, rh Michael

        Hopkins, Kelvin

        Meale, Alan (Mansfield)

        Howarth, rh Alan (Newport E)

        Merron, Gillian

        Howarth, George (Knowsley N & Sefton E)

        Michael, rh Alun

        Milburn, rh Alan

        Howells, Dr. Kim

        Miliband, David

        Hoyle, Lindsay

        Miller, Andrew

        Hughes, Kevin (Doncaster N)

        Moffatt, Laura

        Humble, Mrs Joan

        Mole, Chris

        Hurst Alan (Braintree)

        Moonie, Dr Lewis

        Iddon, Dr. Brian

        Moran, Margaret

        Illsley, Eric

        Morris rh Estelle

        Ingram, rh Adam

        Mountford, Kali

        Irranca-Davies, Huw

        Mudie, George

        720

        Munn, Ms Meg

        Smith, John (Glamorgan)

        Murphy, Denis (Wansbeck)

        Smith, Llew (Blaenau Gwent)

        Murphy, Jim (Eastwood)

        Soley, Clive

        Naysmith, Dr. Doug

        Southworth, Helen

        O'Brien, Bill (Normanton)

        Squire, Rachel

        O'Hara, Edward

        Starkey, Dr. Phyllis

        Olner, Bill

        Steinberg, Gerry

        O'Neill, Martin

        Stevenson, George

        Owen, Albert

        Stewart, David (Inverness E & Lochaber)

        Palmer, Dr. Nick

        Perham, Linda

        Stewart, Ian (Eccles)

        Picking, Anne

        Stinchcombe, Paul

        Pickthall, Colin

        Stoate, Dr. Howard

        Pike, Peter (Burnley)

        Strang, rh Dr. Gavin

        Plaskitt, James

        Straw, rh Jack

        Pollard, Kerry

        Stringer, Graham

        Pond, Chris (Gravesham)

        Stuart, Ms Gisela

        Pope, Greg (Hyndburn)

        Sutcliffe, Gerry

        Pound, Stephen

        Tami, Mark (Alyn)

        Prentice, Ms Bridget (Lewisham E)

        Taylor, David (NW Leics)

        Tipping, Paddy

        Prentice, Gordon (Pendle)

        Todd, Mark (S Derbyshire)

        Prosser, Gwyn

        Touhig, Don (Islwyn)

        Purchase, Ken

        Trickett, Jon

        Quin, rh Joyce

        Truswell, Paul

        Quinn, Lawrie

        Turner, Dennis (Wolverh'ton SE)

        Rapson, Syd (Portsmouth N)

        Turner, Dr. Desmond (Brighton Kemptown)

        Raynsford, rh Nick

        Reed, Andy (Loughborough)

        Turner, Neil (Wigan)

        Robertson, John (Glasgow Anniesland)

        Tynan, Bill (Hamilton S)

        Vaz, Keith (Leicester E)

        Robinson, Geoffrey (Coventry NW)

        Vis, Dr. Rudi

        Walley, Ms Joan

        Roche, Mrs Barbara

        Ward, Claire

        Rooney, Terry

        Watson, Tom (W Bromwich E)

        Ross, Ernie (Dundee W)

        Wareing, Robert N.

        Roy, Frank (Motherwell)

        Watts, David

        Ruane, Chris

        White, Brian

        Ruddock, Joan

        Whitehead, Dr. Alan

        Ryan, Joan (Enfield N)

        Wicks, Malcolm

        Salter, Martin

        Wills, Michael

        Sarwar, Mohammad

        Wilson, Brian

        Savidge, Malcolm

        Winnick, David

        Sawford, Phil

        Winterton, Ms Rosie (Doncaster C)

        Sedgemore, Brian

        Woodward, Shaun

        Shaw, Jonathan

        Woolas, Phil

        Sheerman, Barry

        Worthington, Tony

        Sheridan, Jim

        Wright, Anthony D. (Gt Yarmouth)

        Short, rh Clare

        Simpson, Alan (Nottingham S)

        Wright, David (Telford)

        Skinner, Dennis

        Wright, Tony (Cannock)

        Smith, rh Andrew (Oxford E)

        Wyatt, Derek

        Smith, rh Chris (Islington S & Finsbury)

        Tellers for the Noes:

        Smith, Geraldine (Morecambe & Lunesdale)

        Vernon Coaker and Jim Fitzpatrick

        Question accordingly negatived.

      Clause 29

        INTERPRETATION
        Amendments made: No. 52, in page 16, leave out line 8.
        No. 53, in line 11, at end insert—
        '"the General Commissioners" means the Commissioners for the general purposes of the income tax appointed under section 2 of the Taxes Management Act 1970) (c. 9),'.
        No. 54, in line 12, leave out 'and'.

        721
        No. 55, in line 13, at end insert
        'and
        "the Special Commissioners" means the Commissioners for the special purposes of the Income Tax Acts appointed under section 4 of the Taxes Management Act 1970 (c. 9).'. —[Jim Fitzpatrick.]
        Order for Third Reading read.
        6.7 pm
        Ruth Kelly: I beg to move, That the Bill be now read the Third time.
        The child trust fund is a radical and ambitious policy with four key objectives. They are helping people to understand the benefits of saving and investment; encouraging parents and children to develop the savings habit and engage with financial institutions; ensuring that in future all children have a financial asset at the start of adult life; and building on financial education—working with the Department for Education and Skills and the Financial Services Authority in helping people to make better financial choices throughout their lives.
        The Third Reading of the Bill is a milestone on the route to achieving that ambitious policy. I am grateful to right hon. and hon. Members in all parts of the House for their support and constructive debate today and in Committee—when our deliberations were steered efficiently by my hon. Friend the Member for Bootle (Mr. Benton) and the hon. Member for Southend, West (Mr. Amess). The hon. Member for Southend, West commented that it was a model Committee. I have Opposition spokesmen to thank for that praise because their contributions were invariably made in the spirit of improving the Bill.
        The value of our debates in Committee is demonstrated today by Government amendments tabled to reflect proposals discussed and agreed. The Government have presented an amendment to lower from 18 to 16 the age at which young people can manage their accounts, Young people will not be able to touch the funds until they are 18, but from 16 they will be able to make their own investment decisions. I am delighted that the House supported that amendment, which is a real improvement to our policy.
        Debate in Committee focused also on the need for providers to collect the child trust fund voucher before opening an account. I still feel that collection of the vouchers is the best method to reduce errors and deter fraud, but I have signalled, by tabling an amendment allowing that feature to be changed in regulations, that the issue will be monitored in the future.
        Concern was expressed about who might act for children in care in the unusual circumstances where no one had parental responsibility. I was able to inform the Committee that we were holding discussions with the Official Solicitor about whether his office could take on that role. Members will understand that a sensitive issue such as that needs to be considered thoroughly, so it was not possible to introduce an amendment at this point, but it is our intention to do so when the Bill is considered in another place.
        722
        Perhaps one of our most important debates in Committee was on the question of whether the child trust fund should have special rules for disabled children. I pay tribute to the efforts of the hon. Member for Witney (Mr. Cameron) for moving important and interesting amendments on that subject. In Committee, I promised that I would give the matter serious consideration. There are some difficult issues, both of concept and practice, and they cannot be rushed. Furthermore, I have made it clear that changes could be made by regulation without the need to amend the Bill.
        Members of the Committee expressed particular interest in the level of the charge cap and the minimum contribution that providers would have to accept from parents and others who invest in the child trust funds. I am pleased to tell the House that the charge cap for stakeholder child trust fund accounts, which all providers will be required to include in their range of child trust fund accounts, will be 1.5 per cent. The decision to set the cap at 1.5 per cent. recognises that the child trust fund has certain key features that are not typical of other products in the stakeholder suite, such as stakeholder pensions. The funds in CTF accounts will be lower than funds in pension funds, for instance, and there will also be a lower level of minimum contribution than for other stakeholder products.
        Providers will have to accept contributions of £10 and above for the stakeholder child trust fund account. The minimum contribution level has been chosen to ensure that the child trust fund is accessible to as wide a range of savers as possible, including those who might find it difficult to make regular contributions.
        Mr. Andrew Love: I thank my hon. Friend for informing the House about the charge cap, which I think everyone accepts, and about the minimum deposit required. After the child trust funds have been introduced, will she consider a review of the minimum amount of £10, to determine whether low-income groups, in particular, have been able to meet that hurdle, so that we ensure that they can save properly with the child trust fund?
        Ruth Kelly: I certainly give my hon. Friend that commitment. Accessibility for low income groups is a vital component of the success of the policy. I anticipate that some providers will accept lower levels of contribution, especially if they are regular. I have also made it a requirement that they tell customers up front what the minimum contribution is likely to be, so that families and individuals, especially those on low incomes, can make appropriate choices in the best interests of their child.
        Members will be interested to hear that there are no charges for transferring between different types of CTF account—whether between a stakeholder account and other types of account, or between providers. For example, if a family on a low income suddenly find that they are unable to make a contribution of, say, £5 with their current provider, they are at liberty to switch, with no charge, to another provider who accepts lower

        723
        amounts. A key objective of the child trust fund is to improve financial literacy, so I judged it appropriate that there should be no charge for families who choose to switch provider.
        The child trust fund is a foundation on which we can build. I believe it is the key to creating a real change in people's ability and desire to save for the future, so that children can make the most of their opportunities. I ask hon. Members to support the Bill, and I commend it to the House.
        6.10 pm
        Mr. George Osborne: This is the first Bill that I have shadowed as an Opposition spokesman. It has been a steep learning curve, but I have enjoyed it, especially as the Committee process was particularly constructive. That was largely due to the Financial Secretary, in the sense that it is in a Minister's hands to determine the mood of the Committee—it depends on whether he or she accepts amendments and is prepared to listen to arguments. I served on several Committees as a Back Bencher and on one Committee as a Whip, and it is fair to say that we made more progress on this Bill and that there was a more constructive dialogue than in all those other Committees put together, so I thank the Financial Secretary, as without her input that would not have happened.
        I thank the other members of the Committee, including the hon. Member for Yeovil (Mr. Laws), who speaks for the Liberal Democrats. We occasionally co-operated with each other and worked out where we would cause Divisions and so on, so I thank him for his support. I particularly thank Colin Lee, the Clerk to the Committee, who gave me an enormous amount of help, not least because, as I say, this was the first Bill that I have shadowed for the Conservative party. Perhaps it will be the last Bill that I shadow—it depends on when the general election takes place.
        On Second Reading, I said that we Conservatives support the principle behind the Bill because we believe in the value of savings. We believe that savings nurture independence, that they encourage self-reliance and that they bolster the individual against the state. I also said that we did not stumble across those beliefs through a focus group, an Institute for Public Policy Research summit or some belief in asset-based welfare—they are rooted in the Tory tradition—but that we had concerns about the detail.
        I am pleased to say that many of those concerns have been addressed by the very constructive approach that the Government have taken in considering the Bill. For example, I shall repeat some of what the Financial Secretary has just said. She accepted that 16 and 17-year-olds should be able to manage their accounts. The Government agreed to consider the situation of children with terminal illnesses. They looked very constructively—the Financial Secretary is still doing so—at the proposal made by my hon. Friend the Member for Witney (Mr. Cameron).
        The Government have agreed to work with providers on the opening up of child trust funds to elder children
        724
        and to consider regulatory changes if they are required. They have agreed to consider options to help children in care, and the Financial Secretary said some interesting things about that today. She has opened the door—no more than that—to a telephone and internet-based system, rather than a voucher system, by amending the Bill. She accepted the argument that sticking with a 1 per cent. charge cap would have been a mistake. I am glad that she recognised that and agreed with the 1.5 per cent. figure.
        All that represents a constructive approach, but it would be a mistake to say that we do not still have some concerns, not least about the extension of means-testing to a cradle-to-grave society. We are instinctively against the extension of means-testing; it is our greatest concern, but we discussed that in Committee and I knew that it was unlikely that we would change the Government's mind on that.
        Only time will tell whether child trust funds succeed in encouraging savings, educating people about the value of saving and spreading financial education. I suspect that we will not really know for 18 years whether they have been a success. We will then start to see how people spend or invest the money that they have at the age of 18, and there may be some horror stories at the time, but we shall see. Conservative Members are committed to trying to make child trust funds work, so we will support the Government if there is a Division tonight.
        6.18 pm
        Mr. Dawson: I have never before served on a Standing Committee that has considered a Treasury Bill and, frankly, it is an experience that I would have avoided before now. We have talked a lot about financial education. I am one of those people who tends to avoid banks, building societies, financial institutions, regulations and all those worrying things, but I have thoroughly enjoyed serving on the Committee, partly because of the Front-Bench spokesmen and my hon. Friend the Financial Secretary, who have occasionally characterised themselves, and been characterised, as the young, thrusting generation of the House. We have been talking about a Bill whose effects we will only see over a generation and the generations beyond that. By the time that the first trust funds come to fruition, I can confidently predict that my hon. Friend will have attained great eminence in government, and I am sure that the other extremely able. Members will have enjoyed themselves making small achievements amid the general wastes of Opposition for many years to come.
        It is important to recognise that the consideration of the Bill has been helpful and constructive, because underlying the whole debate has been the recognition that its proposals have enormously exciting potential. We heard about the grand old Tory values of savings, self-reliance and all the rest of it, but the Bill is new Labour. It is a universal provision that addresses the most serious issues in our society: child poverty, the urgent and desperate need for regeneration and the absolute need to ensure that every child in our society has real opportunities to succeed and make the best of what they have. It takes an entrepreneurial attitude

        725
        towards the future and gives young people the chance to own a substantial asset. It will create an imaginative process and implement a grand proposal that will tackle poverty and help people to address their own circumstances and future in a way that neither this country nor any other country in the world has ever seen before.
        I am sad, in a way, that we have not reached the conclusion that I wanted on a matter about which I feel strongly—children in care. However, I am encouraged by the idea that over the next 16 years—the next generation—people who work with children, and children themselves, will have the opportunity to determine the way in which the development of child trust funds may be adapted, adopted and improved to support children's lives in ways that we have perhaps not been able to foresee readily during the Bill's parliamentary stages.
        Some grand ideas were expressed in Committee by not only the Government, but the Opposition. Ideas on working with and supporting children with disabilities and the way in which trust funds could be adapted to meet their needs in a new future of social care are important and point the way forward. A good Committee considered a good Bill that implements a truly inspirational idea and gives us something for the future of which we can all be proud.
        6.23 pm
        Mr. Laws: The hon. Member for Lancaster and Wyre (Mr. Dawson) started his speech by saying that he was not always invited to serve on Committees to consider financial Bills, and that he had not expected to enjoy his experience in Committee. I share his view that our scrutiny of the Bill has been especially interesting. I warn him not to read too much into his experience on that Bill Committee, however, in case any of his Whips come running to ask whether he wants to serve on the Finance Bill Committee. I assure him that that is an altogether different prospect—I give him that advice freely and constructively.
        We have been engaged in a good constructive process over the past few weeks. Our consideration of the Bill has undoubtedly been interesting because whether one agrees or disagrees with the Government's proposals—we have disagreed—their effects will clearly be felt by many families throughout the country, so it was important for us to get the Bill right and amended as best we could. I pay tribute to the Financial Secretary for her constructive approach throughout our proceedings and her patience and tolerance when I pressed her on Japanese equity markets and other such matters on many occasions, without necessarily getting very far.
        It has also been a pleasure to work with the hon. Member for Tatton (Mr. Osborne), who on occasion has been more critical of his own amendments than of the Government's, and has brought great honesty and candour to the Conservative Front Bench. Now we accept that the hon. Gentleman speaks for the Conservative party on this issue, and after its previous leader went out of his way some time ago to criticise the proposal, the hon. Gentleman has clarified its position on this matter.
        726
        I also pay tribute to the Clerk of the Committee, who was extremely helpful to Opposition Members in particular, especially as those on the Front Bench for both parties were relatively inexperienced. His assistance in the drafting of amendments was particularly useful. In addition, I thank those who chaired our proceedings, and the Minister's staff, who no doubt had to do a great deal of work in responding to the amendments.
        I also thank the Minister for amending certain parts of the Bill to take on board some of the considerations expressed from the Opposition Benches. She mentioned the important issue of account management at the age of 16, on which the Government have made genuine progress. It is also clear that they will introduce regulations to deal with the issue of terminally ill children, which is extremely important, and I welcome the fact that the Minister has made it clear that no charges will be imposed on transfers.
        There are a number of issues that we hope the Minister will return to at some stage, either because of undertakings that she has given or because the passage of time proves that our concerns were justified. In particular, I drew attention to the minimum subscription level, which we remain uncomfortable about leaving at £10. We would like to see the accounts more open to low-income savers. I also drew the hon. Lady's attention to the issue of children in care. She has agreed to look into the matter and review the progress of our support for children in care in its totality.
        I have often expressed my concern about the emphasis on equity-based investment for the accounts to be opened by the Inland Revenue, including the accounts of children in care. I am pleased that the Minister said tonight that she was thinking about how that can be dealt with, including through the involvement of the Official Solicitor. If I were the Official Solicitor I would be pretty nervous about taking the responsibility of monitoring the accounts and investment returns unless I had a guarantee that my time in that job would not last the full 18-year life of a child trust fund account.
        We pressed the Minister on access to the accounts for 16-year-olds, particularly those in full-time work. I acknowledge that it seems unlikely that she will change her mind on that subject.
        In Committee we had debates, which we did not air again tonight, about the interaction between child trust fund accounts and the benefits system, including issues such as the deprivation of capital. There was not much movement from the Minister on those issues in Committee, but I hope that she will keep them under scrutiny, so that if it turns out that some of the concerns were justified, the Government will be able to respond to those concerns as evidence bears them out.
        I am afraid that in the final stages of Third Reading, I shall add a somewhat discordant note. As the Minister knows, we do not share her enthusiasm, and the enthusiasm of her hon. Friends and most Conservative Members, for the Bill. Our reservation is not based on the details—important, but details none the less—that I have just outlined. Our concern is about the bigger issues involved in the Bill—whether it will succeed in doing what the Government have said it will, and to some extent whether the Government are spending the

        727
        large amount of money involved in the most effective way, particularly if they are concerned about child poverty.
        Mr. Love: I should like to ask the hon. Gentleman the question that he has been asked throughout the passage of the Bill. He was constructive in Committee, and has been the same so far on Third Reading, and that constructive approach included tabling amendments that would have enhanced the Bill. Does he see any contradiction between that and his opposition to the Bill overall?
        Mr. Laws: The hon. Gentleman may not be surprised to hear that I see no contradiction at all. We said at the beginning of the debates on the Bill that we were fundamentally opposed to it, because we did not believe that it would achieve its objectives, and because we thought the money could be better spent elsewhere. We made it clear that we would seek to amend the Bill, in Committee and elsewhere, as effectively as we could, to improve it. That seemed the sensible and constructive thing to do.
        Nobody has mentioned in detail, although the Financial Secretary may have touched on them, the four fundamental reasons that the Government set out to justify the introduction of the child trust fund account. I shall run through them briefly, so that we can see whether the Government have satisfied the House that those objectives will be met. The first two seem to be more or less the same—first, to build on financial education to help people make better financial choices, and secondly, to help people understand the benefits of saving and investing.
        We have questioned, as have the Institute for Fiscal Studies and others, whether the child trust fund accounts will succeed in those objectives, and whether money invested in financial education in schools could achieve that out-turn more effectively. After all, it was not until the past couple of days that the Financial Secretary accepted the proposal that 16 and 17-year-olds should be able to manage their own accounts, and that children should have any involvement in the running of those accounts. They were to have been run entirely by their parents, which seems an odd way to give people financial experience and education. We do not believe the Government have demonstrated that the large amount of money to be spent on the Bill satisfies those two criteria. The Minister referred in Committee to evidence-based policy. On these two objectives, we see a lack of clear economic evidence that the Bill will have the effects that the Government intend.
        The third stated objective was that the Bill would ensure that in future all children had a financial asset at the start of adult life. That seems to be at odds with the Government's recent decision to encourage students to take on greater debt to fund themselves through university. The question is whether people need financial assets at particular periods of their life, or whether there is a rhythm in the way in which people earn money and save money, which means that the Government should leave those matters to people themselves, rather than interfering. There seems a particular contradiction between the Government's determination to give young people, through the Bill,
        728
        assets at the age of 18, and their willingness to encourage people to take on debt at a similar age to fund themselves through university.
        Mr. Dawson: Will the hon. Gentleman take into consideration the fact that the poorest 30 per cent. of students going into higher education will have substantial grant assistance? Might that not complement the asset that they will have in the child trust fund?
        Mr. Laws: I accept the veracity of the hon. Gentleman's point, but it does not address my concern that Government policy appears to be heading in two contradictory directions. On one hand, there is the desire and willingness for people to have large financial liabilities at the age of 18, and the Government say, "Don't worry, you can pay it off through your income. You'll earn a lot of money over your life in employment. You shouldn't be worried about having the debt." On the other hand, the Government say that it is vital to give children a financial asset at the beginning of their working life. Those two things are clearly contradictory.
        The final objective of the Bill was to encourage parents and children to develop the savings habit. That implies that the Government expect additional saving as a consequence of the Bill; otherwise the Bill would simply shift the savings habit from one savings vehicle to another. I have not seen a shred of evidence that suggests that the Financial Secretary knows whether the Bill will increase saving. Not only has she been unwilling to put a target on the additional savings, but she has been unwilling even to estimate the extent to which the Bill will increase saving. That suggests a certain scepticism on the part of the Government, or at the very least uncertainty about whether their policy will deliver one of the stated objectives.
        The Financial Secretary will say that the Government have received many representations from individuals and corporate entities welcoming the Bill. As I pointed out earlier, that is not surprising, given that the financial market providers ought to gain business from the activity envisaged in it.
        Lest it seem that these are only Liberal Democrat objections, I want to bring the House back to some of the comments that have been made by independent bodies that have scrutinised the Bill—[Interruption.] They include not only the Institute for Fiscal Studies, as the hon. Member for Tatton suggests, but the Treasury Sub-Committee, whose Chairman commented that the proposals in the Bill were likely to be of most benefit to better-off families. That must surely worry the Financial Secretary.
        In connection with the Government's four objectives, I draw the Financial Secretary's attention to comments made by the Institute for Fiscal Studies. In its report of October 2001, it evaluated the savings gateway and the child trust fund and concluded that
        "it is not possible to state with certainty whether the Child Trust Fund or the Saving Gateway will lead to an increase, a reduction or no change in the rates of saving among the target groups."
        The Minister should take the IFS's representations seriously, because I can think of no more independent and credible body that has made representations to the Government on the Bill. Its criticisms have covered a

        729
        wide variety of areas. For example, it also questions whether the educational aspects of the Bill are best delivered through the child trust fund or could be better delivered through improved financial education.
        In its paper to the Treasury Sub-Committee in November 2003, the IFS summed up its position by saying that the policy has not been satisfactorily justified, and went on to say:
        "it is quite possible that the immediate beneficiaries of the Child Trust Fund will be richer families who can substitute the endowment payment for saving that they would have done for their children, and so increase their current consumption. Families who would not have saved for their children, many of whom will be poorer families, will have to wait eighteen years to benefit from their Child Trust Fund."
        That takes me to my final point. Several hon. Members remarked on how valuable the policy will be in dealing with child poverty, which was one of the reasons that the Prime Minister cited in launching it a couple of years ago. However, they have all entirely missed the fact that it will not deal with child poverty at all, because the assets will not be available until the age of 18. That is presumably why the IFS, in its "green Budget" of 2002, concluded its assessment of asset-based welfare by saying:
        "Equally, it is not clear that children from low-income families will be better supported by being provided with an asset that grows through their childhood, rather than by targeted increases in financial support to their families or by targeted education spending. Prior to considering design issues, it would have been useful to have had a stage of the consultation process that invited comments on whether the new policy direction that is asset-based welfare is a good one to take."
        Perhaps the most important reason why Liberal Democrat Members will vote against the Bill is that we question not only whether it will deliver on its objectives, but whether this is the best use of a very large amount of Government money, starting at £250 million per year and probably going up to £350 million or £400 million per year. If the Government are really concerned about child poverty, as the Prime Minister suggested when he launched the policy, the money should be focused on the early years, where the roots of inequality in our society are based.
        Mr. Dawson: Is not the hon. Gentleman overlooking the generational nature of poverty, whereby one poor generation begets another: and is not this policy entirely complementary to the work that the Government are doing on Sure Start, and in many other respects, to help people out of poverty at a crucial stage of their lives?
        Mr. Laws: It is of far less importance than the other good work that the Government are doing in trying to tackle inequalities of opportunity and child poverty, particularly in the early years. At a time when so many of the population, including many children living in poverty, do not have access to services such as Sure Start, the Government's first priority should be to extend the provision of those services, not to launch a Bill whose policy is supposed to be evidence based, but where evidence that the policy will work is in such short supply.
        6.40 pm
        Mr. Weir: The Scottish National party supports the Bill. Perhaps some of the claims for it have been overplayed, but it is none the less an interesting idea and an interesting way forward, and we have supported it throughout its various stages.
        However, there are still some concerns about the Bill, and I share some of the concerns of the hon. Member for Yeovil (Mr. Laws), although not his opposition to it. I raised on Second Reading, in Committee and again today the whole question of access for lower-income families. We have seen movement on many areas from the Financial Secretary—or potential movement, as we have yet to see the outcome, which will be interesting over the next year or so. We even saw perhaps a slight indication of movement on the question of deposit-based accounts, but the absence of those will be a serious drawback for low-income families.
        We live in a society in which hundreds of thousands of low-income families do not even have a bank account. Those people are to be encouraged to make their first financial investment an equity-based one, which many will not understand. As the Financial Secretary said in Committee, if my understanding is correct, most of the selling will be direct, and little will be done through face-to-face interviews. I fear that many people will end up with an investment that they do not understand, and in which they will be unable to invest in future years.
        As to whether the scheme is a success, the real question, as the Treasury Sub-Committee said, and as was generally accepted on Second Reading, is whether parents will invest in these funds in the future. The absence of a building society account option will mean that many low-income families will not be able to invest, and it will fail on that level.
        Secondly, the scheme may fail in relation to the minimum investment being set at £10. We discussed in Committee setting the minimum at anything between £5 and £20. For someone with two or three children, living on a low income, £10 will be an impossible target to meet on a regular monthly basis. As a result, in many cases the £250 initial investment will be all that is invested. That, too, will be judged a failure of the policy.
        As I said, the policy merits support, and we will support it tonight. but I ask the Minister to review it as it goes forward. We must look at how lower-income families deal with it. If we find that there is no addition to the initial investment, and that many low-income families are not able to top it up as we would desire them to do, we will need to look again at the policy. We will need to consider again whether alternative investments, which they understand, with which they are happy, and which provide them with access to saving and to the whole banking and insurance business, would be better for those families. Although we have reservations, we support the Bill, and we look forward to seeing how the scheme works out in the future.
        Question put, That the Bill be now read the Third time:—
        The House divided: Ayes 415, Noes 45.

        Division No.43]

        [6.43 pm]

        AYES

        Abbott, Ms Diane

        Chaytor, David

        Ainger, Nick

        Clapham, Michael

        Ainsworth, Bob (Cov'try NE)

        Clark, Mrs Helen (Peterborough)

        Ainsworth, Peter (E Surrey)

        Clark, Dr. Lynda (Edinburgh Pentlands)

        Alexander, Douglas

        Allen, Graham

        Clark, Paul (Gillingham)

        Anderson, rh Donald (Swansea E)

        Clarke, rh Kenneth (Rushcliffe)

        Anderson, Janet (Rossendale & Darwen)

        Clarke, rh Tom (Coatbridge & Chryston)

        Armstrong, rh Ms Hilary

        Clelland David

        Atherton, Ms Candy

        Clifton-Brown, Geoffrey

        Atkins, Charlotte

        Cohen, Harry

        Atkinson, David (Bour'mth E)

        Colman, Tony

        Conway, Derek

        Austin, John

        Cook, Frank (Stockton N)

        Bailey, Adrian

        Cook, rh Robin (Livingston)

        Baird, Vera

        Cooper, Yvette

        Baldry, Tony

        Corbyn, Jeremy

        Barker, Gregory

        Corston, Jean

        Barnes, Harry

        Cox, Tom (Tooting)

        Barron, rh Kevin

        Cranston, Ross

        Battle, John

        Crausby David,

        Bayley, Hugh

        Cruddas, Jon

        Beard, Nigel

        Cryer, Ann (Keighley)

        Beckett, rh Margaret

        Cryer, John (Hornchurch)

        Begg, Miss Anne

        Cummings, John

        Beggs, Roy (E Antrim)

        Cunningham, rh Dr. Jack (Copeland)

        Bell, Sir Stuart

        Cunningham, Tony (Workington)

        Bellingham, Henry

        Curtis-Thomas, Mrs Claire

        Bennett, Andrew

        Dalyell, Tam

        Berry, Roger

        Darling, rh Alistair

        Best, Harold

        Davey, Valerie (Bristol W)

        Betts, Clive

        David, Wayne

        Blackman, Liz

        Davidson, Ian

        Blizzard, Bob

        Davies, rh Denzil (Llanelli)

        Borrow, David

        Davies, Geraint (Croydon C)

        Boswell, Tim,

        Davies, Quentin (Grantham & Stamford)

        Bottomley, Peter (Worthing W)

        Bottomley, rh Virginia (SW Surrey)

        Dawson, Hilton

        Dean, Mrs Janet

        Bradley, rh Keith (Withington)

        Denham, rh John

        Bradley, Peter (The Wrekin)

        Dhanda, Parmjit

        Brazier, Julian

        Dismore, Andrew

        Brennan, Kevin

        Dobbin, Jim (Heywood)

        Brown, rh Gordon (Dunfermline E)

        Dobson, rh Frank

        Donohoe, Brian H.

        Brown, rh Nicholas (Newcastle E Wallsend)

        Doran, Frank

        Dorrell, rh Stephen

        Brown, Russell (Dumfries)

        Dowd, Jim (Lewisham W)

        Duncan, Peter (Galloway)

        Browne, Desmond

        Eagle, Angela (Wallasey)

        Browning, Mrs Angela

        Eagle, Maria (L'pool Garston)

        Bryant, Chris

        Edwards, Huw

        Buck, Ms Karen

        Ellman, Mrs Louise

        Burden, Richard

        Ennis, Jeff (Barnsley E)

        Burnham, Andy

        Etherington, Bill

        Burns, Simon

        Evans, Nigel

        Burnside, David

        Ewing, Annabelle

        Burt, Alistair

        Fabricant, Michael

        Byers, rh Stephen

        Farrelly, Paul

        Cameron, David

        Fisher, Mark

        Campbell, Alan (Tynemouth)

        Fitzsimons, Mrs Lorna

        Campbell, Mrs Anne (C'bridge)

        Flint, Caroline

        Campbell, Ronnie (Blyth V)

        Flook, Adrian

        Caplin, Ivor

        Flynn, Paul (Newport W)

        Caton, Martin

        Foster, rh Derek

        Cawsey, Ian (Brigg)

        Foster, Michael (Worcester)

        Challen, Colin

        Foster, Michael Jabez (Hastings & Rye)

        Chapman, Ben (Wirral S)

        Foulkes, rh George

        Chapman, Sir Sydney (Chipping Barnet)

        Francis, Dr. Hywel

        Francois, Mark

        732

        Gale, Roger (N Thanet)

        Kemp, Fraser

        Garnier, Edward

        Key, Robert (Salisbury)

        George, rh Bruce (Walsall S)

        Khabra, Piara S.

        Gerrard, Neil

        Kidney, David

        Gibson, Dr. Ian

        Kilfoyle, Peter

        Gillan, Mrs Cheryl

        King, Andy (Rugby)

        Gilroy, Linda

        Knight, rh Greg (E Yorkshire)

        Godsiff, Roger

        Knight, Jim (S Dorset)

        Goggins, Paul

        Kumar, Dr. Ashok

        Greenway, John

        Ladyman, Dr. Stephen

        Grieve, Dominic

        Lait, Mrs Jacqui

        Griffiths, Jane (Reading E)

        Lammy, David

        Griffiths, Win (Bridgend)

        Laxton, Bob (Derby N)

        Grogan, John

        Lazarowicz, Mark

        Hain, rh Peter

        Lepper, David

        Hall, Mike (Weaver Vale)

        Leslie, Christopher

        Hall, Patrick (Bedford)

        Levitt, Tom (High Peak)

        Hamilton, David (Midlothian)

        Lewis, Ivan (Bury S)

        Hamilton, Fabian (Leeds NE)

        Lewis, Dr. Julian (New Forest E)

        Hammond, Philip

        Liddell, rh Mrs Helen

        Hanson, David

        Liddell-Grainger, Ian

        Harris, Tom (Glasgow Cathcart)

        Lidington, David

        Havard, Dai (Merthyr Tydfil & Rhymney)

        Linton, Martin

        Lloyd, Tony (Manchester C)

        Hawkins, Nick

        Llwyd, Elfyn

        Healey, John

        Loughton, Tim

        Heathcoat-Amory, rh David

        Love, Andrew

        Henderson, Doug (Newcastle N)

        Lucas, Ian (Wrexham)

        Henderson, Ivan (Harwich)

        Luff, Peter (M-Worcs)

        Hendrick, Mark

        Luke, Iain (Dundee E)

        Hepburn, Stephen

        Lyons, John (Strathkelvin)

        Heppell, John

        McAvoy, Thomas

        Hermon, Lady

        McCabe, Stephen

        Hesford, Stephen

        McCartney, rh Ian

        Hewitt, rh Ms Patricia

        McDonagh, Siobhain

        Heyes, David

        MacDonald, Calum

        Hill, Keith (Streatham)

        McDonnell, John

        Hinchliffe, David

        MacDougall, John

        Hoban, Mark (Fareham)

        McFall, John

        Hoey, Kate (Vauxhall)

        McGuire, Mrs Anne

        Hood, Jimmy (Clydesdale)

        McIntosh, Miss Anne

        Hoon, rh Geoffrey

        McIsaac, Shona

        Hope, Phil (Corby)

        Mackay, rh Andrew

        Hopkins, Kelvin

        McKechin, Ann

        Howarth, rh Alan (Newport E)

        McKenna, Rosemary

        Howarth, George (Knowsley N & Sefton E)

        McLoughlin, Patrick

        McNulty, Tony

        Howarth, Gerald (Aldershot)

        MacShane, Denis

        Howells, Dr. Kim

        Mactaggart, Fiona

        Hoyle, Lindsay

        McWalter, Tony

        Hughes, Kevin (Doncaster N)

        McWilliam, John

        Humble, Mrs Joan

        Mahmood, Khalid

        Hunter, Andrew

        Mahon, Mrs Alice

        Iddon, Dr. Brian

        Mallaber, Judy

        Illsley, Eric

        Mann, John (Bassetlaw)

        Ingram, rh Adam

        Marris, Rob (Wolverh'ton SW)

        Irranca-Davies, Huw

        Marsden, Gordon (Blackpool S)

        Jack, rh Michael

        Marshall, David (Glasgow Shettleston)

        Jackson, Glenda (Hampstead & Highgate)

        Marshall, Jim (Leicester S)

        Jackson, Helen (Hillsborough)

        Martlew, Eric

        Jackson, Robert (Wantage)

        Mawhinney, rh Sir Brian

        Jamieson, David

        Meacher, rh Michael

        Jenkin, Bernard

        Meale, Alan (Mansfield)

        Jenkins, Brian

        Merron, Gillian

        Johnson, Alan (Hull W)

        Michael, rh Alun

        Jones, Helen (Warrington N)

        Milburn, rh Alan

        Jones, Jon Owen (Cardiff C)

        Miliband, David

        Jones, Kevan (N Durham)

        Miller, Andrew

        Jones, Lynne (Selly Oak)

        Mitchell, Andrew (Sutton Coldfield)

        Jones, Martyn (Clwyd S)

        Jowell, rh Tessa

        Moffatt, Laura

        Joyce, Eric (Falkirk W)

        Mole, Chris

        Keen, Alan (Feltham)

        Moonie, Dr. Lewis

        Keen, Ann (Brentford)

        Moran, Margaret

        Kelly, Ruth (Bolton W)

        Mountford, Kali

        733

        Mudie, George

        Simmonds, Mark

        Munn, Ms Meg

        Simpson, Alan (Nottingham S)

        Murphy, Denis (Wansbeck)

        Skinner, Dennis

        Murphy, Jim (Eastwood)

        Smith, rh Andrew (Oxford E)

        Murrison, Dr. Andrew

        Smith, rh Chris (Islington S & Finsbury)

        Naysmith, Dr. Doug

        Norman, Archie

        Smith, Geraldine (Morecambe & Lunesdale)

        O'Brien, Bill (Normanton)

        O'Hara Edward,

        Smith, John (Glamorgan)

        Olner, Bill

        Smith, Llew (Blaenau Gwent)

        O'Neill, Martin

        Smyth, Rev. Martin (Belfast S)

        Osborne, George (Tatton)

        Soames, Nicholas

        Ottaway, Richard

        Soley, Clive

        Owen, Albert

        Southworth, Helen

        Page, Richard

        Spink, Bob (Castle Point)

        Palmer, Dr. Nick

        Squire, Rachel

        Paterson, Owen

        Stanley, rh Sir John

        Pearson, Ian

        Starkey, Dr. Phyllis

        Perham, Linda

        Steinberg, Gerry

        Stewart, David (Inverness E & Lochaber)

        Picking, Anne

        Pickthall, Colin

        Stewart, Ian (Eccles)

        Pike, Peter (Burnley)

        Stinchcombe, Paul

        Plaskitt, James

        Strang, rh Dr. Gavin

        Pollard, Kerry

        Stringer, Graham

        Pond, Chris (Gravesham)

        Stuart, Ms Gisela

        Pope, Greg (Hyndburn)

        Sutcliffe, Gerry

        Pound, Stephen

        Swayne, Desmond

        Prentice, Ms Bridget (Lewisham E)

        Swire, Hugo (E Devon)

        Tami, Mark (Alyn)

        Prentice, Gordon (Pendle)

        Tapsell, Sir Peter

        Price, Adam (E Carmarthen & Dinefwr

        Taylor, David (NW Leics)

        Taylor, Ian (Esher)

        Prosser, Gwyn

        Taylor, John (Solihull)

        Purchase, Ken

        Taylor, Dr. Richard (Wyre F)

        Quin, rh Joyce

        Taylor, Sir Teddy

        Quinn, Lawrie

        Thomas, Simon (Ceredigion)

        Rapson, Syd (Portsmouth N)

        Tipping, Paddy

        Raynsford, rh Nick

        Todd, Mark (S Derbyshire)

        Redwood, rh John

        Touhig, Don (Islwyn)

        Tredinnick, David

        Reed, Andy (Loughborough)

        Trickett, Jon

        Robertson, Angus (Moray)

        Truswell, Paul

        Robertson, Hugh (Faversham & M-Kent)

        Turner, Dennis (Wolverh'ton SE)

        Turner, Dr. Desmond (Brighton Kemptown)

        Robertson, John (Glasgow Anniesland)

        Turner, Neil (Wigan)

        Robinson, Geoffrey (Coventry NW)

        Tynan, Bill (Hamilton S)

        Tyrie, Andrew

        Roche, Mrs Barbara

        Vaz, Keith (Leicester E)

        Rooney, Terry

        Vis, Dr. Rudi

        Rosindell, Andrew

        Walley, Ms Joan

        Ross, Ernie (Dundee W)

        Walter, Robert

        Roy, Frank (Motherwell)

        Ward, Claire

        Ruane, Chris

        Wareing, Robert N.

        Ruddock, Joan

        Waterson, Nigel

        Ruffley, David,

        Watkinson, Angela

        Ryan, Joan (Enfield N)

        Watson, Tom (W Bromwich E)

        Salmond, Alex

        Watts, David

        Salter, Martin

        Weir, Michael

        Sarwar, Mohammad

        White, Brian

        Savidge, Malcolm

        Whitehead, Dr. Alan

        Sawford, Phil

        Wick, Malcolm

        Sedgemore, Brian

        Wiggin, Bill

        Selous, Andrew

        Williams, Hywel (Caernarfon)

        Shaw, Jonathan

        Wills, Michael

        Sheerman, Barry

        Winnick, David

        Winterton, Ms Rosie (Doncaster C)

        Shephard, rh Mrs Gillian

        Sheridan, Jim

        Wishart, Pete

        Short, rh Clare

        Woodward, Shaun

        734

        Woolas, Phil

        Wyatt, Derek

        Worthington, Tony

        Young, rh Sir George

        Wright, Anthony D. (Gt Yarmouth)

        Tellers for the Ayes:

        Wright, David (Telford)

        Vernon Coaker and Jim Fitzpatrick

        Wright, Tony (Cannock)

        NOES

        Allan, Richard

        Jones, Nigel (Cheltenham)

        Baker, Norman

        Keetch, Paul

        Barrett, John

        Kirkwood, Sir Archy

        Beith, rh A. J.

        Lamb, Norman

        Brake, Tom (Carshalton)

        Laws, David (Yeovil)

        Breed, Colin

        Oaten, Mark (Winchester)

        Brooke, Mrs Annette L.

        Öpik, Lembit

        Bruce, Malcolm

        Pugh, Dr. John

        Burstow, Paul

        Reid, Alan (Argyll & Bute)

        Cable, Dr. Vincent

        Rendel, David

        Calton, Mrs Patsy

        Russell, Bob (Colchester)

        Campbell, rh Sir Menzies (NE Fife)

        Sanders, Adrian

        Smith, Sir Robert (W Ab'd'ns & Kincardine)

        Carmichael, Alistair

        Chidgey, David

        Stunell, Andrew

        Cotter, Brian

        Taylor, Matthew (Truro)

        Davey, Edward (Kingston)

        Teather, Sarah

        Doughty, Sue

        Thurso, John

        Foster, Don (Bath)

        Tonge, Dr. Jenny

        George, Andrew (St. Ives

        Tyler, Paul (N Cornwall)

        Gidley, Sandra

        Webb, Steve (Northavon)

        Green, Matthew (Ludlow)

        Williams, Roger (Brecon)

        Hancock, Mike

        Harris, Dr. Evan (Oxford W & Abingdon)

        Tellers for the Noes:

        Richard Younger-Ross and Mr. David Heath

        Holmes, Paul

        Question accordingly agreed to.
        Bill read the Third time, and passed.

      EUROPEAN UNION DOCUMENTS
      Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9)(European Standing Committees)
      EUROPEAN UNION DOCUMENTS

        COMMON AGRICULTURAL POLICY (REFORM)
        That this House takes note of European Union Document No. 12965/03, Commission Communication 'Accomplishing a sustainable agricultural model for Europe through the reformed Common Agricultural Policy-the tobacco, olive oil, cotton and sugar sectors': and supports the Government's objective of securing reform of these subsidy regimes. in line with the reforms agreed in June this year for other sectors, which will pave the way for a more sustainable, market oriented and less trade distorting system of agriculture in the European Union.—[Mr. Heppell.]
        Question agreed to.

      School Transport
      Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heppell.]
      7 pm
      Matthew Taylor: Last week the House witnessed a fierce debate about student top-up fees. But while it is still the case that a minority of people go to university, everyone goes to school; and while tuition fees are a serious issue, school transport fees are an issue that is even more relevant to millions of pupils and parents across the country.
      As the Minister will know, there have been striking developments in school transport patterns over the last 20 years. The proportion of children travelling to school by car has doubled, bus and train use has remained steady, and the proportion of children walking or cycling has decreased sharply.
      That is contrary to what the Government would like, and it clearly poses serious problems and challenges. There is the problem of congestion, as more children travel by car. There is the problem of pollution, for the same reason. As traffic speed and congestion increase, there are more fears about safety even for those who live less than three miles from their schools. In fact, as more children travel by car, more children—and their parents—feel vulnerable if the children are still walking or cycling, so even more go by car. Thus the situation gets worse and worse, and with fewer cycling or walking, health gets worse too. The only success story, in terms of policy, is free school buses.
      I should stress that I welcome many of the initiatives recently outlined by the Government in the travelling to school action plan. They include promoting road safety skills for pedestrians and cyclists, establishing safer walking and cycle networks, and providing secure cycle parking and locking and bus bays. Such measures to promote sustainable travel are obviously welcome. However, I applied for this debate in response to a proposal referred to in the Government's action plan, and described in the Queen's Speech, to
      "enable some local authorities to pilot new arrangements for school transport to reduce road congestion".
      What may sound a rather welcome statement is in fact intended to empower local authorities to charge for school transport, which at present is provided free of charge.
      First, there is a point of principle. As the Minister is no doubt well aware, the law currently requires local education authorities to provide free travel for children living more than three miles from their schools, or two miles in the case of those under the age of eight. That is the maximum distance that it is felt reasonable to expect children to walk. The draft transport Bill to be presented to the House next month would free certain LEAs from that statutory obligation.
      The Secretary of State for Education and Skills has insisted that the proposals are being pursued on a non-partisan basis and are at an early consultative stage. I want to express my worries now as part of that consultation. I believe that the statutory entitlement to free transport is part of the principle of free education. More than three miles is clearly too far to walk to school, and without a free bus the only option is paid
      736
      transport. Effectively, education for some children, especially in rural areas, will come with a compulsory price tag: the cost of getting to school.
      As the Minister probably also knows, there has already been a sharp reaction to the proposals. In Cornwall, head teachers, school governors and parents have all expressed serious concern about any plan to introduce charges, and I want to add my voice to theirs. Last month, my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) questioned the Under-Secretary of State for Transport, the hon. Member for Plymouth, Devonport (Mr. Jamieson), on the issue. The Under-Secretary of State replied:
      "There is no intention to introduce a widespread withdrawal of the free transport system."—[Official Report, 6 January 2004; Vol. 416, c. 143.]
      I am not sure what "widespread" means in this context. The launching of a trial suggests that the Government expect the withdrawal to be widespread in the future, if they judge the trial a success.
      The Government also claim that all money raised through charges would have to be reinvested in better transport provision, but I oppose the principle of charging for school transport. Making parents pay is not a good transport or education policy. Moreover, there is no guarantee that new income raised through charges will not just provide an excuse for a future Government to cut funding for education to local councils, and in particular the funding that councils currently receive to meet transport costs. That is what happened to universities after the introduction of tuition fees in 1997, and the truth is that no Minister can bind their successors.
      once the principle of free transport to school is lost, the principle that every child should be entitled to a free education is also lost. Free education includes the right to get to school in the first place. Transport is free on foot or by bicycle when pupils live close enough to school, and it should be free by bus when the distance is too great.
      Given that, at least in theory, the formulae provide local education authorities with the money to provide free transport, it is clear that where local authorities are allowed to charge for transport, it will be more and more difficult to make the case at local government grant settlement time that they need the money if they have the alternative of charging for it, and it will be even more difficult if they already charge for it.
      More than the principle of free education is at risk, and there are clear practical reasons to oppose charging. As a Cornwall Member, I have particular concerns about the proposals. Families in rural constituencies such as mine will be hit especially hard because home-to-school distances are often greater than in urban areas. The nearest village schools are often full, so children are sometimes required to travel even further than normal to get to their allocated school. Across the county as a whole, more than 10,000 children are entitled to free transport because they live more than three miles away from their local school. Some 99 per cent. of eligible pupils take up free transport—the policy is a success, it works and it clearly provides children with a transport solution that they need and that their parents welcome.
      In other words, while walking or cycling to school decline and roads become ever more congested, free school buses are the one real success story of the

      737
      Government's transport policy. School buses are well used, well liked and clearly necessary. The Government's stated aims in the travelling to school action plan are to reduce car usage, increase bus patronage and reduce congestion. I fail to see how the introduction of charges for a service that has been provided for free until now and has a 99 per cent. take-up in Cornwall can be the best way to fulfil those objectives.
      The simple fact is that free school buses are already extremely effective in reducing congestion. In my constituency, as elsewhere in Cornwall and indeed across the UK, the uptake of free school buses, where they are provided, is nearly 100 per cent. If only for psychological reasons, charges will deter parents from using the bus and will put children back in the car. Given the proven popularity and effectiveness of free school buses, surely we should be extending provision, not cutting it back.
      It is unreasonable to expect a child to walk a six-mile round trip to school every day, even in ideal conditions. To expect them to do so along unlit rural roads with no pavements is patently wrong and dangerous. Parents object over and over again and call for free school buses within the three-mile zone. The real issue—I accept that there is a debate to be had about how buses should be funded—is not whether parents should pay if they live more than three miles away from their child's school. If the Government are serious about cutting congestion and increasing safety, why is school transport policy centred around a three-mile limit that was set in legislation dating back to world war two? The policy has become increasingly unrealistic, unsafe and inappropriate for children living in rural areas given the reality of fast cars, no pavements and increasing parental concerns.
      Even children entitled to free school meals do not qualify for free transport if they live within three miles of their schools. Given that 99 per cent. of those living more than three miles from school use their free bus entitlement, the current congestion is clearly caused by families travelling less than three miles, and we should encourage those children to take the bus.
      The Minister may argue that charges could provide funds for greater school bus provision, so most would pay and more buses would be laid on. However, charging families who live outside the three-mile limit in order to provide more charged buses within it seems perverse in the extreme. The Government do not want to charge only wealthy families. They defend that position by arguing that it is okay to charge because those entitled to free school meals will still be entitled to free school bus trips, but that covers only families on household incomes below £13,200. Even in Cornwall, that is a very low household income. Indeed, it is almost 50 per cent. lower that the average household income. The great majority of hard-working families, even those with incomes well below average, will be expected to pay.
      Of course, the quality of transport is fundamentally important to parents. Are the buses of a high standard? Are they clearly identifiable and recognisable? Is the bus manned by a regular driver who knows the route? Are the pick-ups and drop-offs close to home and school? I
      738
      am not saying that there is no room for improvements, and I understand the Government's financial concerns in terms of how to make them, but those improvements should not be at the cost of the free service currently provided, which is overwhelmingly popular and clearly successful in meeting the Government's own objectives.
      If we are to get serious about increasing bus usage, reducing congestion and improving safety and security for children, arguably, we should look at what is happening in the US, for example, and build on the model of the yellow buses. Fifty per cent. of children in the US go to school by bus, compared with just 20 per cent. in the UK. However, that statistic is linked to the fact that every child in the US has the right to a free school bus place. That is the primary reason why they use it. As a result, school run congestion is relatively rare in the US.
      The US has other lessons for us, as well. Yellow buses are not available to the general public, which reassures parents that their children are safe. Drivers are usually allocated to specific routes, so they get to know the schools, parents and children. Again, that reassures parents. The colour and identity of the buses increases awareness among parents, and therefore increases usage, and pick-ups and drop-offs are close to schools and homes.
      I know that the Government have piloted such schemes. That is welcome, but charging for what is usually a free service is a step in the wrong direction; it is not the route that the US goes down. We have a system that is broadly popular with families, reduces congestion and improves safety and security. Let us build on it, not dismantle it. If there are cost issues, perhaps we should look at the cost of school run congestion, and consider whether the advantage to the economy of getting children out of the family car and on to the bus would be sufficient to make it sensible to consider extending, rather than reducing, provision, at least to those who are in receipt of free school meals. That is the exact opposite of the Government's position, which is to charge more children. Perhaps we should charge fewer children within the three-mile zone. Six miles is a very long round-trip on a dark, cold and wet night, on a fast rural road with no pavement.
      Let me finish by quoting the response of the National Association of Head Teachers to the Government's draft proposals. It said:
      "It will lead not only to a rural revolt by parents who are going to be worse affected, but there will be parents all around the country who will be asking themselves whether this seriously undermines free education."
      The NAHT is right on both counts. I represent just such a rural constituency, in which a very significant number of families will be badly affected if these proposals go through. It is my belief that they threaten the principle of free education. For people living outside the three-mile zone, there is no viable alternative to the free school bus. We cannot possibly expect children to walk or even cycle such distances. That means paid provision.
      Most of all, the proposals run counter to the Government's primary policy objective, on which we are agreed. How do we reduce congestion, and get more children travelling safely to school, and, therefore, on to the buses? Charging will not help us to do that. For

      739
      10,000 families in Cornwall—a low-income area—on below average earnings, it will impose a further burden. Parents who live just within the three-mile boundary have applied pressure to get a free school pass. Such people are on very low incomes and struggle to pay the bus fares, which are not insignificant It will be a real blow to those families if they are asked to make these payments.
      7.14 pm
      The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): I congratulate the hon. Member for Truro and St. Austell (Matthew Taylor) on securing the Adjournment debate. I know that he has a genuine interest in many aspects of this important issue, as do other hon. Members—although not many are present this evening. I hope that we can have a constructive debate over the next few months about the matter. We need a cross-party debate that involves local communities and the Church, which also has an interest.
      My desire for a consensual approach is genuine, but I have to tell the hon. Gentleman that it is a common characteristic of Liberal Democrat Members to share an analysis of a problem that genuinely faces the country, but never want to rule out any option that might challenge citizens' contributions to resolving the problem. Liberal Democrat representatives have to answer the question: if we agree that we need to expand, invest in and improve home-to-school transport, how will the expansion be paid for in the long term? Will it be another item that comes from raising the 40 per cent. tax rate up to 50 per cent., for example? That is not a churlish comment, but a genuine one. We will have to find a way of identifying the resources to improve access to transport—not only for children and young people in rural communities, but in all communities.
      It is also important to say that, in the context of the proposed legislation, a local education authority would have to consult the local community and volunteer to run a pilot. The proposal would then have to be approved by the Secretary of State before the pilot would be considered acceptable as a means of testing the innovation, experimentation and new ideas. If it is true that the hon. Gentleman's local authority and community do not feel that it is worth testing those ideas in a pilot or trying to solve some complex long-running problems, there would be no compulsion to participate in the process. That is an important point.
      We should not be scaremongering either local education authorities or, more importantly, local parents by saying that a compulsory obligation will soon be imposed on them to participate in a pilot against their wishes, leading to various problems. The only way that a local education authority could end up participating would be if it were initially to volunteer because the local community supported it, and if the Secretary of State were to approve the application to be one of the pilot areas.
      Matthew Taylor: I accept the Minister's point about the pilot areas and I believe it extremely unlikely that Cornwall county council would volunteer to start charging parents in a pilot scheme, but the Minister
      740
      must accept that the principle is to remove the entitlement and if the Government view the initial pilots as successful, they could become more general. That brings into question the principle that local authorities are automatically funded on the basis of the free school provision. That may not be the Government's view now, but they could be opening the gate to a future Government who might adopt precisely that position. It could be the start—or the thin end of the wedge—of eroding a guaranteed free school bus place for every child.
      Mr.Lewis: The hon. Gentleman says that it is unlikely that his local communities, local education authority or constituents would volunteer for the experiment to introduce charging, as he puts it. However, they may seek to volunteer to test out innovative ways of tackling some of their fundamental problems in respect of travel between school and home. People are mature enough and communities are able enough to make rounded judgments about what is in the best interest of a particular community to solve some long-running problems. Any decision about the lessons learned from pilots or testing new ideas will clearly have to demonstrate that a particular course of action is, in the round, in the best interests of local communities—all local communities that face problems of access and isolation. It is unfair and unreasonable scaremongering to suggest that the proposals are the thin end of the wedge. That takes no account of our capacity to adopt a consensual approach to tackling a problem that is very real for many communities in this country.
      It would be irresponsible of the Government to turn their back on the problem and not to try to resolve it. Our proposals would free up local authorities, and allow them to experiment and innovate. They would have to consult their local communities before they went down that road—I hope that the hon. Member for Truro and St. Austell will excuse the pun.
      The problems that need to be resolved cross the political divide. There will be a process of pre-legislative scrutiny before legislation comes before the House. That is important and will allow hon. Members and others to express and articulate their views in a powerful way. It must be more sensible to approach the matter with an open mind and a blank sheet of paper, as that will allow everyone to make a genuine contribution to the debate. Such an approach means that nothing is ruled either in or out when we consider how to remove many of the barriers faced by children and young people who need to travel to schools, further education institutions and other education providers.
      Politicians have to make decisions, often on questions that frequently offer no easy answers or choices. The hon. Member for Truro and St. Austell will not appreciate my using the example of the council in Luton, which is controlled by the Liberal Democrats and the Conservatives. It is proposing to cut school transport resources and school crossing patrols. My hon. Friend the Member for Luton, South (Margaret Moran) is leading a campaign in her community to stop the council's plan. As I said, politicians have to face up to difficult choices. I suspect that the question of home-to-school transport has been avoided for many years because it is too controversial, difficult or sensitive. Politicians have walked away, leaving people facing the

      741
      same difficulties that they have faced for a long time, and which have affected young people's access to education, the local environment and the quality of life of local families and parents.
      I am proud that the Government are willing to tackle this issue. We do not rule out any option, or rule any option in—we want to facilitate and enable solutions at local level. Central Government are often prey to the criticism that they seek to dictate policy in the search for one-size-fits-all solutions. Another accusation is that central Government change policy in ways that are too dramatic and hasty to take people with them.
      On school transport, enabling legislation will be produced, after a pre-legislative scrutiny process, that will give local education authorities the freedom and flexibility to face up to what in many areas is a chronic problem. They will have the opportunity to step up to the mark and take responsibility for tackling the problem, and the freedom to innovate and test out new ideas as they do so. We want local authorities to achieve a step change in their response to a problem that has resisted progress for many years.
      It must be right for central Government to create an environment in which local education authorities are freed from some of the constraints that prevent them from being innovative in their response to the problem. Our proposals will give them the power and the freedom to test the innovations and original ideas that they come up with.
      Matthew Taylor: It was clever of the Minister to work in Luton, but people living there may not understand how their Member of Parliament can defend free transport at the same time as the Minister is arguing to remove the statutory protection for entitlement to free transport for persons resident more than 3 miles away. In Cornwall, 10,000 persons who live more than 3 miles from a school rely on free transport, but 60,000 others live closer. If they were offered a discount at the expense of people living farther away losing their free entitlement, they might vote for that change. But would it make sense to help with a bus ride those who live close enough to their schools to walk or cycle, at the expense of free transport for those who do not? The majority could take a decision that was not right for people who depend on free transport because the only way of getting their children to school is by bus.
      Mr. Lewis: The hon. Gentleman is one of the architects of his party's strategy—and central to it is the concept of localism, devolution and empowering local communities to make the right decisions for themselves. That is exactly what the Government are doing with this policy. The hon. Gentleman appears to be afraid of local
      742
      communities and LEAs reaching conclusions on what is in the best interests, in the round, of the young people and families in his constituency.
      The Luton analogy was not fair, because there the proposal is seriously to cut home-to-school transport provision. Government policy is about freeing up local education authorities to enable them significantly to improve and expand the ways in which children and young people can have access to education and to increase capacity. I feel passionately about encouraging many more children and young people to stay on in education post-16, so that they may see the benefits and progress into further or higher education or a skilled job. It is particularly important for older young people to have access to institutions of their choice, to motivate them in staying on in education or training. An important part of that is a sensible approach to transport policy, which is fundamental to increasing aspirations and levels of attainment—particularly in low-aspiration communities, where the belief can permeate that, on reaching 16, one drops out of education and training.
      Whether it be education maintenance allowances or revamping modern apprenticeships, the Government are doing much to boost post-16 participation, but there is still the problem in many families and neighbourhoods of low aspiration. If we permit significant barriers to be put in the way of children and young people in making the choice to progress and develop, we will damage the long-term social fabric and economy of communities such as that which the hon. Gentleman represents.
      I ask the hon. Member for Truro and St. Austell to participate in this debate in a fair-minded and objective way. My right hon. Friend the Secretary of State has made it absolutely clear that we want to work on policy in a consensual way. We seek consensus on a difficult and challenging issue facing the whole country, which is most acute in particular areas. I ask the hon. Gentleman to resist the temptation to play party politics. I can see that scaremongering to his constituents about the thin end of the wedge and the end of free education is attractive and seductive politically, but in an era in which politicians have a problem with being trusted, it should be remembered that the public know some issues are difficult and that there must be an honest dialogue about how to resolve them.
      The checks, balances and stages we propose will ensure that we shall genuinely, not superficially, engage, involve and consult local communities and give them the power to decide whether they want to be part of our policy initially. Then we must learn from best practice locally in resolving some of the issues that continue to present problems in respect of access by children and young people to education and their local environment.
      Question put and agreed to.
      Adjourned accordingly at half-past Seven o'clock.