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Child Trust Funds: People with a Learning Disability

Volume 813: debated on Tuesday 22 June 2021


Asked by

To ask Her Majesty’s Government whether they will facilitate access to Child Trust Funds by people with a learning disability.

My Lords, the Mental Capacity Act 2005 provides a process to obtain legal authority to access matured child trust funds. We are working with stakeholders to examine the case for legislation to enable third-party access to smaller balances without the need to obtain the form of legal authority currently required under the Act. This is a complex issue; we intend to bring forward a proposal for consultation as soon as possible after the Recess.

My noble friend has described as “absolutely unfortunate” the current position, whereby access to child trust funds by those with a learning disability has to be through the Court of Protection. This time-consuming and intimidating process is denying much-needed funds to vulnerable people. While he proposes to change the law, as he has just said, he has told me that this might not happen before December. People should not have to wait that long, so may I urge him to make much faster progress?

My Lords, as I have said, we intend to launch the consultation as soon as possible after the Recess. This is a complex issue: as I have said before in this House, it is not limited to child trust funds. It goes beyond those funds and includes, for example, junior ISAs. We need to ensure that all factors, such as scope, simplicity and security of a small payments process are considered and accounted for. We are engaging with stakeholders across the financial services industry to make sure that the consultation is as smooth and effective as possible.

My Lords, may I press the Minister a little further? What plans do the Government have to work with the providers of child trust funds to develop a proactive strategy to advertise the need for parents of children with learning disabilities to apply to the Court of Protection in advance of the young adult’s child trust fund maturing? This is a really urgent matter, and we need the Government to be on the front foot.

My Lords, the right reverend Prelate is absolutely right: the focus should be on people applying before the young adult turns 18, at which point the legal position changes. We are engaging with industry providers to make sure that parents are aware of that change. We have put material on the GOV.UK pages, HMRC has also published material and my ministerial colleague Minister Chalk will host a round table on 15 July, bringing together relevant stakeholders to enable us to progress this work further.

This is the fourth time that my noble friend Lord Young has asked this question. It is a travesty that children with learning difficulties who are over 18 cannot readily access their child trust fund. The Government need to grasp and solve this problem. I do not see why parents should need a Court of Protection order to access funds on their adult children’s behalf. There is now all the more reason for enacting legal changes to solve this problem, which faces 200,000 children with trust funds who cannot access their cash when they are 18 because of their disability. I do not see the DWP working group readily solving the legal problems here. The crucial need is to be able to access balances without requiring a Court of Protection order. This needs special legislation to achieve. Can the Minister update the House on what the group has achieved?

My Lords, people need a court order because, in the Mental Capacity Act, Parliament provided protection for young adults to make sure that their funds—and the funds are theirs, not their parents’—can be accessed only by people with a proper court order. The working group meets monthly, and the next meeting is later this week. It has engaged with people across the industry and, as I said a few moments ago, because of the work of the working group, we are now amending the GOV.UK pages to provide more information to parents in that regard as well.

Does the Minister agree that the noble and learned Lord, Lord Falconer of Thoroton, should be congratulated on the Mental Capacity Act, which is a precious piece of legislation that protects the most vulnerable? Does he agree that any erosion by creating exceptions to its established processes would fail to ensure long-term provision for the vulnerable person’s welfare as an adult over 18, while increasing the risk of child trust funds being diverted without accountability?

My Lords, I respectfully agree that the noble and learned Lord, Lord Falconer, should be congratulated on his work on the Mental Capacity Act. He described it as

“a vitally important piece of legislation, and one that will make a real difference to the lives of people who may lack mental capacity.”

I respectfully agree. I also congratulate the noble Baroness on hosting a very good briefing event on 17 June. I urge all Members of the House who are interested in this topic to look at the materials from that event, which are available on the Social Care Institute for Excellence website.

My Lords, along with the noble Lord, Lord Young, I was at the briefing that was just referred to. What disturbs me most now is the juxtaposing of the rights under the Mental Capacity Act and the rights of young adults to access their own funds. Surely, the 15 July round table that the Minister mentioned should be the jumping-off point for the consultation, if, as he has often said, his officials are working “at pace”? “At pace” surely means that, within the next three weeks, that consultation material could be put together.

My Lords, we are putting the consultation material together as quickly as we can. The noble Lord is certainly right that we have to balance the ability of young adults to access their own funds against the importance of the protections given by the Mental Capacity Act to young adults who lack the mental capacity to manage those funds or give instructions to others to do so.

My Lords, we have been going at this for a while. Would the Minister agree that a parent who has filled one of these trust funds for someone who is now a young adult should be presumed to have their best interests at heart, unless there is another good reason? Saying that you now have a warning system for those coming up is of no assistance to those who have already matured.

The noble Lord puts his finger on a problem: the Law Commission in 1995 highlighted the need for a small payments procedure, but that was not picked up in Parliament in the Mental Capacity Act 2005. Here we are in 2021, trying to resolve a long-standing legal issue. We need to amend the legislation—otherwise, the Mental Capacity Act is a legal block to people’s ability to obtain funds.

Could my noble friend the Minister help us to understand how many individuals with cognitive impairments could be supported to grant power of attorney to their parents or carers to manage these moneys in the interim? Can we also have reassurance that never again will policies such as this be introduced without any consideration whatever being given to how they might impact those with learning disabilities?

My Lords, I will pick up the noble Baroness’s second point first. As the noble Lord, Lord Blunkett, explained on a previous occasion, regrettably, no thought was given when these funds were set up to people who could not access them because of mental incapacity. That is why we are having to deal with the point now. We do encourage people to make lasting powers of attorney, for example. The important fact is that we want to encourage young adults and their parents to be aware in advance of the legal position that the young adult will be in when they turn 18; it is a fundamentally different position from the one they were in the day before their 18th birthday.

It is clear that a lot of people will be prejudiced by the delay. From the Minister’s answers, I take it that the Government have decided to legislate. Why can they not legislate before December?

My Lords, we have decided to consult, and that is a very important point. It should not be thought that there is nothing, so to speak, on the other side of the argument. I have received representations from third sector organisations that are very concerned that people with disabilities should retain the protections that the Mental Capacity Act, in which the noble and learned Lord played such an important part, gives them. The consultation will ask for views on how we balance these important, but sometimes opposing, principles.

My Lords, this Question raises the wider challenge of inadequate financial literacy for underage and mature individuals with special learning needs. As a parent of young adults now seduced into lock-in accounts by commercial banks, I ask whether there not a public duty that could fall on the Post Office to provide community adult numeracy and financial literacy skills. Should the Government consider investing in designated accounts with higher incentive rates for those less able to grasp the complexities of mortgages, investments and standard banking and thus less able to use the market to make money grow?

My Lords, I fear that I might be straying from my own ministerial brief if I were to say too much about that. It is important that we recognise that part of education generally is teaching young adults and schoolchildren about how finance and money work. Perhaps fewer people would fall victim to scams if a greater emphasis was placed in the education system on the importance of understanding fairly basic financial concepts.