Press Story

David Laws, the new Chief Secretary to the Treasury, justified the move on the grounds that 'government payments into the scheme are essentially being funded by public borrowing', but this is, of course, nonsense. Public spending in the UK is not hypothecated to particular taxes (or to borrowing). It would make just as little sense to say that the police force was being abolished because it was funded by borrowing.

Child Trust Funds (CTFs) have been a great success since they were launched in 2002. Three-quarters of children have CTFs opened for them by their parents (and, to ensure that no one misses out, the Government opens accounts for the reminder) and one quarter of accounts have received extra payments from family and friends.

This government wants to see households in the UK save more and borrow less, as part of the necessary rebalancing of the economy. It is, therefore, odd that one of its first decisions is to abolish a programme that is specifically designed to encourage saving and that has been shown to do so.

Lisa Harker, ippr's Co-Director, said:

'Scrapping the Child Trust Fund is a major backward step away from achieving greater equality in Britain. Campaigners have fought long and hard to establish the principle that the state should help families build up an asset to give all children a fair start as they enter their adult life. The spark provided by the Child Trust Fund has substantially increased parental saving since it was created in 2002 and meant children born since then will have a pot of money to help them get on in life when they reach 18. Now tomorrow's generation are being asked to pay for the mistakes of today's. We strongly urge the Government to reconsider this step for the sake of building a fairer Britain.'

Contact

Tim Finch, Director of Strategic Communications, tel 020 7470 6110 / 07595 920899
t.finch@ippr.org