Tuesday, January 17, 2006
Child Trust Funds
The take-up on Child Trust Funds has been predictably low. Of the two million vouchers sent out- worth at least £250 each- a third have not been cashed. At all. The IFS says:
"Parents may be very busy and not have time to open an account. The other possibility, which is much more concerning for the government, would be that parents aren't really engaged with the accounts. If that continues, perhaps they won't engage with the accounts over the next 17 years, which means it won't deliver the benefits that the proponents of the policy hope."
This is another of those worthy cloud-cuckoo ideas from Labour's nanny state. It's estimated to cost about £250m pa, and when it was launched the then Financial Secretary to the Treasury, Ruth Kelly (!), described it as:
"..a groundbreaking new initiative which will strengthen financial education, promote positive attitudes to saving and ensure that all children, regardless of family background, will benefit from access to a stock of financial assets when they start their adult lives. It is based around the Government’s belief in progressive universalism – benefiting every child while offering more help to those in most need.”
(Translation- "progressive universalism" means everyone gets the basic benefit, but the poor may get more if they can navigate another quagmire of means testing).
What's actually happened- as many predicted- is that the children of the financially switched-on "middle-classes" have cashed in, and the children of the switched-off poor have lost out. It has done nothing to "strengthen the financial education" of those that need it most.
The CTF is a waste of money and should be abolished forthwith.
Posted by Mike D at 12:01 pm