Savings Accounts and Health in Pregnancy Grant Bill

Catherine McKinnell Excerpts

Tuesday 26th October 2010 Commons Chamber

[Mr Hanson]

The hon. Gentlemen need not listen to me but should listen to the groups that are arguing for the retention of the grant. It is important not just for health but for costs of pregnancy, such as maternity dresses or equipment for the home, or covering time taken off work through ill health. Women on poor incomes need help and support to cover those important things, and this universal grant can help individuals to meet those needs at a time of great stress in the 25th week of pregnancy.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I noticed that the Minister referred during his submission to a quotation from the National Childbirth Trust, which expressed its upset that the grant was not provided earlier in pregnancy. I also have a quote from the trust that might provide the evidence requested by the hon. Member for Central Suffolk and North Ipswich (Dr Poulter):

“At a time when families are trying to make ends meet, the Coalition Government has hit parents particularly hard. Cutting pregnancy and maternity grants, as well as child benefit and tax credits, will make it even more difficult for new parents or those wanting to start a family… the Government should stick to its commitment to making the UK more family friendly.”

[Mr Hanson]

My hon. Friend quotes the chief executive of the National Childbirth Trust, but she could have also quoted the Royal College of Midwives, which said that there is an opportunity for midwives to communicate health advice to women and their families, as the grant is dependent on engagement with health practitioners. Never mind the cost of maternity dresses and other clothes, minerals, healthy eating, advice or taking time off work, these are important grants.

The Bill shows that the Government are out of touch with the needs of the vast majority of the British people. A £190 maternity grant may not seem much to some Government Members, but for the shop worker getting by on the minimum wage, it is a significant amount of money. For a woman with an unemployed partner, it might make a difference to the future health of their child. For those people, the grant makes a difference. Like the child trust fund, the grant is about investing in our future and in our children’s health and in giving them a good start and ensuring that they have a break at the age of 18, to make their way in life with positive support.

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[Paul Maynard]

Three quarters of those accounts opened since 2005 have failed to receive additional deposits; 99% have not received the maximum funding available; and only 71% of eligible children have a child trust fund. I am not trying to argue, as Opposition Members seem to think, that the fund is a failure; I am trying to argue a more subtle point, that this piece of legislation—this policy innovation—has not achieved its goal.

[Catherine McKinnell]

Will the hon. Gentleman give way?

[Paul Maynard]

I shall give way on this one occasion.

[Catherine McKinnell]

The child trust fund has not been in existence long enough truly to reap the benefits that it would if it were kept on. In respect of deposits, the fact is that when parents have young children, their outgoings are extremely high, but if the child trust fund is in place in the future, when they have more expendable outgoings, they are able to invest more money in it. So, an awful lot of parents who might not invest when the child is a baby might do so in a few years’ time when the child has gone to school and they are not paying for child care and so on.

[Paul Maynard]

I thank the hon. Lady for those ifs and buts. We can all hope for what might happen at some point in the future.

The shadow Minister, the right hon. Member for Delyn, set out three reasons why Labour introduced the measure. It was about inculcating a savings culture, encouraging financial education and providing a nest egg. So, rather than assessing the measure against the legislation, let us try to assess it against what the shadow Minister said was important.

There is no evidence that the fund has encouraged a savings culture. Many organisations that promote financial education come to me time and again to ask, “Why didn’t the last Government do more to promote financial education, particularly at primary level?” In the average family, a piggy bank—

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[Paul Maynard]

Improvements in diet are important, but the waiting times for those applying for the health in pregnancy grant have been anything up to eight weeks, by which point the money that was supposed to transform their ability to access an improved diet is simply not appearing. It would be very easy to dismiss—

[Catherine McKinnell]

Will the hon. Gentleman give way?

[Paul Maynard]

No, I am not going to give way now—[Hon. Members: “Give way!”] No, I do not want to give way—[Interruption.]

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[Paul Maynard]

It would be very easy to dismiss health in pregnancy grants, as some Opposition Members seem to think that we are doing. I am not doing that. My constituency has significant pockets of poverty, and if Conservative seats were ranked in order of deprivation, mine would be somewhere near the top. I spent a fascinating Friday a couple of weeks ago with our family nurse partnership, a pilot project that is working with young mothers-to-be in the most deprived quartile of the population in the most deprived areas of the constituency. They receive intensive support from the moment they become pregnant to beyond the birth. It is a fantastic project and it costs £3,000 per mother. The project also works with the father. It addresses issues such as self-esteem, improving literacy and numeracy, helping the father to get back into work and ensuring that the father feels part of the birth.

To my mind, the project achieves far more than a £190 health in pregnancy grant. One might argue that it is a significantly greater amount of money, but I would argue that it represents a different approach to policy making. The hon. Member for Nottingham North (Mr Allen) is looking at early intervention on behalf of the Government and he is a strong supporter of the family nurse partnership. I think that it makes a much greater difference to outcomes if we have evidence-based policy. My hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) was correct to pursue the Opposition about the lack of medical evidence for improvements in the health of pregnant women—

[Catherine McKinnell]

Will the hon. Gentleman give way?

[Paul Maynard]

No, and the quote that I heard from the hon. Lady did not pass the quality threshold for the British Medical Journal and nor was it ever likely to do so, coming as it did from a press release.

It is also worth bearing in mind that we give other targeted interventions for pregnant women that are designed to assist them. The Minister has referred already to the Sure Start payment and the healthy start payment, and the latter is specifically designed to support women who wish to improve their dietary health by purchasing fruit, vegetables, vitamins and other things that will assist them. Interventions must be properly targeted and not just handed out. It is all very well to oppose this measure, but not to do so by reference to generalities. These proposals have to be considered in the round, and those Opposition Members who may not like this proposal need to suggest what they would do instead and how they would seek to cut the deficit that they have left behind.

This Bill is the start of something new and radical. I am a great fan of Ronald Reagan, the former President of the United States—as we all should be. He always said that he lived on the sunrise side of the mountain and I always try to do so too. Although my glass is often half empty, when I consider things I try to take an optimistic view, and I consider this to be an important measure. It says that—unlike the previous Administration —no longer will we pass legislation year after year without bothering to ascertain whether it achieves its purpose. We will pass legislation based on the evidence of whether what has gone before has worked and whether it assists in meeting the wider challenges of public policy that we face—both economic and social. I urge the House to support this Bill, not just because it will assist us in reducing the deficit, but because it introduces the concept of evidence-based, high-quality public policy making, and that is sorely needed in this country today.

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[Richard Graham]

The hon. Gentleman is right that this is a short period of history over which to judge them, but the fact remains that the annual management costs for CTFs, at 1.5%, are significantly higher than most of us would need to pay for an alternative form of savings. That will not alter over time. In answer to the suggestion that, in time, parents, families and friends might put more into the accounts, there is nothing to prevent them from opening an ISA or, as the Minister suggested, a new denomination of children’s ISA—if one becomes available—in their child’s name. Although I think that half the point made by the hon. Member for Pontypridd (Owen Smith) is right, I do not think that the overall impact of CTFs would be positive.

[Catherine McKinnell]

The hon. Gentleman made a point about accessibility and the fact that 25% of child trust funds set up by the state are not taken up by the individuals. How does he suggest that that 25% of people benefiting from those savings funds will benefit from ISAs, given that they are unlikely to walk into a financial institution to arrange one for their children?

[Richard Graham]

I have a specific suggestion on that, which I will come to in a moment. Meanwhile, I am sure that the hon. Lady will have noted earlier the intervention from my distinguished colleague on the Work and Pensions Committee, the hon. Member for Stretford and Urmston (Kate Green), who in an earlier career pointed out that CTFs do not necessarily reach the most vulnerable families. Arguably that was a flaw in the concept at the beginning.

[Richard Graham]

The only difference is that CTFs are funded by the Government, so we come to the argument about whether that funding can be used more effectively in the context of the goals. I was going to come on to that. I suggested that there are alternative forms of savings that are more effective than CTFs, have lower management fees and better performance, and come at no cost to the taxpayer.

I come to the next point made by the SCS alliance. It argues that CTFs have been

“one of the most successful government savings schemes ever”.

Members will agree that everything is relative. Clearly, CTFs did better than the previous Government’s attempt to create a savings scheme—the stakeholder scheme—which is a scheme that not even the right hon. Member for Delyn (Mr Hanson), in one of his more elaborate flights of fancy, could conceivably describe as having been an outstanding success. However, by comparison with the success of other savings schemes not run by the Government, CTFs have done only a relatively modest job.

The important thing is that, although Governments can, do and should create the structure for savings schemes, their track record in running them is not good. For example, do Members believe that we should be paying people to work for Her Majesty’s Revenue and Customs and spend their time advertising and promoting CTFs, or do we believe that they should be ensuring that benefits go to the right people and that we all pay the tax that we should pay? HMRC should not be in the advertising business.

[Catherine McKinnell]

rose—

[Richard Graham]

I have given way to the hon. Lady already, but I am happy to do so again

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[Catherine McKinnell]

On the hon. Gentleman’s point about HMRC officials spending their time promoting savings accounts to children and parents, the idea is to give a hand-up, rather than a handout. Rather than benefits being handed out to families, the idea is to encourage saving in a family and to make it accessible to families that would not otherwise easily access saving funds. That is a hand-up, rather than a handout, and I would have expected Government Members to support such a programme.

[Richard Graham]

The answer is that we all want to encourage hand-ups to everybody, through whatever means possible, but that brings us to the second point about the difficult decision that the Government have had to take in their proposals—and which we as individual Members have to take—which is: what are the alternatives? I will come to that in one second, but on the Government’s role in running saving schemes, one crucial lesson that I hope will be learnt from the stakeholder experience and, now, from CTFs is that the Government should operate such schemes at arm’s length. When it comes to the creation of the national employment savings trust—or NEST—by the Department for Work and Pensions, I very much hope that that lesson will be taken on board.

The question then is one of choice. What could we do for our children with the money that the Government have been spending on CTFs that would be more effective? My belief is that the best investment that any of us can make as parents for our children is an investment in education. Therefore, Members need to focus on several crucial changes that have been made in the education of our children. Those changes will cost the Government and the taxpayer significant amounts of money, but that is an investment on which I believe we will all see a significant return. First, the retention of Sure Start children’s centres, which were begun by Labour, is an important move by the Education Secretary. Secondly, there is an extension of the availability of free education to every three and four-year-old in the country. Thirdly and most significantly, there is the poor pupil premium, which will cost the Government some £7 billion over this Parliament and which comes on top of baseline funding for schools.

I really believe that the most important thing that any of us can invest in is education. This is not about money: I do not believe that there is any evidence that financial literacy in this country has improved as a result of CTFs, nor, in a sense, could it, because the children are not involved. Children benefit from financial literacy programmes that go into schools and talk about what type of mobile telephone package they should have and so on, not from being given a lump sum of money that goes into an account with which they have no involvement. From the choices available to the Government, the best way to spend the money was and should be in education. For that reason, I shall be supporting the Bill.

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[Jacob Rees-Mogg]

I thank the hon. Lady for that useful clarification.

The health in pregnancy benefit is paid to ladies towards the end of their pregnancy so that they can eat properly. Again, my wife was entitled to it. I have in the past been mobbed up somewhat on nannies and issues relating to that subject, but the one type of nanny of which I most firmly disapprove is the nanny state. This patronising approach, saying to these ladies, “You ought to eat your greens and here’s some money so you can do so,” is not what government is about. The Government are here to allow people to lead their lives as freely as they possibly may, without interference from the state while also providing a safety net for those who fall on hard times, not to tell people how to lead their lives, at the expense of the taxpayer and the economy.

[Catherine McKinnell]

Does the hon. Gentleman agree that a “lady” of very low income who finds herself pregnant and expecting her baby in three months’ time will have increased expenditure relating to both the pregnancy and the upcoming birth?

[Jacob Rees-Mogg]

The hon. Lady makes a brilliant and inspired point with which I completely agree, and it is therefore wise to ensure that such benefits as there are are directed to the people who need them, not wasted on people who do not need them. [Interruption.] If the hon. Member for Nottingham East (Chris Leslie) wants to say something, I am more than happy to give way.

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[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Over the past few days, weeks and months, there has been a lot of talk about “fairness”, which is an easy word to use. Who is the judge of what is fair? Whose standards of fairness are being applied? Many believe that the measure of a civilised society is how it treats its weakest members. If so, the Bill clearly fails the fairness test, because it lets down families and leaves our children to take the strain.

When the Prime Minister spoke about “mending our broken society”, he did not say that he would go around breaking it first.

“I want the next Government to be the most family friendly Government we’ve ever had in this country”.

It was a broken promise, one of many, with more to come. Then we have the Chancellor’s hollow promise of fairness:

“A fair Government make sure that those with the broadest shoulders bear the greatest burden.”—[Official Report, 20 October 2010; Vol. 516, c. 955.]

Today we see the Liberal Democrat and Conservative idea of fairness.

Anyone who has young children running around knows how expensive bringing up a family can be. As we are discussing the removal of a grant of £190 to encourage health in pregnancy, I want to talk about how expensive simply being pregnant can be. There seems to have been a lot of debate and misunderstanding about the value of the grant. My hon. Friend the Member for Walsall South (Valerie Vaz) made good points about the physical nourishment required by a pregnant woman, especially in the later stages of pregnancy. On a physical level, however, a pregnant woman needs clothes to go to work, shoes for her swollen feet, vitamin supplements—I craved fresh fruit salad. I know mothers who have suffered from chronic back pain and chronic pelvic pain. They have struggled to sleep because the later stages of pregnancy are so uncomfortable. All those conditions can be helped by customised cushions, back supports and other aids, none of which is available on the national health service, all of which must be purchased, and all of which I was fortunate enough to be able to purchase, although many on lower incomes would not be able to. The health in pregnancy grant was designed to ease the final stages of pregnancy, and to ensure that a child is not born to a broken mother.

All that arises before we consider the huge impact of the link between the health visitor, the midwife and the pregnant woman that is currently required for the grant to be obtained. The financial pressures during pregnancy are difficult for all women, but teenage mothers suffer a particular burden. The Institute of Education has found that they suffer a lifelong financial disadvantage, with a lifetime family income £12,000 lower—or an annual income 2% lower—than the family incomes of those who become pregnant in their mid-20s.

[Toby Perkins]

Will my hon. Friend give way?

[Catherine McKinnell]

Am I the last speaker?

[Mr Speaker]

Yes.

[Catherine McKinnell]

In that case, I will give way.

[Toby Perkins]

My hon. Friend is making a compelling case. Does she agree that, whatever we may have thought about the upper-class buffoons whom we may have considered to constitute the Conservative party, they always seemed to have a sense of gallantry? When they said “Women and children first”, it was supposed to be a good thing. Nowadays, however, when they say “Women and children first”, they mean that women and children should be in the front line, facing a battering from the cuts. It is women and children first who are losing the benefits, it is women and children first who are losing the payments, and, most of all, it is women and children first who are paying the costs for these upper-class buffoons.

[Catherine McKinnell]

My hon. Friend ably makes a point that I was about to make myself. Families are being asked to bear the brunt of the mistakes made by bankers. The Government plan to take £190 away from the pregnant mothers who need it most. I believe that that constitutes a shameful attack on the most vulnerable and needy in our society. The Government tell us that the banking levy would bring in £2.4 billion, but my hon. Friend the Member for Walsall South set out the economic case—the “you do the maths” case—very clearly.

[Richard Graham]

I promise that my intervention will be briefer than the last one.

How fair does the hon. Lady think it is that those with money in child trust funds pay £25 million a year in fees at the last Government’s prescribed rate of 1.5% a year, which reduces the amount of money in the funds?

[Catherine McKinnell]

rose—

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

Does my hon. Friend agree that one of the crucial reasons the child trust fund is so important is that if a parent can save the maximum amount, the £18,000 or so would probably pay for one year’s tuition fees under the Liberal Democrats’ new plans?

[Catherine McKinnell]

I am grateful for all these interventions, but we had a discussion earlier about the benefits of the child trust fund scheme as opposed to the establishment of a potential ISA scheme. We dealt at length with the arguments in favour of the current scheme, which is targeted at everyone, including the most vulnerable and disadvantaged. The ISA scheme would not necessarily achieve that. However, I fear that we are becoming lost in figures.

The point that I am trying to make concerns the real-life cost of the decision to remove the health in pregnancy grant, to freeze child benefit and to cut the child trust fund, tax credits and the Sure Start maternity grant. It is clear that, as a result of those and other cuts, low-income families will bear the greatest cost of many of the Government’s policies. The average household income in the north-east is £12,543 a year. According to a recent report by Citizens Advice, the combination of the Government’s proposed cuts could cause a low-income family with a new baby to lose up to £1,235 a year—10% of the average household income of someone in the north-east. Is it really fair that children should be paying this price, rather than bankers?

Because of the establishment of the child trust fund, both my young children have bank accounts, and that is the start of saving for their future. I know of lots of families who are saving through child trust funds, regularly topping them up with birthday and Christmas gifts. Many people have admitted to me that they would not have started saving without the impetus to set up the account. We have discussed at length the benefits of the trust fund in encouraging a savings culture in this country; I think Members on both sides of the House agree that that is a positive development.

Since the child trust funds were introduced in 2005 there has been steady growth in the opening of new accounts, from 3 million in 2007 to 4 million in 2009. The current number is about 5 million—that is 5 million families saving up for their children’s futures.

The child trust fund was a universal and progressive policy that recognised the importance of children. It allowed families to open an account, but it gave greater assistance to those on lower incomes through additional payments from the Government. Abolishing child trust funds will lead to the next generation paying for the mistakes of the City bankers and financiers who caused the global economic crisis.

I beg the Government seriously to review this decision, and to accept the analysis of the independent Institute for Fiscal Studies that the spending review is regressive and that families with children will lose out the most. I also ask the Minister to consider some of the suggestions that have come out of the debate—such as keeping the savings mechanism in place while, perhaps, reducing the amount being put in, or means-testing if necessary—in order to hold on to this credit saving system that has already been so heavily invested in.

The Government are taking a terrible risk—reversing so much work that has been done to remove so many of our children from poverty. The Government have chosen to pursue this policy, and in my view and that of all Labour Members it is the wrong choice for our future generations.