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Child Trust Funds

Volume 814: debated on Monday 11 October 2021


Asked by

To ask Her Majesty’s Government when they will issue their consultation on access to Child Trust Funds by adults with a learning disability.

My Lords, since the House last considered this matter, I have been working closely with officials to deliver this consultation. We have had discussions with various stakeholders. Our work on drafting the consultation was completed just before the reshuffle. I have now discussed the issue with the new Secretary of State. I am hopeful that the consultation will now commence very shortly.

I am grateful to my noble friend. In the 12 months since child trust funds matured, more than 10,000 children with learning disabilities have been entitled to the proceeds, but only a handful have negotiated the tortuous Court of Protection process advocated by the Government. Up to 1,000 have had funds released by financial institutions using a streamlined procedure not endorsed by the Government but likely to be in the consultation document. Does this not underline the need for urgency in amending the law, so that these children can get the funds to which they are entitled?

My noble friend does not have to impress on me the need for urgency. I have been working hard on this matter since it was first raised. The problem with the industry scheme is not that it is not endorsed by the Government but that it is inconsistent with the Mental Capacity Act, a piece of legislation passed by Parliament.

This issue has been raised five times by my noble friend Lord Young and this is the second time that I have supported him. It is a travesty that those with learning difficulties who are over 18 cannot access their child trust funds. It should not be necessary for parents to apply for a Court of Protection order on behalf of their adult children. As my noble friend Lord Young pointed out, only a handful of parents have negotiated the Court of Protection route successfully. There are surely less demanding ways to protect their beneficiary children’s interests. Some financial institutions have released funds using a streamlined procedure. Hopefully, this will be refined in the consultation paper, but it is not currently endorsed by the Government. The issue currently affects 10,000 children with trust funds who cannot simply access their cash when they reach the age of 18 without a court order. Can the Minister advise the House as to whether the DWP working group has considered this issue?

My Lords, let me give a short answer to a long question. It is not a question of whether going to court should or should not be necessary: it is necessary because Parliament passed the Mental Capacity Act, which requires it. In 1995, the Law Commission recommended a small payments scheme. That was not taken up by Parliament, but I am now consulting on it, because it seems to me that that is the right way forward.

My Lords, I declare my interest as chair of the National Mental Capacity Forum. Will the consultations specifically consider how to exclude coercion, malintent or diversion of the person’s funds for use other than purely in their interest, if there is no lasting power of attorney or court-appointed deputy?

My Lords, the noble Baroness has put her finger on the point. What we have to do here is balance the need to protect vulnerable young adults—because that is what they are—with their desire and that of their parents and guardians to access small amounts of money speedily and efficiently. It is that balance which the consultation will be aimed at.

My Lords, I declare my interest as a vice-president of the National Autistic Society. Seven months ago, I told the Minister that, for families of autistic youngsters seeking to access the child trust fund, the Mental Capacity Act code of practice was a barrier. Mr Justice Hayden in the High Court said that the wording of the guidance needed to be revisited. In reply, the Minister said that he had met Mr Justice Hayden and that the Government were looking to address this. Can he tell the House: whether the Government have completed their look, and can he give us an update?

My Lords, the position with the Court of Protection is this: we did invite the court to look afresh at all its forms—that is a matter for the court and not the Government—and it declined to revise its forms. We want to do two things: first, consult on the small payments scheme, which I think really is the answer here; and, secondly, educate people. If people apply to the court before they turn 18, there is no time pressure and everything can be completed before the legal problem arises—which is at the point when the child becomes an adult and the parents, therefore, cannot access the money without an order of the court.

My Lords, I declare an interest as chairman of the Children’s Mutual, which, I believe, was the largest provider of child trust funds. Has my noble friend’s department consulted with the senior management of the Children’s Mutual and, perhaps, a couple of other leading providers? I do believe that, when the child trust fund was launched, there was some provision in case of difficulties that might arise at a later time. In any case, now may be the right time to make sure that the industry can help.

My Lords, we have consulted widely across industry with the major providers. I have to say to my noble friend that it is the case, I am afraid, that there was a lacuna here. I think the noble Lord, Lord Blunkett, who is not in his place now, candidly accepted that when child trust funds were put in place, no thought was given to people who would not be able to give instructions to banks at the time they turned 18. The Mental Capacity Act in 2005 only made that position more difficult. So we are now dealing with a problem that has been exacerbated by subsequent legislation. The way to deal with it is a small payments scheme: that is what we are going to consult on.

My Lords, a few weeks ago, I spoke to Teddy Nyahasha, who is chief executive of OneFamily, a financial services firm that has administered 1.6 million child trust funds. The central point Mr Nyahasha made to me was that small donations or payments of up to £5,000 are made through something called the fair access protocol. He was seeking some recognition of that. If there was some recognition, there would be wider access for other charities and providers to expand the fair access protocol. Can the Minister say what he is doing about this?

My Lords, my officials met Mr Nyahasha on 17 August, and we are well aware of this proposal. The problem is that it is not a matter of the Government recognising the scheme; the scheme, I am afraid, is inconsistent with the Mental Capacity Act, and it is fundamental to the rule of law that the Government act in accordance with legislation passed by this Parliament. Therefore, we cannot just bless schemes that are inconsistent with the legislation. If we want to solve this, we have to change the legislation. That is what the consultation is aimed at.

My Lords, it is quite clear that the cock-up school of history has been proven correct on this issue. The Minister has said that the law is incompatible with the current status and intention of this. Surely we have enough time in Parliament to change the law. Will the Government guarantee that we get that time?

My Lords, guaranteeing government time might be a little above my unpaid pay grade—but what I can say is that there will be a consultation. As the question from the noble Baroness, Lady Finlay of Llandaff, pointed out, there are interests to balance here. There will be, I hope, an eight-week consultation, and I invite everybody to be part of that. Following that, if we are going to legislate, I agree that it is something we should be getting on with.

My Lords, I can only encourage my noble friend in his worthwhile endeavours to sort out this situation. I think a small payments scheme makes sense and, as the mood of this House shows, there is great support for allowing learning-disabled children to access the money that they need. In real life, Mikey, whom we have heard about before in this House, was able to get out during lockdown, and other children have been able to access sports therapy. Will the Minister acknowledge that this is a monumental success for the private financial industry, which for once has done its utmost to try to help people take money out of their accounts, which would cost them fees?

My Lords, I do think that the small payments scheme is the way forward. One of the mysteries in this cock-up, if I can use that word from the Dispatch Box, is why a proposal from the Law Commission in 1995 was, it seems from Hansard, not picked up by anybody in 2005 when the Mental Capacity Act was passed. It is that problem that I am now trying to resolve.

My Lords, I welcome the timely Question from the noble Lord, Lord Young. There are some other funds directed at children with distinct needs. Her Majesty’s Government have repeatedly told local authorities that the premium plus grant, which is made available to children who are adopted from care in England and Wales, should be available to children adopted from overseas to ensure real equality for these kids, who often have significant educational difficulties. Will the Minister reissue the advice that Nick Gibb has issued and enforce the provisions of the Children and Social Work Act 2017 for these adopted children, and will the Government compel recalcitrant local authorities to act speedily and properly?

With respect, my Lords, I think that that is a question for the Department for Education. I will pass it on and ask the department to write to the noble Lord with an answer.