- 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- release the amount requested to be withdrawn, and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- The responsible person shall, wherever practicable, consult the disabled child about the expenditure of amounts withdrawn in accordance with the provisions of this section.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- requirements for the provision of information to the Inland Revenue relating to expenditure of amounts withdrawn in accordance with the provisions of this section.'—[Mr.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
§ Madam Deputy Speaker (Sylvia Heal)
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
- 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]'.
651 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 652 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 (Northavon) (LD)
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 653 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 includethe 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 654 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 (Lancaster and Wyre)(Lab)
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 655found 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 tothe 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 isnursing, 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 tospecialist medical or palliative serviceI 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 meYour 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.656 It said that life-threatening illnessesand 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.
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 (Angus) (SNP)
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 657 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 659 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 (Tatton) (Con)
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.
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'sproposal 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 amendmentsforceful, 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.661 She wasstruck 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 bequalified 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.662It 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 wasstruck 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 (Yeovil) (LD)
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.
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 664 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 665 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 (Bury St. Edmunds)(Con)
Will the Minister clarify the resource implications for the 666 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 —
§ 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 667 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.