Magazine article Public Finance

Cutting Child Trust Fund 'Would Be Misconceived'

Magazine article Public Finance

Cutting Child Trust Fund 'Would Be Misconceived'

Article excerpt

Experts have warned against Conservative and Liberal Democrat plans to cut the Child Trust Fund.

In their attempts to slash public spending, the Tories have pledged to cut state contributions to the scheme, which costs £500m a year, for all but the poorest children and families with disabled children. The LibDems have said they will scrap the savings accounts for newborn babies altogether.

But Julian Le Grand, one of the fund's principal architects, told Public Finance such policies were misconceived. He said the fund used only 0.6% of the education budget, and added: 'It's a tiny amount when compared with other areas of public spending. If you do feel the CTF has got to take its share of cuts, there are ways of doing it and preserving its essential character.1

He said annual costs could be brought down to £200m by cutting extra payments for seven year-olds and disabled children.

The scheme provides £250 for every child born in the UK Labour, which introduced the fund in 2002, has promised to protect it for the next generation'.

Le Grand, professor of social policy at the London School of Economics, said the scheme had 'significantly raised savings, especially for poor families'. …

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