Why I don't mind saying goodbye to child trust funds

Rachel Lacey's picture

Everyone seems to assume that because I’m a parent of a young child, I’m hugely annoyed by the new coalition government’s decision to scrap child trust funds.  Naturally I’d have loved my son’s fund to get another £250 when he turns seven and it’s a shame any brothers and sisters he may at some point get, won’t get the same perk. (Or at least they will, but my account will £250 lighter).

However as we enter this new age of austerity we all have to take a hit and the CTF is one I’m happy to take. The same goes for the taxation of child benefit – a suggestion made by the Institution for Public Policy Research. It was spared in the government’s first round of spending cuts but may not be so lucky come June 22nd when George Osborne presents his first budget speech.

I’d have been much more aggrieved if the government slashed funding to Sure Start centres  - which deliver health, education and childcare support to families with under fives – or abolished childcare vouchers – a scheme that cuts the cost of nursery fees, helping mums who couldn’t otherwise afford to work.

In principal I’m behind any initiative that encourages saving - and if a voucher from the government is what it takes for parents to open accounts on behalf of their kids then that’s great, but let’s face it those mums and dads who want – or perhaps more importantly, can afford, to save for their kids will continue to do so, CTF or no CTF.

And for those who were only going to invest the free vouchers, the sum accrued would make a nice coming of age ‘perk’, but it certainly wouldn’t be enough to make a dramatic difference to the start their child’s adult life.

I also think that the CTF scheme was fundamentally flawed from the outset. While we’ve topped our son’s fund up with the odd birthday or Christmas present here and there, we would never invest more than that simply because we would have no control over how that money is spent.

Like most parents I want financial security for my son. It might be a way off but I’d like to think we’ll be able to offer him some financial support as he starts his adult life.  But in my mind that’s helping him buy a first car, stumping up for university fees or some other worthy venture. Call me mean but if he wants a holiday with the boys he can get a job.

For me, giving your kids financial security isn’t just about giving them a head start, it’s about teaching them financial responsibility and the value of money.  Of course, that’s easy for me to say; my son is one and so far his only words are doggy and bear.  He certainly hasn’t mastered ‘I want’ or ‘can I have?’ But, hey, that’s the plan at least. Wish me luck!

Your Comments

Good point but you fail to mention poorer kids get £500! For those on low incomes 18 years worth of interest is better than a kick in the teeth!

Agreed austerity measures are needed by all but I do hope this is not a sign that the government is going to move away financial education. If we can foster smart saving habits and good money management early our children would benefit later in life and perhaps with less money stress. So maybe they can do without the free perk if they learn the right tools.

I almost wish i had not read this article.To say you accept this only means your either a conservative voter or you have enough to live on and save as well.Just think about those unfortunate people who cant afford to to save.The rich get richer and the poorer get poorer.So much for children in poverty.Con-Dem them all eh.

I agree with this post.Straight to the point.

I fully agree with Guest sat 29/05/2010

I am a disabled single parent unable to work NOT unwilling and have to live on what i get which is NOT a lot, i am also supporting my 20 year old son through college who is at the moment on summer break and trying desperately to get a job ANY job,i get NO money for him when he is at college although he can claim while on summer vacation, he would love NOTHING more than to have money and be able to save.

I have taught ALL my children if you want something badly enough anything in life YOU can achieve it.

When something costs they understand if it is not a birthday or Christmas they have to save and buy it themselves.( not guaranteed to get it then either if its too expensive they still save)

My youngest who is soon to be seven wants to go to Disney land Paris and is saving everything he gets even the £1 occasionally given for an ice cream,so DO NOT speak for the majority of REAL people in this country your own views are too one sided, then maybe you wanted a reaction and you have one here.

The Children that are too old to be eligible for a CTC will not be affected.

Neither are Children's Accounts 'Eligible' for ISA status as they are too young to hold ISAs.

However as 'None Taxpayers' most childrens accounts SHOULD Have an 'R85' Tax form completed which removes any liability for tax from all but 'Very Wealthy' taxpaying children.

That just leaves us with ALL the savings instituitions, Banks, Building Societies etc. Greedy, Unhelpful, Badly Failing to encourage 'Thrift' in the young.

If, all you 'Adults' out there think YOU are badly done to as regards interest paid on YOUR savings, Spare a thought for kids, these accounts, wether with Banks or Mutuals all pay around 1% or less.

In effect 'Charging Kids' to save with them as this is LESS than the rate of inflation!!