19 December 2003
The Treasury is committing more than £4bn to its 'untried' baby savings scheme which may only benefit the children of affluent families, MPs warned this week.
A report from the Treasury select committee, timed to coincide with the second reading of the Child Trust Funds Bill, urged the government not to risk the money over the next 18 years without getting details of the scheme right.
Under the legislation, all children born in the UK after September 1, 2002, will receive £250 to start a savings trust. Those from poorer families will receive £500. The funds will mature after 18 years.
But the committee warned that those from better-off families were likely to get the most benefit from the policy, as the final size of the endowment was dependent on contributions made by family and friends.
It also urged the government to clarify the effect the trusts may have on benefits. Technically they could be designated as assets and could prevent families from adding to them or result in a cut in benefits for the child in later life.
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