Tories’ CTF proposal draws criticism - Savings - News - Moneyfacts

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Tories’ CTF proposal draws criticism

Tories’ CTF proposal draws criticism

Category: Savings

Updated: 07/10/2009
First Published: 07/10/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Politicians have been urged to retain child trust funds (CTFs) in the wake of Shadow Chancellor George Osborne's announcement that the Conservative Party would cut spending on the funds.

Should the party win next year's General Election, new spending on CTFs would be stopped for all but the poorest third of families. The Liberal Democrats have said they would scrap the scheme altogether.

Currently, all families receive a £250 voucher when their child is registered, with an additional £250 (£500 for poorer families) on the child's seventh birthday. Parents are encouraged to top up the balance, with average contributions at £24 a month at present.

The new proposal is part of a number of plans the Tories have proposed to try to claw back part of the UK's multi-billion pound deficit. However, the plans have drawn strong criticism.

"Yes, the CTF scheme can be improved but this does not mean it should be scrapped for the majority of children," said John Reeve, chief executive of Family Investments.

"Under the Conservative proposals, households earning under £17,000 and families of disabled children will be the only ones eligible for a CTF. It will not, therefore, just be the super-rich who lose this benefit; it will be millions of children from average hardworking families."

F&C Investments has warned politicians that the narrowing of the scheme may lead some lenders to stop offering such plans.

Jason Hollands, director at the firm said: "We hope that George Osborne will confirm that in moving to reduce the number taxpayer-funded CTF vouchers, and target these on the most needy, middle income parents will not be prevented from making their own voluntary contributions into CTFs."

Furthermore, the Shadow Chancellor has been advised that the scaling down of CTFs would be harmful to what the chief executive of The Children's Mutual, David White, has called 'the most successful savings product ever.'

"The CTF has trebled the savings rate for children by families," he said. "More than two million parents are using the CTFs to make monthly contributions."

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Just 44 savings accounts beat inflation

Inflation recorded another large jump during December, and predictably, this has had a devastating impact on the number of savings accounts that beat it, so much so that you’ll need to lock your money away if you want an inflation-beating return.

Just 47% have money in a savings account

We’re often told of the importance of saving, yet unfortunately, the message doesn’t always get through. Indeed, research shows that just 47% of those surveyed have money in a savings account, and 17% have no savings or investment whatsoever.

How much will you save this year?

Many of us have set savings goals for the year ahead, and planning to budget better and save more will be at the top of many financial resolution lists. But how much are you hoping to squirrel away? Encouragingly, many people have impressive targets.