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

26 May 2010

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!