On 24th May when the new Con-Lib Government announced its first round of cuts to reduce “waste” one of the things they put into this category was the Child Trust Fund. See – http://news.bbc.co.uk/1/hi/business/10146734.stm
This scheme, launched under Labour, gave every child £250 at birth to be invested in a special tax free account and another £250 at age of 7. The money is released to the child at the age of 18. Each year you can invest up to a set about (about £1,200) into the account.
I was really annoyed and very sad at this announcement. My daughter has benefitted from this scheme. Yes, ok in reality my partner and I currently earn enough that we don’t necessarily need the money, but the incentive has certainly helped focus our minds into saving regularly for our daughter. The cap each year has also ensured that we invest that amount of money if we can. I’m not sure that we would have done so without this.
However, although it is a loss for me personally, I fear it is a much greater loss for many, many families on low incomes. To cut the entire scheme to me seems sloppy policy making and going for an easy option. Why not means test it or just give it to the lowest income families? I understand that we have to reduce public spending but cutting this scheme which costs relative peanuts in the grand scheme of things, yet could make a massive difference for so many children, seems very short sighted. David Laws, before his departure, argued that we were just giving with one hand and taking away with the other by carrying on with this scheme, but given the Government is still wedded to some high ticket items like Trident, this hardly seems like a credible argument.
The thing that really saddened me though was the whole rhetoric around these cuts. It is as if the public sector is at the root of all the UK’s financial problems when the cause of much of our financial woes started in the City. Of course we all need to look very carefully at what we spend and public services could save money, but schemes like the CTF can provide huge amounts of good. Cutting this in an announcement which was about reducing waste demonstrated a worrying set of values and perspectives from the new government. We await 22nd June with trepidation.