Savings Accounts and Health in Pregnancy Grant Bill
(Limited Text - Ministerial Extracts only)
Read Full debate18:52 - The House divided: - Ayes: 218 / Noes: 297 - Question accordingly negatived.
19:59 - The House divided: - Ayes: 197 / Noes: 300 - Question accordingly negatived.
20:57 - The House divided: - Ayes: 217 / Noes: 304 - Question accordingly negatived.
22:00 - The House divided: - Ayes: 311 / Noes: 224 - Question accordingly agreed to.
Sheila Gilmore
The hon. Lady overstresses that issue. She fails to see that the child trust fund was different from other savings funds because it was intended to provide not only financial education but a real asset to children who would not otherwise retain one. It is also important to realise that there is a real difference in kind between what the previous Government put in place and the junior ISA, which was thrown in fairly late on in the course of the thinking that occurred in response to the concerns expressed and is still fairly vague in its implications.
This is about a transfer of assets and tackling asset inequality. We are faced with not only income inequality but asset inequality. It is perfectly legitimate, and indeed desirable, that we look at asset inequality just as much as at income inequality. As my hon. Friend the Member for Stretford and Urmston (Kate Green) said, the way in which child trust funds were structured enabled additional money to be put in for looked-after children and children with disabilities. That is extremely important for them at the age of 18. Junior ISAs do not deliver that; rather, they will be of greatest benefit to those who get the tax relief that goes with an ISA.
In the past, there have been many schemes allowing parents, grandparents and other people to save on behalf of children. My children had baby bonds, which were provided under the National Savings scheme, and some of the money that went in came from their grandmother. That was wonderful, and a great idea, but it would not—I am sure that it did not—assist many children from low-income households, to whom the child trust fund was specifically designed to give additional help.
I want to return to the pamphlet produced by Phillip Blond, which has been given a lot of support from several organisations interested in this field. He strongly advocates that the infrastructure of child trust funds should be retained, even if the rest of the system is to go:
“Our first and foremost recommendation is to maintain, extend and improve the infrastructure of the…Child Trust Fund under the auspices of the new ABC account. Maintaining the old CTF platform comes at a minimal cost (£2m pa) and it preserves a unique and valuable savings infrastructure for the further augmentation and development of children’s savings.”
That would then enable the new proposal that comes from a raft of organisations working with children—the ABC account—to be developed using the same infrastructure. It would also enable this Government, or a future Government, to return to it and decide that they want to put in additional contributions at a later date. I am surprised at the lack of faith shown by Government Members, including members of the Committee, about the economy recovering. They do not seem to think that it is worth preserving the infrastructure for a future time when it would be possible to put in extra contributions.
I urge the Minister to listen to the words of Phillip Blond and those who have supported his proposals and even at this stage, if the Minister cannot support amendment 1, to consider keeping the infrastructure.
The Financial Secretary to the Treasury (Mr Mark Hoban)
As the right hon. Member for Delyn (Mr Hanson) set out in his opening remarks, the amendments in this group, except for the two tabled by the right hon. Member for Wythenshawe and Sale East (Paul Goggins), seek to delay the ending of child trust fund eligibility, or indeed not to end eligibility at all. Amendments 4 to 12 and 17 to 26 would delay the end of child trust fund eligibility from January 2011, either to 2016 or a date set by regulations. Amendments 1 and 36 would mean that child trust fund eligibility did not end at all.
I set out clearly on Second Reading the rationale for ending child trust fund eligibility, particularly for ending it from January 2011. This Government inherited a fiscal position that the Governor of the Bank of England described as “clearly unsustainable”, and dealing with it immediately was unavoidable. As hon. Members will recall, my right hon. Friend the Chancellor set out a package of £6 billion-worth of savings in 2010-11 just a couple of weeks after the coalition Government were established. Part of that package was £320 million of savings from the child trust fund this year. A large part of those savings have already been made through the regulations made in July, which reduced contributions at birth and stopped them at the age of seven. Delaying the end of eligibility would reduce the savings that we plan to make by £20 million this year and by around £50 million in each future year that the delay continued.
Those figures assume that the current value of the child trust fund would continue at £50 at birth for most children and £100 for those in lower-income families. Some providers have told us that those values would not be viable for them in the long term, and so some could withdraw from the market. However, if the value of the vouchers were increased, which could be done through regulation, the costs of the delay in ending eligibility would increase too. Either way, the money would have to be found from somewhere, through other spending cuts, tax rises, or even more borrowing. The Labour proposals would also be confusing for families who understand that CTF eligibility is due to end in January this year, particularly if we were to take the power to set a date through regulations.
I understand the point that the right hon. Member for Delyn made about delaying the end of eligibility until the junior ISA, which I announced on Second Reading, is in place. I am not expecting that to take too long; I hope that the new account will be up and running as early as autumn next year. It will be available for children who are born after the ending of the child trust fund—that is, those born after 3 January 2011.
The hon. Member for Edinburgh East (Sheila Gilmore) said that the trouble with the junior ISA was that it is tax free, but so was the child trust fund, so I cannot see that its essential nature is very different. I do not quite understand her point.
Sheila Gilmore
The point that I was trying to make is that the only incentive given in the junior ISA is that the payer—the parent or grandparent, or whoever is putting in the money—can get tax relief. The child trust fund gave money to the children of families who do not usually benefit from putting money into a savings account that brings tax relief because they may not be paying tax, or paying very little tax, so it is not of such great advantage.
Mr Hoban
The fundamental difference is that under the junior ISA there will be no contributions from the state, whereas in the case of the child trust fund there were contributions from the state. Our intention is to save money in order to cut the deficit—that is why we are ending eligibility for those sums. The junior ISA will be a simple product. The hon. Member for Stretford and Urmston (Kate Green) queried that, but she should remember—to reiterate a point that I made in Committee—that 20 million people have ISAs, 12 million of whom earn incomes of less than £20,000 a year. The ISA is a mainstream financial product that people of all income streams and all ages understand; they find it very easy to contribute to a cash ISA or to an equity ISA.
John Hemming
Perhaps the hon. Member for Edinburgh East (Sheila Gilmore) was slightly confused about whether people get tax relief on contributions to an ISA. My understanding is that they do not. They get it only on contributions to a pension.
Mr Hoban
Indeed, the tax models for ISAs and pensions are different. With an ISA, the income and gains are tax-exempt, which is one of their incentives.
I believe that child trust fund eligibility should end for children born from January 2011, as the Bill provides, and not from any other date. I continue to believe that ending eligibility is the right thing to do. I know that some find that disappointing, but in the middle of the exceptional fiscal challenge that we are facing, it simply does not make sense to continue to spend half a billion pounds a year on giving people money that is locked up until the age of 18. There are more urgent priorities, and the child trust fund is a luxury that we cannot afford.
I wish now to refer to the amendments tabled by the right hon. Member for Wythenshawe and Sale East and the wider points raised in his new clause and amendment that were not selected. I understand his point about looked-after children, who are among the most disadvantaged young people in our society and face a number of particular challenges that mean they need additional support. As he said, we met last week to discuss the matter, and he outlined to me the proposal that he has referred to today. As I said then, I have a lot of sympathy with what he is trying to achieve, and I want to consider the matter more closely. Indeed, I have already written to the Under-Secretary of State for Education, my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton), to ask his views on the proposal. We will have to consider it carefully, but as I have said a number of times during debates on the Bill, we have limited resources at the moment and there is currently no unallocated funding in the Department for Education budget that could be used for the suggested payments. We would also have to be sure that they were the best use of our resources and gave us the best possible value for money.
As I have said, there is also the question of whether locking up money for up to 18 years provides better value than spending it to support people now, and we need to ensure that we focus resources on our priorities. We will also have to consider what the proposal would leave children with. As the right hon. Member for Wythenshawe and Sale East explained, the provision would not be triggered until a child had been in care for at least 13 weeks, to avoid junior ISA accounts being opened for children who were in care for only a week or so. We know that, thankfully, most children are not in care for long periods. Of the children who left care in 2009-10, about 37% were in care for less than six months. I will therefore wish to consider how many children would receive accounts containing just the £250 Government payment that he suggests, and whether those accounts would necessarily provide good value.
However, as I have said, I am more than happy to continue to consider the proposal with my hon. Friend at the Department for Education, and I certainly commit to maintaining contact with the right hon. Member for Wythenshawe and Sale East. I reassure him that if we do want to move forward with his proposal or something similar, the Bill will not be the right vehicle for doing so. It may be possible to legislate on the matter alongside the provisions on junior ISAs, or even to introduce them without legislation. Not including them in the Bill does not close down our options.
I understood the right hon. Gentleman’s points on amendments 51 and 52, which were selected, but there are practical reasons not to accept them. First, as I have said, we are still looking closely at our options, and that may end up making the reports called for in those amendments unnecessary. Secondly, if we wanted such reports to be produced, requiring their completion by the end of 2011 would be too early. By then, child trust funds would only just have stopped being opened, as the last vouchers are not expected to expire until well into 2012, and junior ISAs would have been in place for only a few months.
Thirdly, I suggest that even if we did want to carry out the reports that the right hon. Gentleman suggests, we could do so without having them specified in the Bill. In fact, leaving them out of the Bill would provide us with more flexibility on both content and timing.
Paul Goggins
I am very grateful to the Minister for clearly giving very serious consideration to the points that I put to him at our meeting last week. He has clearly weighed them up carefully. I am grateful that he has already written to his colleague in the Department for Education.
The Minister will understand my slight concern that, notwithstanding the fact that he is going to consider my proposals seriously, the Bill will now go to the other place and—in fairly short order, he hopes—become an Act. With the Government’s majority, I am sure that will happen. I do not want the focus on the important issues that we have discussed to be lost, so will he make a commitment that as far as possible, they will be addressed as the Bill is considered in the other place?
Mr Hoban
The right hon. Gentleman will be aware that we are consulting on the design of the junior ISA, and we need to ensure that his points are considered in tandem with that, rather than in the accelerated time scale that it will take for the Bill to go through the other place. I reassure him that I am considering the matter seriously with my hon. Friend at the Department for Education.
The right hon. Gentleman makes important points about looked-after children, and we need to consider them carefully. As he knows, there are other provisions in place to meet the needs of such children, such as a bursary scheme for those who go into higher education, although I regret that not as many do so as we would all like. However, he has made important points both today and in our meeting last week, and I will pursue them with him and with my hon. Friend the Under-Secretary of State for Education. I hope that the right hon. Gentleman will not press the amendments tonight, but that is a decision for him to take. I hope that he will take into account my comments this evening about the approach that I want to take.
On the other amendments in the group, as I have explained, I believe that we should go ahead as planned with ending child trust fund eligibility from January 2011. I believe that the right structure is in place to ensure that children who do not qualify for a child trust fund will be eligible for the junior ISA, even if it is not introduced until late next year. I have made the commitment that any child born after 3 January 2011 will be eligible, and I believe that the for combination of reasons that I have set out—the need to tackle the deficit, the need to save money and the need to put the public finances on to a better, firmer footing—we need to press ahead. I urge hon. Members to oppose the Opposition’s attempt to squander yet more money.
Sheila Gilmore
Indeed; I agree with my hon. Friend.
My point about the housing association movement is that the people who say that there are not enough outlets to make the saving gateway really work are not sufficiently prepared to look at some of the things that already exist. I firmly believe that we could have built the scheme up. If tenants could have agreed to small savings being taken at the same time as they paid their rent, for example, which would then be passed over to the provider—whether it be a credit union or another organisation involved in the saving gateway—that would have provided a relatively straightforward and easy-to-access method for those tenants. Housing associations, which see themselves as having a wider role than simply being a landlord, felt that this would have been helpful for their tenants.
We hear so much of “We have to do this because of the deficit.” We are told by the coalition Government, “We had to change our minds about all these things”—in fact, both Government parties did not support all these proposals, although they did support the saving gateway scheme—“because of the financial situation.” We have two different views about how to get out of a recession. The Government parties did not just want to pay down a deficit which they suddenly claim not to have known about before, although they did know about it and, as was pointed out by my hon. Friend the Member for Sefton Central (Bill Esterson), it had in fact been falling. They decided to reduce that deficit speedily, within five years, regardless of the consequences. There is another choice, although the Government may not agree with it.
The Government say to us, “You cannot support child trust funds or any of the other measures involved, because if you do, you will not reduce the deficit.” That is not the case. We take a different view on the economy. Our view is that the deficit should be reduced far more gradually. That was also the clear view of the Liberal Democrats as recently as late April: they said that fast cuts would be exceedingly dangerous. I do not see what has changed since then.
Ireland has been mentioned yet again. It cut public sector salaries and services, and it cut very hard. Indeed, only a few months ago it was being set up as a model in that regard. However, it has not got itself out of its financial difficulties.
We believe that if we reduced the deficit more slowly, two things would happen. First, we would be able to make choices about the things that are important, and I believe that the saving gateway would be one of them. Secondly, if we did not cut so drastically, unemployment would not be as high, which would mean more money for the Treasury, and we would not have a growing deficit problem. I firmly believe that if we proceed with the Government’s proposals the deficit will not be reduced as fast as they would like, despite the cuts, and it may actually increase.
We believe that those choices exist, and that the saving gateway is important because of the advantage that it brings to low-income families. It represents a long-term and real effort to change behaviour and improve the circumstances of such families, and that is why we want to retain it.
Mr Hoban
The speech of the hon. Member for Edinburgh East (Sheila Gilmore) was remarkable. It appears that only one group taking part in international debates is suggesting that we should be less aggressive in tackling the deficit and should put ourselves at the mercy of international markets, and that group is the Labour party. Surely the one lesson that should have been learned from our current circumstances is that a credible plan is needed to tackle the deficit, but Labour lacks that credible plan.
Sheila Gilmore
Many economists share our view, including Joseph Stiglitz and David Blanchflower. It is not true to suggest that it is only the view of the Labour party. There are different views, and it is entirely legitimate for people to hold different views, but it is simply not true that no one shares our view that reducing the deficit too rapidly is dangerous.
Mr Hoban
If the hon. Lady reads the comments of international organisations such as the OECD, the International Monetary Fund and the European Union, and those of rating agencies such as Standard & Poor’s, she will find that mainstream opinion agrees with the Government about the need to take action now to tackle the deficit in order to avoid the crises that we are seeing elsewhere in the world. All that we hear from the Labour party is “Let us delay the difficult decisions. Let us go into the election with the structural deficit, and try to deal with it in four or five years’ time rather than now.” That has been the theme of Labour Members’ contributions throughout our debates on the Bill. They have denied the need to tackle the deficit now, and have ignored the lessons that are being presented all around us.
Mr Hoban
Let me make some progress and explain why we are repealing the Saving Gateway Accounts Act 2009. The repeal is part of our deficit reduction policy. The right hon. Member for Delyn (Mr Hanson) quoted from my Second Reading speech. It was the third time that I had heard him use the same quotation. Let me now, for the third time, expand a little on what I said on that occasion. I said:
“The pilot scheme demonstrated some benefits, but it demonstrated some challenges too… What are the long-term benefits? What are we getting in return for the quite generous bonus that we are giving to savers?.. In the second pilot, questions were raised about whether the scheme was effective… First, there was no statistically significant evidence that, in delivering genuinely new savings, the saving gateway accounts delivered higher overall net worth.”
I referred to a
“number of anecdotes, rather than hard evidence, used to support the proposal”,
and added:
“It appears that money was moved from one set of savings to another, perhaps from a current account to a savings gateway account, simply to secure the Government match.”—[Official Report, 13 January 2009; Vol. 486, c. 145.]
While accepting the principle behind the saving gateway account, we nevertheless flagged significant concerns about its effectiveness.
The right hon. Gentleman mentioned the pilots. According to the conclusion from the second pilot,
“when we look at a broader measure of net worth (including investments as well as all cash deposit accounts), there is no statistically significant evidence that funds held in these forms have increased… we nevertheless do not find statistically significant evidence of an increase in overall net worth among this group.”
Carl Emmerson said in his evidence to the Committee:
“There was not any really strong evidence from the saving gateway that it led to more overall saving from lower-income households.”––[Official Report, Saving Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 18, Q42.]
Given the fiscal constraints that we face, we must question the value for money to be obtained from this project. It would be nice to be able to proceed with it, but the evidence suggests that it does not increase saving and does not possess the benefits ascribed to it by Labour Members. Not only is the evidence of its effectiveness in question, but it would cost more than £300 million over the next five years, which makes it unaffordable in the light of the need to reduce the deficit.
The other strand of the argument, touched on by the hon. Member for Makerfield (Yvonne Fovargue), is access. Who would be able to gain access to the saving gateway account? My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) echoed Adrian Coles, the director general of the Building Societies Association, who said that
“no building society had committed to offering a saving gateway account”.
Eric Leenders of the British Bankers’ Association said
“there were only a couple of providers who felt that it was suitably beneficial for them to provide the account.”
The banks that said they would provide accounts were Royal Bank of Scotland and Lloyds. The Post Office would take part in the scheme only if it received more taxpayers’ money.
I do not think we would have seen the easy access that the hon. Lady believed to be a key part of the scheme’s attraction. The only credit union outlet in my constituency is in a deprived area, and is open for only a short time each week. In my constituency, credit unions would not have been a vehicle for access to the saving gateway account.
Given that we do not intend to proceed with the scheme, we should leave no room for uncertainty among financial institutions or advice-giving bodies, and the best way in which to be clear about our intentions is to repeal the 2009 Act. I believe that if a future Government revisited the scheme, they would design it very differently. If the right hon. Gentleman wishes to press his amendment to the vote, I will ask my hon. Friends to oppose it.
Mr Hanson
I am disappointed by the Minister’s response, but that is the nature of the role that I currently fulfil. He did not oppose the saving gateway in opposition or in the general election; he did not vote against Third Reading of the Saving Gateway Accounts Bill; and he could have taken the opportunity today to accept the amendment enabling him to delay the repeal of the Act until a later date in order to judge how the economic situation developed. I have to assume that he says one thing in opposition and another in government, and that he is abolishing the scheme on the basis of dogma rather than the economic situation. I urge my hon. Friends to reject clause 2, and to support the amendment.
Question put, That the amendment be made.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I call Mr David Hanson to move the next amendment.
Dr Poulter
I thank my hon. Friend for her point. On nutrition in pregnancy, we know from all the evidence that the biggest and single most effective intervention in nutritional terms is to give women folic acid pre-conception and in the early days of pregnancy. Most problems or birth defects occur in the first six to eight weeks of development, when the embryo is very small, so if we are to intervene effectively that is the time to do so. We already do, because all GPs, midwives and obstetricians encourage women in the first stage of pregnancy to take folic acid, which is the single most effective intervention to prevent neural tube defects and all others.
We have heard how we need to ensure that when we intervene, particularly with the most vulnerable and disadvantaged groups, we do so effectively. When the Act was introduced, the whole point of it was to reach those groups, yet people from Traveller communities, Gypsies and people from deprived backgrounds often still do not access maternity services until the time of delivery or when it is far too late. The hon. Member for Bristol East tried to argue that the grant improves access to maternity services among disadvantaged groups, but lots of clinical audits and data prove that it does not. The evidence shows that the grant is not at all effective in helping improve access to pregnancy services. The hon. Lady’s point fails, and I hope Members will bear that in mind later.
We are talking about targeted, results-driven and evidence-based care, but there is no evidence to support the grant as a nutritional intervention or in terms of improving childhood outcomes at birth, so for all those reasons we must target our resources where they belong, on putting those 3,000 extra midwives on to the front line, because they, not a £190 grant, will make the difference.
Mr Hoban
It has been a brief but thoughtful and thought-provoking debate. The amendments that the hon. Member for Bristol East (Kerry McCarthy) proposes seek to achieve one of three things: keep the health in pregnancy grant in place, delay its abolition or require the Government to conduct a review into the case for maintaining it in another form.
The grant was introduced in April 2009 by the previous Government. When announced in the 2006 pre-Budget report, the provision was to be paid as child benefit from the 29th week of pregnancy to recognise the important role of nutrition in the last months of pregnancy, when nutrition is most important, and in the first weeks after birth, with parents bearing the extra costs. Then, the payment was to be a £190 one-off grant, made from the 25th week of pregnancy with the intention of providing support for the general health and well-being of women in the later stages of pregnancy and helping them to meet costs in the run-up to birth.
Those were laudable objectives, but, as we have outlined on Second Reading, in Committee and again tonight, the grant has been essentially flawed from the outset. There is no requirement to use it for better health and well-being: women can spend the money on whatever they want; and it is paid to pregnant women regardless of their income or need. As Dr Samantha Callan of the Centre for Social Justice said in an evidence session on the Bill:
“There was absolutely no guarantee that the grant would be spent on nutritious food.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 4 November 2010; c. 116, Q279.]
In the context of the unprecedented budget deficit, therefore, we believe that this payment to all pregnant women is a poorly targeted use of limited public funds. Abolishing the payment will help to reduce the UK’s budget deficit, saving £40 million in 2010-11 and £150 million per annum from 2011-12 onwards.
Having decided that we need to abolish the grant, the Government believe it should be done quickly to maximise the Exchequer savings. By delaying the abolition until 2014, as amendments 44 and 45 seek to do, we would reduce those savings, and amendment 3 would keep the grant in place, so additional money would have to be found through other spending cuts, borrowing or tax rises this year. As my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) said, there are other priorities. The coalition Government are clearly committed to increasing spending on health in real terms over the lifetime of this Parliament. Are Labour Members saying that that commitment should be relaxed to enable us to keep the health in pregnancy grant?
Much was said by Opposition Members on Second Reading and in Committee about the importance of a healthy diet during pregnancy, the importance of vitamin supplementation, and, especially, the effect of these on women on low incomes. There is no doubt that maintaining a healthy diet throughout pregnancy is important. However, the evidence suggests that that should start at the earliest possible stage. Belinda Phipps of the National Childbirth Trust said in the evidence session on the Bill:
“If you are setting out primarily to improve the nutrition of the mother to improve the health of the baby,”
the payment of the health in pregnancy grant
“needs to be earlier. If you…really want to change the future of the baby, it needs to be as early as possible. It is not possible easily to do it pre-conception, but the earlier in pregnancy you can do it, the better.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 4 November 2010; c. 79, Q205.]
Amendments 43 and 44 would stop the abolition of the grant and require the Treasury to conduct a review to consider whether the grant should be retained in its current form, means-tested or replaced by a system of vouchers. As I said on Second Reading and again in Committee, the Government are committed to supporting the health of pregnant women in low-income households through the Healthy Start scheme, which provides support from the 10th week of pregnancy, when diet is particularly important in a baby’s development. The Healthy Start scheme provides vouchers worth £3.10 a week for fruit, vegetables and milk, as well as coupons to exchange for Healthy Start vitamin supplements containing the recommended daily amounts of vitamins C and D and folic acid for pregnant women and new mothers. The Department of Health is also co-ordinating a consultation exercise that seeks views on the extension of the scheme to allow vouchers to be used to buy plain frozen fruit and vegetables. This would increase the flexibility and choice for women supported by Healthy Start while encouraging them to include more fruit and vegetables in their daily diet at the time in their pregnancy when that is particularly important.
The amendments would delay the abolition of the grant or keep the grant in place. That would mean that additional money had to be found through other spending cuts, borrowing or tax rises this year. The Government have to face some difficult choices as to where to cut public expenditure, and we cannot afford to continue spending £150 million a year on the cash payment of a health in pregnancy grant regardless of what it is spent on and whatever the income or financial position of the recipient. As my hon. Friend the Member for Congleton (Fiona Bruce) explained, it is not well focused, well targeted or well timed. That is why I believe that it is right to scrap this grant, recognising that measures are in place to help to support maternal nutrition among families on low incomes. We also have the Sure Start maternity grant, which is a lump sum to help those on the lowest incomes.
Mrs Mary Glindon (North Tyneside) (Lab)
The Sure Start maternity grant is given only for the first child. If a family do not have that grant or the health in pregnancy grant, with the Government also reducing the amount that they would get in family tax credits for toddlers, they will be much worse off.
Mr Hoban
That is an unfortunate consequence of the difficult decisions that we have to take to tackle the deficit that the hon. Lady’s party has left behind. Tough decisions have had to be made to target help as closely as possible on those in the greatest need. The support that exists, whether through the Sure Start maternity grant—yes, we are restricting that to the first child from April 2011—or through the Healthy Start vouchers, provides targeted, focused help for those in the greatest need. That is the best way to give support to help mothers on low incomes through pregnancy. The health in pregnancy grant does not tackle nutrition, and it is not well timed because it should be delivered at an earlier stage to help families.
I have to say to the hon. Member for Bristol East that if the grant goes, there are still plenty of opportunities for expectant mothers to access health visitors, midwives and GPs to get the support that they need to help them with their diet or with smoking cessation, and to give them advice and support throughout the pregnancy. Support is not limited simply to receiving that grant; it is there throughout pregnancy, and we should not overlook that fact in discussing the Bill.
It is right to remove the health in pregnancy grant, even though we do not do it lightly and would not choose to do it unless it were a consequence of the situation that we have inherited. The previous Government lost sight of good fiscal discipline, and we are having to take measures today to tackle the problems that have resulted.
Kerry McCarthy
In all our debates on the health in pregnancy grant on Second Reading, in Committee and today, we have been going round and round in circles without ever quite nailing what the Government’s objections are to the grant continuing.
I shall try to pin down what the Minister has said. He says that the grant would be better if it were paid earlier, yet he has not brought forward any suggestion that it should be. He says that it is a problem that there is no guarantee about what it is spent on, yet he seems perfectly happy to go on paying child benefit to mothers or the winter fuel allowance to pensioners. There is no guarantee about how that money is spent, so I reject that argument. It has been suggested that there has been no evaluation of the scheme, but as he said, it was introduced in 2009. How on earth can we possibly have had the chance to carry out a full evaluation of the take-up of the grant, what it is spent on and people’s access to advice?
My final point, and the crux of the matter, is that the Minister praises the Healthy Start scheme because it is targeted at the people who need it most. He also mentioned the Sure Start maternity grant, which, as we know, is being reduced to cover just the first child. Does he not accept that if we abolish the health in pregnancy grant, the families he spoke of, who need the Healthy Start vouchers to cover expenses and to have a healthy diet during pregnancy, will be £190 a week worse off? That is why we argue for the retention of the grant, with a review of whether it should be means-tested and better targeted. In rejecting the idea of a review totally, he is basically saying that the poorest families, who are already suffering because the Sure Start maternity grant is being restricted to the first child, must lose £190 a week. That is something of a scandal. I therefore wish to press the amendment to a vote.
Question put, That the amendment be made.
Mr Hoban
I beg to move, That the Bill be now read the Third time.
As we have discussed today, the Bill deals with three policies: child trust funds, the saving gateway and the health in pregnancy grant. Both today and in Committee two weeks ago, we have debated the details of those policies. Opposition Members have pointed to their merits or, rather, their potential merits—as we have found, quite often the hard evidence to support their arguments is rather lacking. They have argued that we should either retain the policies or delay removing them, and sometimes both at the same time.
I shall come to some specific points about those policies in a moment, but I want to be clear on one point. The question for this Bill is not simply whether we think that child trust funds are a nice idea or whether we would like to give pregnant women some more money. The question for this Bill is a harder one to confront. It is whether we can afford such policies—at a cost of £3 billion over the spending review period—given the scale of the deficit that we inherited, and whether continuing with them would be the best use of taxpayers’ money.
As we decide to give the Bill its Third Reading, it is important to remind hon. Members of the context. When the Governor of the Bank of England says that our fiscal position is “clearly unsustainable”, when our borrowing last year was the highest in our peacetime history and when we are spending £120 million a day just to pay the interest on our debt, something has to give. If we do nothing and fail to tackle the deficit, we will see higher interest rates, business failures, rising unemployment and, potentially, even the end of the recovery. We therefore need a clear, credible plan to tackle the deficit. We have set one out, including more than £80 billion of spending reductions. However, to deliver it we have to make choices about where savings are going to come from.
We have made those choices, and this Bill implements three of them. They were not easy choices. As I said on Second Reading, the Conservative party supported the introduction of child trust funds and the saving gateway in opposition. Indeed, on at least three occasions so far, the right hon. Member for Delyn (Mr Hanson) has quoted what I said about the saving gateway, and I suspect that he may well remind the House again in his speech on Third Reading. We did not warn against the health in pregnancy grant, although we did raise some concerns about it. My Liberal Democrat colleagues were rather more sceptical. They opposed the child trust fund and prayed against the regulations that introduced the health in pregnancy grant. However, as I have said, the question is not whether it would be nice to keep those policies—in an ideal world it would be—but whether we can afford to keep them, given the fiscal challenge that I have outlined, and where else we would have to find savings if we did so.
I believe that the Bill makes the right savings. Continuing with the child trust fund, for example, would have cost us more than £500 million each year. That money would have been locked up for up to 18 years—a luxury we cannot afford.
Given our limited resources, we must spend money on our priorities: reducing the deficit, so that our children are not left to pay our debts; supporting the most vulnerable and poorest people in our society now—for example, through the pupil premium; and the extension of early years education and care to all disadvantaged two-year-olds. Those policies will provide real opportunities for disadvantaged children to move out of poverty for the long term.
While saving money from the child trust fund, we are still committed to encouraging people to save for their children in an affordable way. That is why I announced a new account—a junior ISA—on Second Reading. It will provide parents with a simple and clear way of saving for their children, albeit without Government contributions, and build on products that are already accessed by 20 million people of all ages and on all incomes. I also want to encourage people on lower incomes to save, but again that must be affordable. Unfortunately, it would not have been affordable to introduce a new scheme such as the saving gateway, which would have cost up to £150 million a year just when we are starting to tackle the deficit that we inherited in the summer this year.
I was worried that there would not have been enough providers to ensure that everyone had an accessible option for opening a saving gateway account. During the Bill’s evidence sessions, we heard from the British Bankers Association and the Building Societies Association that their members were far from enthusiastic about providing such accounts. The Post Office was going to offer the account only if taxpayers had funded it to do so. We cannot afford to introduce that account, and there were significant doubts not only about access and who would offer it, but about its effectiveness in increasing saving.
It is right to abolish the health in pregnancy grant. I remind hon. Members that it is a one-off cash payment of £190 to every pregnant woman around the 25th week of their pregnancy. In Committee, we debated at length the different ways in which women might spend that money, and how the scheme could be improved, such as by paying it earlier, in instalments or to only some women. The basic point is clear. The grant is unfocused, it can be spent on anything, and it is untargeted. We believe that there are better ways to support maternal health.
Fiona O'Donnell (East Lothian) (Lab)
Following that logic, does the Minister believe that because there is no guarantee about where housing benefit, child support and child benefit will be spent, they should be scrapped?
Mr Hoban
The hon. Lady has not participated in the debate today, but we have thought carefully about how to provide support during pregnancy to those on low incomes. There are vouchers under the Healthy Start scheme, and the Sure Start maternity grant, which we believe are more effective in providing targeted, better timed and more focused support to expectant mothers.
There is a choice. We could spend £120 million on the health in pregnancy scheme or we could scrap it and save the money so that we do not have to increase taxes or borrow so much. The latter is the right action to tackle the deficit. There are better ways to support maternal health, such as the Healthy Start scheme, which provides vouchers to enable pregnant women to buy fresh fruit and vegetables. The Department of Health is consulting on whether to extend that to plain frozen fruit and vegetables. Vouchers are also available for vitamin supplements, including folic acid, to provide a daily dose of vitamins B and C.
The Healthy Start scheme is effectively targeted at pregnant women and children living in low-income households, and is focused on supporting health and well-being, because it pays support in the form of vouchers rather than in cash. It is delivered at the earliest stage of pregnancy when dietary intervention is much more effective. That means that we can focus our resources better, but at the same time make some real savings—about £150 million a year. That is a vital contribution to tackling the deficit and ensuring that people are not burdened with the debt that we inherited from the previous Government.
That is the key point of the Bill. The changes that we are making to child trust funds, the decision not to introduce the saving gateway and the abolition of the health in pregnancy grant will save more than £3 billion over the spending review period. That is an important part of our plan to reduce the deficit and put our finances back on a stable footing.
As I said, this has involved some tough choices, but I believe that we have made the right ones. We found areas of spending, such as the child trust fund, which does not support people for up to 18 years, the saving gateway, which has not yet been introduced, so its removal will be less directly felt, and the health in pregnancy grant, which is untargeted and unfocused. We have confronted the questions, which I outlined earlier, of whether we could really afford to continue with those policies and whether they would represent the best use of taxpayers’ limited resources. The questions for anyone who wants to oppose this Bill and to continue with the policies are how they would find the money and what they would do instead. This is an important Bill. It is part of our work to tackle the unprecedented deficits that we inherited, and it will help us to put our public finances back in order. I commend it to the House.