Child Trust Funds

– in Westminster Hall am 4:27 pm ar 19 Mawrth 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

[Relevant Documents: Sixty-Seventh Report of the Committee of Public Accounts of Session 2022–23, Child Trust Funds, HC 1231, and the Government response, CP 941.]

Photo of Jeremy Quin Jeremy Quin Chair, Defence Committee, Chair, Defence Committee 4:30, 19 Mawrth 2024

I beg to move,

That this House
has considered Child Trust Fund access for people seeking to manage the finances of others.

It is a pleasure to use this debate to highlight the ongoing issue of disabled young people’s access to their child trust funds and to recognise the good will of the Minister and his Department, but to demand changes that would solve issues for the courts, CTF providers and, above all, the disabled young people and their families. We have the means to secure easy access to funds that rightfully belong to those young people—funds that could prove invaluable but which are being denied to them by a lack of information and processes that may be well-meaning in intent, but are Kafkaesque and off-putting in delivery.

It is a pleasure to move the debate under your chairmanship, Ms Elliott. I am delighted to see the Minister in the Chamber, as I know he is focused on the issue, as well as other hon. Members who have taken a real interest in getting a resolution on the issue.

I would like to pay tribute to my constituent Andrew Turner. Back in September 2020, Andrew found that his disabled son, Mikey, was locked out of his child trust fund. He simply wanted to buy an adapted bike with Mikey’s money, and Mikey’s life-limiting condition meant that time was of the essence. The child trust fund was Mikey’s only financial asset. That should have been the start of a simple process in which a loving parent who looks after his disabled son can use that child’s own funds to enhance the wellbeing of the child. Instead, Mr Turner found that he and thousands of others were required to go to court when the account matured. Such is the complexity that Mr Turner was independently advised that it would be easier and cheaper for him—I hate to say this—to wait until Mikey died, when a simpler process existed to reclaim the money. He was naturally deeply upset. He was also determined to do something about it, not just for Mikey, but others in the same predicament.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

I commend the right hon. Gentleman. As I said to him before the debate, I want to give the Northern Ireland perspective. In Northern Ireland, the responsibility for the management of the child trust fund account for a child when there is no person with parental responsibility is transferred to the Share Foundation, which deals with inquiries until the child turns 18. Does he agree it would be a good idea if the responsibility went to relatives in the extended family, such as grandparents, to ensure that they can provide guidance within a familial setting in relation to finances? That would be a simple way of doing it—letting the grandparents or the extended family look after things.

Photo of Jeremy Quin Jeremy Quin Chair, Defence Committee, Chair, Defence Committee

I am grateful to the hon. Gentleman for his intervention. I will touch on the circumstances in Northern Ireland, but the fundamental point that unites many people in the Chamber is the desire to get easy access for parents to ensure they do not go through a court process, incurring fees, going through bureaucracy and requiring the support of GPs and social workers, to access what in many cases is an average of about £2,000. It is just too much bureaucracy and work when it is rightfully the asset of their child.

I know many people in the Chamber, not just the hon. Gentleman, take a close interest in the matter and have far more personal experience than me, as parents of children with disabilities. They know that parents of children with disabilities have so much to do. Often that involves struggling to get what is rightfully theirs from Government. That is one area in which Mr Turner felt that progress could be made. The good news is he found a groundswell of support from parents and charities. I would like to thank in particular Contact for its support and Renaissance Legal for its tireless campaigning. There is support from child trust fund providers and, indeed, from the Minister, and yet four years on, we are still nowhere near where we need to be.

I would like to set out the scale of the problem. I will set out what I recognise the Government have attempted to do to mitigate the problem and, lastly, what I believe they should do to go further and largely to resolve it for most families with disabled children. Let us be clear: it is not a new issue. It is very apparent and has been well rehearsed—not only as a result of my constituent’s brilliant campaigning. The Public Accounts Committee looked into the issue last year as part of its analysis of child trust funds. The PAC highlighted a wider problem with CTFs as a whole, but it drew particular attention to access for young people lacking the mental capacity to manage their own savings.

In these circumstances, a family or carer must gain legal authority to access funds that belong to the young person involved. To do so requires an application for a deputyship order to the Court of Protection in England and Wales. For England and Wales, the Ministry of Justice estimates that between 63,000 and 126,000 young people may not have the mental capacity to access and manage their matured CTF when they reach 18. All CTFs will mature between 2020 and 2029. Tens of thousands of young people will therefore be subjected to a prohibitively lengthy, costly and complex process simply to access what is rightfully theirs.

In relation to stand-alone CTF applications, there were just 70 court applications between September 2020 and May 2023, compared with about 27,000 accounts maturing over the same period. The Department, in its Treasury minute responding to the PAC, broadened the scope of applications to include not just stand-alone CTF applications but other assets. However, even on that basis, the number of applications for 16 to 21-year-olds between September 2022 and March 2023 was still only 312. Whichever statistic one chooses to cite, thousands of people are missing out on what is rightfully theirs, because we are not informing them of their rights, and if we do, the process is too complex and too costly for all but a few.

I know that the Minister is a decent man. He put aside time to meet Mr Turner and me on this issue, and I know that he has instructed the Department to engage. I know that he is keen to make it simpler for families and he has ensured that changes have been made. I acknowledge that the MOJ last year moved some of the application online, waiving the fees and creating a toolkit for parents. That is to be welcomed, and I believe it was introduced with excellent intent. However, the process still involves completing 12 forms, including the duplication of a number of forms, and 93 pages. This includes requiring time-pressured GPs or social workers to complete a 21-page mental capacity assessment, which not all are prepared to do. With all the pressures on the families of disabled young people and the associated cost of becoming a deputy, is it surprising that they do not prioritise accessing what are, on average, funds of about £2,000? However, that is £2,000 that could and should be used to the benefit of the disabled child.

I know that the Minister and his team wish to help further, and there is a means to do so readily at hand, already in use and absolutely capable of being advertised and delivered on. It could help to deliver tens of millions of pounds—actuarial analysis suggests up to £73 million—into the hands of those who desperately need it. I thank the chief executives of two child trust funds, OneFamily and Foresters UK, for talking me through their proactive approach, which puts their customers first. Those two funds account for more than half of all CTFs. Very commendably, those providers recognise the problem and are applying a common-sense and pragmatic approach to its resolution. That is in effect using the Department for Work and Pensions appointee scheme—a tried and tested system to enable families to manage their child’s benefit income. It provides adequate protection and is the obvious solution to unlock the savings of disabled young people.

Let us be clear: this is no free-for-all. The providers require evidence that the parent or guardian is a DWP appointee; they require identity checks and confirmation of the child’s capacity. This process is available only in relation to funds under £5,000, and complex cases may still have to go through the courts. However, it has enabled the providers to meet the needs of hundreds of disabled children. There is a problem. Despite following a DWP process, and despite the knowledge that were a DWP appointee to be acting fraudulently there would be far more at stake than a modest child trust fund, this sensible route is frustratingly not officially sanctioned. The financial institutions are commendably going on risk to allow access to the funds. They know that there are far more affected families out there, but as responsible, regulated entities, they do not believe they can advertise their willingness to help in this pragmatic way, which combines existing safeguards with swift access.

Those two leading institutions and others with a similar proactive mindset assist 900 families a year—a significant multiple of the number aided through the court route—but thousands still need support. I therefore have three requests for the Minister that would help to resolve this issue. Will he engage with the DWP to extend the appointee scheme and officially include savings held in CTFs? Will he engage with the finance industry to formalise what is already a successful industry process, and in doing so enable it to advertise that route so that families can take advantage of a simple scheme? Lastly, will he help families to secure basic information about their CTF provider if the account has been lost?

Photo of Philip Hollobone Philip Hollobone Ceidwadwyr, Kettering

I commend my right hon. Friend for his superb speech. He has approached this debate in an extremely constructive fashion, with a common-sense, straightforward solution to the problem. We do not need to reinvent the wheel; we just need to apply common sense. Child trust funds are a wonderful advantage to many young people, but the most vulnerable are missing out. My right hon. Friend has outlined a way in which the Government can address the biggest part of this problem.

Photo of Jeremy Quin Jeremy Quin Chair, Defence Committee, Chair, Defence Committee

I am most grateful to my hon. Friend, who brings me, brilliantly, to my conclusion. I agree with him. Movement on those three issues will prevent thousands of unnecessary court applications, and reduce bureaucracy and cost for the parents of disabled youngsters. Above all, it would put to work funds that could make a real difference to young people who could really do with a little extra help.

Photo of Edward Davey Edward Davey Leader of the Liberal Democrats 4:42, 19 Mawrth 2024

I pay tribute to Sir Jeremy Quin for securing this debate. I agree with everything he said. I hope there can be cross-party agreement today that we need to move forward at long last.

I also pay tribute to Andrew Turner and his family—particularly his son, Mikey—for the work they have done, but I am sure Mr Turner will agree that others have played a big role, including lawyers such as Philip Warford, journalists such as Jessie Hewitson, and Martin Lewis. Financial service companies have shown leadership, and Contact, other charities and families, many of whom are here, have campaigned. Their voices have come together, and I hope that the Ministry of Justice will listen.

I should declare an interest: I have a 16-year-old son, John, who has an undiagnosed neurological problem that means he cannot really walk by himself or talk, and has serious learning disabilities. He will never be able to manage his own personal affairs, let alone financial affairs. Although my wife and I, and many wonderful professionals, work to give him as much independence as possible, there is no way, when he reaches the age of 18, that he will be able to get the money from his child trust fund. I declare an interest, but I hope I have an insight into the issues that families face and the problems they have as carers. Just looking after their children on a day-to-day basis can be quite enough, without having to worry about lots of bureaucratic forms and having to go to the court of protection.

I have been involved in this debate for some time. I met Mr Turner in 2020, and I asked a question at Prime Minister’s questions on 21 October 2020. The then Prime Minister said:

“I will do whatever I can to help”—[Official Report, 21 October 2020;
Vol. 682, c. 1058.]

He made that promise nearly four years ago, and we are still here. Hopefully we can do a bit better today.

After that, I met Alex Chalk, who was then doing the current Minister’s job but is now Secretary of State at the Ministry of Justice. I think I met him three times, and we discussed all the options. We have seen the work that has been done—the waivers, the so-called simplification of the forms, the digitisation—in an attempt to make this work. Sometimes, particularly when the Ministry of Justice proposed a consultation on the small payments scheme, I supported it. I did not think it was the best solution, but I was trying to be constructive, so I went along with it to try to make it work.

However, I am afraid that all the efforts have failed, demonstratively, by the statistics that the right hon. Member for Horsham and many others have shown. To date, the Ministry of Justice has utterly failed to solve the problem, so we need action. We cannot wait much longer. The number of young people and their families, and the amount of money, will just build up over time. The problem will not go away, unless one Minister—I am sure it will be the Minister present today—actually grasps it properly.

I set out initially believing that the DWP appointee scheme was the right one. Families are aware of it, and it has worked in Government and for much larger funds. The amount of money that a loved one gets through their disability living allowance or personal independence payment far outweighs the average amount from a child trust fund, but apparently it is not possible to use that scheme because of the difference between flows of money from DWP and savings and capital. For the life of me, I have never quite understood that distinction, but perhaps there is something in it. I will come on to what I think is behind the Ministry of Justice’s objections.

In the spirit of being constructive, two solutions seem to be on the table. One is the proposal for a new, one-off order solution, which the right hon. Member for Horsham talked about. A family would still have to fill in a form, but it would be a one-pager. They would still have to go the Court of Protection, but it would be a very simple process. I think it has been well thought through by campaigners, and different fund managers have been involved. I believe that Mr Turner wrote to the Ministry of Justice before Christmas. Unfortunately, he received an email from an official in December 2023, which stated that

“we are not able to consider any proposals for an alternative process for accessing CTFs at this time.”

That is not good enough, Minister. People are working hard to come forward with practical solutions within the remit of the Ministry of Justice, and officials are not even willing to see people who are trying to be constructive.

I think that the one-off order solution would work. The Minister might not be able to answer today, but I would like to ask him: would it require a change to primary or secondary legislation to get that solution working, or would the registrar of the Court of Protection simply have to change the administrative rules? It is probably as simple as that, and it would suddenly unlock the problem both for child trust funds and junior ISAs. That is one solution, which the MOJ would be in control of.

The right hon. Member for Horsham touched on another solution: working through the financial service companies, which have shown huge flexibility and taken risk upon themselves. That would not be an MOJ responsibility; I think the MOJ would have to talk to the Treasury. I think the Government have landed this problem in the lap of the MOJ and said, “You sort it out.” If the Minister went to the Chancellor or another Treasury Minister and said, “Look, we want you to say this, and we are happy for you to say it,” all the Treasury Minister would have to say is, “We are relaxed about fund managers of child trust funds or junior ISAs taking that approach, taking the risk upon themselves if anyone objects, and marketing, giving information and promoting the idea that people with DWP appointee status can use the funds and transact them on behalf of their loved one.” That would be what we might call a market solution, but from my insight into how government works, that would require the MOJ to give the green light to the Treasury to make that statement.

Those are two simple, zero-cost solutions to allow vulnerable people to get their own money. After four years of trying, I urge the Minister to wake up and smell the coffee. Why might the MOJ object? I will put myself in his shoes and the shoes of the officials to work out what on earth is going on. The first issue might be the Mental Capacity Act 2005, the Court of Protection and their underlying principles. When officials and Departments have jurisdiction over an Act of Parliament, they can get jealous about how it has worked and not want to see any change. I get that—we have been there. However, democratically elected politicians must challenge the principle behind the Act, to test whether it has been taken too far, because in law there are other principles that apply, including proportionality and reasonableness. Surely those principles apply here. We are talking about small amounts of money for very vulnerable people whose parents and carers ain’t got the time to go to court. They may phone up one person and ask, “Can you help me?” but if the financial service company or the court says, “Well, it is a bit complicated,” they just give up, because their young person is in pain, needs medical help and needs to go to the hospital. That is the reality of their lives.

Photo of Jeremy Quin Jeremy Quin Chair, Defence Committee, Chair, Defence Committee

First, on the specific point of proportionality, does the right hon. Gentleman agree that the financial providers are talking about sums below £5,000, and the average child trust fund here is about £2,000? Secondly, tens of thousands of pounds would to through the DWP appointee scheme, which means that in comparison the child trust fund is a tiny amount of money. On the grounds of proportionality, the right hon. Gentleman is making an extremely good case.

Photo of Edward Davey Edward Davey Leader of the Liberal Democrats

I strongly agree with the right hon. Gentleman. He might be interested to know that, while I am not an expert, I am told that principle 5 of the 2005 Act talks about the least restrictive option to achieve the best interests of the vulnerable adult. Can the MCA apply itself to itself, please?

I wonder whether there is another reason why the Ministry of Justice is sticking to the principle despite all the evidence and pressure. Perhaps it wants to get more people to go to the Court of Protection so that the judges there can help with the deputyships of those vulnerable adults as they turn 18. One can have a discussion about whether more families should ultimately go to the Court of Protection. However, when one reads the guidelines of the Court of Protection, it is clear that it rightly sees itself as a court of last resort for a family dispute about money or, more likely, for how a person should be cared for, who should be caring for them and where they should live.

Sometimes, if there is a dispute in the family, the court is necessary and the Court of Protection is brilliant at that. Sometimes, a vulnerable adult may have no loved one or family member, and then the Court of Protection rightly fills that vacuum. However, if families can come to an agreement among themselves, more often than not that will be better than having to go to the Court of Protection. We should make the Court of Protection available to more people. We could advertise and market it—people may want to think about that in due course.

My wife and I are old parents; my son is 16 and I am 58, so I am quite an old dad. I worry about when my wife and I die. My son does not have a degenerative condition, and he is going to live for quite a few years. Of course, we are thinking in due course of going to the Court of Protection or getting a family member such as his sister or one of his cousins to be there for him. The Court of Protection, as I say, has good reason to be there. No one is against it, but it should be used when it is needed.

Perhaps the Ministry of Justice thinks that it has no court backlogs and loads of judges who are just sitting there twiddling their thumbs, so we should give them more business. Come on! Please take the pressures off the system by adopting something simple. I do not like saying this, but there may be a reason why people in the judiciary and legal profession are keen to force people to go to the Court of Protection even when it is disproportionate. Perhaps it is vested interests. I really hope that that is not what we are dealing with, because it is not acceptable.

We are talking about people who are vulnerable, and parents and carers who are stretched to their limits. We are talking about small amounts of money. I urge the Minister to listen to us, and to go back to his Department and the Secretary of State and say that the officials and some of the judiciary from the Court of Protection need to be overruled on this. We need to act proportionately. We need to act in the best interests of thousands of young people who should have access to their own money.

Photo of Danny Kruger Danny Kruger Ceidwadwyr, Devizes 4:54, 19 Mawrth 2024

I am pleased to speak in support of my right hon. Friend Sir Jeremy Quin, and it is a privilege and a pleasure to follow Ed Davey, who spoke so well. I entirely agree with what has been said.

I had the pleasure of speaking a few weeks ago at a conference organised by the Share Foundation. Gavin Oldham is in the Gallery for this debate. Andrew Turner spoke at the conference as well and laid out all the practical challenges that we have heard. There was also a very good speech by Ruth Kelly, the former Labour Minister who had oversight of the child trust fund policy when it was introduced. It inspired me to recognise how often good Conservative policies are introduced by non-Conservative Governments, because I have a great respect for the policy.

Another speaker discussed the real genesis of the child trust fund, which was, of course, Tom Paine. In the 1770s and 1780s, he wrote about an approach by which Governments simply gave families a lump of capital as a means of sustaining them and ensuring that they developed the habits of thrift, industry and self-reliance that we all need. We might remember that in the 1990s, the then Labour Opposition were developing ideas around what they called asset-based welfare, which is a very good principle and one that I would not give to Labour entirely. We all share these ideas—[Interruption.]

Sitting suspended for Divisions in the House.

On resuming—

Photo of Julie Elliott Julie Elliott Llafur, Sunderland Central 5:42, 19 Mawrth 2024

The debate may now continue until 6.15 pm. I call Danny Kruger to resume his speech.

Photo of Danny Kruger Danny Kruger Ceidwadwyr, Devizes

Thank you very much, Ms Elliott—I shall resume, rather than start again. I was saying that the child trust fund has its roots in a very good British tradition: the principle of asset-based welfare. In the 1990s, there was a tussle about the approach to public services. On the one hand, there was what we have come to call new public management, which was about centralised and bureaucratic quasi-market systems based on individual entitlements and comprehensive services. On the other, there was asset-based welfare, which was about putting capital into families and supporting communities to develop their own collective responses to social challenges.

In the new Labour years, the new public management model won out, with the great and noble exception of the child trust fund, which is such a brilliant innovation. It is such an important principle that people should be trusted to manage wealth and to sustain their families directly. I regret that, in 2010, when the coalition Government came in, the child trust fund was abandoned —I was going to have a pop at the Liberal Democrats, who I am sure were responsible for scrapping it, but let us just blame George Osborne, because we can all unite on that. Junior ISAs were established instead, and that is also a very good principle.

I want to echo the points that were eloquently made by my right hon. Friend the Member for Horsham and by the right hon. Member for Kingston and Surbiton about the real injustice that families now endure. Back in the days when the child trust fund was created, not enough consideration was given to children without mental capacity to access and manage their own finances upon becoming adults. Something very wrong was done without anybody intending it and without it being properly thought through. I will not repeat the points made by my right hon. Friend, but we have a huge obligation to right that injustice.

It is worth pointing out that we have not just tens of thousands of young people locked out of money that is rightfully theirs and without the money or incentive to pursue a Court of Protection case to unlock it. There is also a significant disincentive to open a junior ISA for parents with a disabled child who are thinking about the long-term future and whether it will be possible to access that money. So we are inhibiting the principle of saving altogether.

The right hon. Member for Kingston and Surbiton and my right hon. Friend the Member for Horsham made very good suggestions about a one-off order solution—I absolutely echo the case made there—and also about the DWP appointee scheme. The fact that we do that for benefits—as we have heard, those often account for much greater sums than the child trust fund—means that we should extend it. I also agree with the right hon. Member for Kingston and Surbiton about relieving the pressure on the Court of Protection.

The principle of child trust funds is such a good and important one in terms of the welfare model that we should have. The injustice that we have at the moment—the complexity of the system and the fact that there are so many dormant accounts—does not apply just to the families who know about the money that belongs to their disabled children and who want to access it; many millions of young people do not know that they have the right to this money—that it is, in fact, rightfully theirs. I understand that about 6 million young people have accounts, worth around £2,000 each, that they are unaware of, and it is estimated that around 1 million of those young people will come from deprived circumstances. What an enormous injustice it is that all that money is sitting there in Government accounts that they are not able to access! This has been described as malign neglect; it will not be deliberate—nobody is actively trying to prevent young people from accessing money that is rightfully theirs—but, nevertheless, for reasons we have heard about, disabled children and young people more widely are not being given access to money that is rightfully theirs.

I echo the point made by campaigners, including Gavin Oldham from the Share Foundation, about having a default withdrawal policy whereby the system knows the bank details of young people who are registered with HMRC. I understand that about 60% of young people with child trust fund accounts that they have not yet accessed could simply be given the money. That should happen; there would need to be communications and an information campaign around that, but it is the right thing to do, not least because it would stop the outrage of companies charging a 25% fee for the benefit of informing young people of the fact that they have this money. That, I think, is the future model.

As a country, we should be proud of the principle of child trust funds. A lot of people are increasingly thinking that we need to develop approaches around asset-based welfare. I noticed that David Willetts, a former colleague of ours, is proposing something similar—a capital sum granted to young people at coming of age—and Gavin Oldham has suggested that inheritance tax receipts should be used to invest in child trust funds for the future. I think that this is an old idea whose time has come, and I hope we can fix the immediate problems we have and then think more broadly about how to extend this model more widely.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Justice) 5:48, 19 Mawrth 2024

It is a special pleasure to serve under your chairmanship this afternoon, Ms Elliott. I pay tribute to Sir Jeremy Quin for securing this debate on behalf of his constituent Andrew Turner. I congratulate him on his detailed speech, which outlined very clearly the challenge before us.

I also want to comment on the speech from Ed Davey. I am grateful to him for sharing his personal experience of engaging with the system with his son, John. He demonstrated a special empathy for other parents of children with challenging disabilities. He offered solutions, and I remind the House of his most important statement: that people are just after their own money. He also spoke of the need for a simpler system.

That point was repeated by Danny Kruger—I have just found out how to pronounce his constituency properly, so I hope I did it justice this time—who lamented the fact that we no longer have the children’s trust fund, which was set up by the Labour Government. He tried to blame the right hon. Member for Kingston and Surbiton, but it was the right hon. Gentleman’s colleague in the Treasury—the same person who axed the hospital that was planned in my constituency. Health inequalities have widened ever since, and the hospital is not even on the Government’s new list. The hon. Member for Devizes confirmed that there is consensus in the Chamber that we need action: he said, “Simply give them the money,” which is a good thing for me to mention at the beginning of my speech.

Andrew’s fervent campaign to bring about change stems from the challenges faced by his family, who have come up against tremendous problems along the way as they have tried simply to get access to the money they saved for their son Mikey. We heard about the distress faced by Mikey’s family and others, and also about the deeply disturbing legal advice that Andrew received: that it would be easier and cheaper to wait until Mikey died, because a simpler process could then be used. I cannot find the words to describe the anguish I would feel in such circumstances.

Andrew has become an advocate for the many parents of children with disabilities who all too often come up against these barriers. I pay tribute to him and charities such as Contact for their hard work on this issue. I also thank the other parent campaigners—Nasreen Yasin, Claire Binney, Michele Creed and Ramandeep Kaur, as well as Rachel Dixon, John Roberts and their son, Joseph—for joining us today.

Under the fund introduced in 2005, every child born in the UK between September 2002 and January 2011 received up to £500 in Government vouchers as an incentive for their parents and guardians to open a savings account for them. That initiative was ditched by the coalition Government in 2011, when the junior ISA was created. Disabled children and those from low-income families received an additional amount to provide greater benefits in later life. The trust money was then locked away, and parents were able to add more to the account each year until the child turned 18. Again, as we have heard, parents of children who lack the mental capacity to manage their finances themselves when they turn 18 face making a deputyship application to the Court of Protection to access their child trust fund or junior ISA.

The Ministry of Justice estimates that between 63,000 and 126,000 young people may fall into that category, yet the Court of Protection approved only 15 applications in 2021. The Minister will be aware that Andrew wrote to the Lord Chancellor yesterday outlining the scale of the challenge. He highlighted that, since 2020, an estimated 31,488 disabled young people have been unable to access £72.4 million of child trust fund and junior ISA savings.

The Public Accounts Committee looked into this matter and highlighted reports of families finding the deputyship application process difficult, time-consuming and costly. Fees are waived if families are applying to access a child trust fund, but there are other barriers. The Committee heard that a six-page GP letter is needed as part of the process. The Down’s Syndrome Association said in evidence that low awareness of banking safeguards among the parents it supports is also a barrier to accessing their child’s trust fund. It explained that the fee waiver does not apply if the young adult is still in education, and that many families believe that they still need to pay for the services of a solicitor.

I recognise that the Government have considered measures they hoped would address the problem over the years, but the legislation and processes put in place to support individuals and their families should be much more accessible. We need closer working between the finance industry and Departments to find a workable solution to this ongoing problem. That would have the potential to significantly increase accessibility, helping many more families to access savings locked in child trust funds and junior ISAs.

I agree with the statement from Una Summerson, head of policy and public affairs at Contact. She said that implementing a less restrictive approach is in the best interests of disabled young people. Disabled young people must be allowed to enjoy their savings like everybody else, and continuing to promote actions that fail to address this issue will simply perpetuate injustice. There is an opportunity to bring common sense into the debate and to commit to a new approach.

Photo of Edward Davey Edward Davey Leader of the Liberal Democrats

The hon. Gentleman has made a powerful speech, and I thank him for his kind comments. We all hope that the Minister will take the opportunity to tell us that the Government will look at the issue again and will make changes, but does the hon. Gentleman agree that if this Government fail to make changes, at the next election and in the next Parliament, it is vital that his party, working with others, makes those changes?

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Justice)

Yes. Whichever Government are in power, they have to make the changes necessary to make it much easier for people to access the funds. I do not know what the mechanism will be, but I think we can all say that the next Government, of either colour, will deliver on that particular promise, but the Minister might get this sorted before we have that general election. Today might have been the last day the Prime Minister could have called the election, but we still have a few hours to go—bring that on!

The Government referred in their consultation response to clear evidence of the challenges in the current system, with the Court of Protection property and affairs application forms being too lengthy and complex, and the time taken between completing the application to the final order being made being too long and disproportionate for the sums involved. Instead of a wholesale change, however, the Government opted for incremental changes to the current court process. In 2023, the Ministry of Justice created a toolkit for parent carers on making financial decisions and implemented a new digital process for property and affairs deputy order applications, which was rolled out last year and is set to speed up the process. Users can complete some of the court forms electronically and can digitally submit remaining paperwork.

Sadly, Contact tells me that none of the Government’s piecemeal changes has meaningfully simplified the court process or made it more accessible for families with no legal experience. The Government’s strategy is not working. If their intended aim was to have a process that was as accessible as possible, it simply has not been achieved. I hope that the Minister will outline the impact that those changes have had on application processing times, addressing whether future digitalisation of Court of Protection processes is planned, and outline exactly how the Government will remove those blockages to the funds once and for all. Let them have their own money!

Photo of Mike Freer Mike Freer Assistant Whip, The Parliamentary Under-Secretary of State for Justice 5:57, 19 Mawrth 2024

It is a pleasure to serve under your chairmanship, Ms Elliott. I thank my right hon. Friend Sir Jeremy Quin for securing the debate and continuing the conversation we have had for some time. I was pleased to meet him and his constituent Mr Turner last May to discuss the issue, and I welcome the ongoing debate that we are having.

I will not tiptoe down memory lane, as colleagues have —I am not sure that revisiting the coalition Governments of 2010 onwards is particularly helpful to today’s debate. What I want to do and what is important—and I am sorry if it is dry—is lay out the legal framework that is there is to protect vulnerable people. I understand clearly that the actions of the vast majority of parents are well intentioned, and that they act with great honour and kindness looking after their child or young adult. However, my job is also to protect vulnerable people from any form of abuse, and that weighs heavily on any reforms that we take forward. I appreciate that people will disagree vehemently with me, but I have to take into account the fact that not every parent would act with the best of intentions when accessing the funds.

It is a well-established common-law principle that an adult must obtain proper legal authority to access or manage the finances or property of another adult. That includes, for the purpose of today’s debate, a matured child trust fund of a young adult. People are understandably unaware of that legal principle, and it may be surprising to parents and carers who have been heavily involved in decision making for their young person prior to their turning 18. I want to iterate the steps that we have already taken to try to improve the process, particularly as regards awareness of what steps need to be taken as the young person reaches the age of 18.

Photo of Edward Davey Edward Davey Leader of the Liberal Democrats

Before the Minister talks about reforms that have been made, can I bring him back to the point of principle that he outlined at the beginning of his remarks? I do not think anyone disagrees that there is an important principle, but there is equally a principle of proportionality that I mentioned in my speech. Can the Minister address that point? Where does proportionality arise in his thinking about the principles involved?

Photo of Mike Freer Mike Freer Assistant Whip, The Parliamentary Under-Secretary of State for Justice

I have to say to the right hon. Gentleman that I am happy to have an ongoing conversation. In fact, this is the first time we have discussed the matter face to face since I took on my portfolio. Proportionality is a valid point, but what is the level of risk that the right hon. Gentleman is willing to take? It will be different from the one that I or the Government are prepared to take. The right hon. Gentleman or anybody in this room may be prepared to say that 10, 20, 100 or 1,000 young people could have their money accessed inappropriately. That is a proportionate risk that they are willing to take. My view is that I want to minimise that risk and that proportionality is not easily measured.

I am not a lawyer. I look to my right hon. Friend the Member for Horsham and my legal friends to say that there may be a legal definition of proportionality. However, the definition of proportionality for those who are making decisions against those who are asking for change may be different. I am willing to see if we can bridge the gap, but my view is that I want to ensure that we can both improve access and that protections remain in place so that those who may not have the best interests of the young adults in mind do not get access to funds with total liberty.

Photo of Edward Davey Edward Davey Leader of the Liberal Democrats

I am grateful to the Minister for that answer. It was direct and to the point, and he has given way again, which is generous.

When we look at the risk, we have evidence from the industry, which has looked at the case and many firms and funders have said that they are prepared to take on the risk themselves. Even though the Government are behind it, because the risk and the amount of money are so small, the firms have taken on that risk themselves. Is that not a lesson that the Minister should dwell on? If the MOJ is not prepared to act on that, would he at least go and talk to his colleagues at the Treasury and see if they can make a statement about the way in which the financial services could take on that risk and how the Government would support that?

Photo of Mike Freer Mike Freer Assistant Whip, The Parliamentary Under-Secretary of State for Justice

I am always happy to discuss with any provider and certainly the provider I have spoken to. No provider has beaten a path to my door saying, “We think you have got it wrong and our risk assessment is right.” Any organisation is entitled to make their own risk assessment and accept the consequences if they get it wrong. That is their decision. As for my risk assessments, perhaps I am being over-cautious. I am willing to be challenged on that and I appreciate that people have a different view, but I want to ensure that I take the least risk regarding vulnerable adults.

I will talk briefly in the time left about the work we have done with the Investing and Saving Alliance to try to improve accessibility and knowledge. Given the time, I will have to skip over the part of my speech about the legal framework of the Mental Capacity Act 2005. I think everyone in the room is probably aware of the methodology of applying for the deputyship that gives people access or the ability to act on other people’s behalf. I will not go through that in any great depth.

We have heard that the court process was cumbersome, which is why we looked at how we could change that. We consulted on what kind of different system we could put in place, but there was not a consistent view from the consultation on how we should reform access to the funds. In fact, if we go into the consultation, many people wanted to add safeguards to a new form of access that actually made the system even more cumbersome than the one we were trying to reform. That was a difficulty, as we did not get a common view on what checks and balances needed to be in place. We talked not just to parents, but to charitable organisations, the legal and finance sectors, groups representing the elderly and so on, and we heard that it was too complex. The big message that came out was that people were not really aware of what they had to do or when they had to do it.

I think that the first ask from my right hon. Friend the Member for Horsham was whether we would extend appointeeships to cover child trust funds. We are working with the Department for Work and Pensions to extend the availability of information. I am more than willing to go back to the DWP and talk about whether its process is suitable for child trust funds. It is a very different process: it is about accessing regular payments rather than lump sums, so there is a different quantum at risk. It would take primary legislation to access the DWP-type processes—we double-checked that today. It is not a quick fix, but it is certainly one that I am more than happy to go back and have another look at.

I want to ensure that we are streamlining the processes. Can we take the paper out? Can we use more digital processes? We have seen that the time has reduced from 24 weeks to 12 weeks. We will continue to liaise with the President of the Court of Protection to monitor performance and see what more can be done.

A key issue is that people often do not know what they have to do until the child turns 18, and then they are locked out. We have done two things; I apologise if this sounds a little disjointed. I sat down with TISA, the major provider of child trust funds, and we agreed that as part of its normal maturity mailing, it will include advice and information about how to access and use the Court of Protection to get the relevant legal powers in place. We are taking early steps to educate people as to what they need to do before the person turns 18. That comes alongside the toolkit, which, as hon. Members have noted, provides practical guidance on how to access and navigate the legal process.

My right hon. Friend’s second ask was about making people aware of how to find lost funds. We are doing more work to provide information. People can use the “Find my child trust fund” service on gov.uk. We can continue to do more to raise awareness of that.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Justice)

It is a good idea that providers are prepared to write out and provide additional information. I welcome that, but it is not going to solve the problem. Does the Minister agree that it is no good just having a one-off? It will have to be done on a regular basis, as more young people become mature and approach the age of 18.

Photo of Mike Freer Mike Freer Assistant Whip, The Parliamentary Under-Secretary of State for Justice

The shadow Minister pre-empts me. This is a regular communication strategy: TISA will continue to notify those who are heading towards maturity of what they need to do to access the fund once they turn 18.

I have also been working with the Department for Work and Pensions on accessing its client bank. We have agreed with the DWP that we will contact the cohort of parents and carers who receive personal independence payments and who may lack the mental capacity to access their child trust fund. We have an agreement in principle that we will do a mailing—not a one-off, but a constant mailing—so that people in this cohort, which we think is particularly relevant to child trust funds and difficulties of access, will become aware in advance of what they need to do. One of the big messages from the consultation was about the lack of understanding and knowledge of the steps until it was too late.

I appreciate that hon. Members have said, “Give them the money.” I get that. As I mentioned at the start of my speech, the vast majority of parents act in the very best interests of the child. I am not a parent, so I cannot possibly understand the role of a parent having to juggle all the demands of everyday life while having a child who needs additional support. I accept that my knowledge is limited, but the risk of just one parent not acting in their child’s best interests, but accessing those funds inappropriately, weighs very heavily on me.

I accept all the points about proportionality, and I am happy to have a conversation about where the line on risk is drawn. Broadly speaking, where I am coming from is improving education, improving access and improving knowledge, but I cannot in all good conscience say that I am going to throw open the accounts and give unfettered access without some checks and safeguards to ensure that the very small minority do not have the ability to abuse a young adult. However, I will commit to following through with colleagues at the DWP to see whether there is anything we can do to copy or piggyback on their approach and make the system more accessible.

Photo of Jeremy Quin Jeremy Quin Chair, Defence Committee, Chair, Defence Committee 6:10, 19 Mawrth 2024

I am grateful for the Minister’s candour. We have heard what he has to say. Like Ed Davey, I am keen to work with the Minister, and I know that he has put changes in train to improve the situation. I was pleased to hear what he said about mailing, and we will certainly work with him to see how it can be improved. I know that his intent is absolutely genuine and that he has genuine worries about ensuring that any scheme is safe for all, but this is about proportionality. There is a concern that thousands of young people may miss out because of the Minister’s genuine concern about what could be a very small number indeed.

I come back to the point about the DWP appointee scheme. If fraud is at work, which is always a risk when the Government are distributing or giving access to money in any form, there are far bigger fish to fry than the child trust fund. Trying to avoid that tiny risk prevents access for many thousands of people. We should be able to find a more effective yet secure way through. I urge him to keep reviewing the issue.

I was pleased to hear the Minister say that he will talk to the DWP about the process. I understand his point about primary legislation, but ultimately if primary legislation is required to ensure that we can right a wrong and get fairness, I am sure that it would not be a controversial bit of legislation—and what on earth are we here for? I look forward to ongoing discussions with the Minister and to finding a solution that works for all these disabled young people and their families.

Question put and agreed to.

Resolved,

That this House
has considered Child Trust Fund access for people seeking to manage the finances of others.

Sitting adjourned.