By Lucy Phillips
22 December 2010
A leading think-tank has called on the government to retain Child Trust Fund contributions for children in care.
The Institute for Public Policy Research said today that tens of thousands of looked after children will lose a ‘vital nest egg’ when the Child Trust Fund is abolished next year.
The coalition government is scrapping the scheme for children born after midnight on January 1 as part of its drive to cut the budget deficit.
The IPPR condemned the abolition of the whole scheme as a ‘backward step’ but particularly for the 87,300 children in care in the UK. The think-tank claimed the Treasury would only save £14m a year by removing it from this group.
Nick Pearce, IPPR director, said: ‘The cost to the taxpayer is tiny, while the small amount of savings that the Child Trust Fund would give to teenagers in the care system could make a significant difference to their lives.’
He added that the tax free savings accounts or ‘junior ISAs’ that the government is considering as a replacement for the trust funds would not help children without parents to save for their future.
The Child Trust Fund was set up by the previous Labour government. All newborn children since September 2002 have been given a minimum of £250 to encourage saving for their future. The money cannot be accessed until aged 18.
