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Plans to cut CTFs are widely unpopular

Plans to cut CTFs are widely unpopular

Category: Savings

Updated: 17/02/2010
First Published: 17/02/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Plans to cut Child Trust Funds (CTFs) for all but the poorest families have been widely derided by parents.

The Conservative Party proposes to cut the CTF for families with a total household income of £16,040 or more should they be voted into power in this year's General Election.

The party has said that the measure would save some £300 million a year, although The Institute for Fiscal Studies has put the figure closer to £225 million.

Research conducted by Family Investments found that almost all (96 per cent) parents consider CTFs as a positive measure, with many citing the funds as encouragement to save for their children's future.

It also appears that the plans are not widely known by parents. Almost three quarters of parents said they were unaware of the potential threat to a universal CTF programme.

The same number said they would look upon any party introducing the cut in a less favourable light.

"It is hard-working, low and middle income families who will be really hit by these spending cuts," said John Reeve, chief executive at Family Investments.

"These are exactly the kind of families who may want to save for their children's future but need the help and encouragement to do so. To get rid of the CTF before the long-term benefits have been realised seems very strange."

An estimated two million parents and relatives make regular contributions to CTFs amounting to around £22 million a month.

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