The Child Trust Fund will be scrapped. From August 1st 2010 £320m will be saved by reducing all contributions. All payments will be stopped entirely by 1 January 2011, excluding payments to disabled children which will be made through to the end of 2011 only.
Stuart White, a key supporter of the fund, said of it recently:
Despite being one of the most effective pro-savings policies ever introduced by a UK government, the policy is inexpensive. It could easily have been preserved with government contributions reduced but with a clear commitment to raise them back to present levels as financial circumstances allowed.
It was a small cost from the government purse that went a long way, and not being means tested, was a universal symbol, promoting savings for all young people. The universalism could’ve reduced the risk of vulnerable people falling short in years to come, and made trustafarians of us all (obviously doing away with those negative connotations of the latter).
The scrapping of the fund can not be blamed on the Tory side of the coalition. It was a Lib Dem doing through and through. Before the election, the Lib Dem plan to cut the CTF was announced alongside the promise to use the money to reduce class sizes – though vague, it is a noble cause, if not only realistic in the suburbs. But, in any case, why the two could not co-exist is obviously beyond my economic comprehension.
As White, above, mentioned in his article, this was a liberal measure, possibly the most important one devised by New Labour in all its 13 years of government. But it has been done away with by the Liberal Democrats, alone; that illiberal guild of compromisers.
A further reason to worry about this unjust and unnecessary cut is the effect it will have on other vulnerable children. Sadly, this has only been spoken about at length in Wales and not, as yet, in England, but the ridding of the CTF will have negative effects on looked after children.
On Wednesday, 26th May, the Welsh Assembly held a short debate entitled: Raising the Educational Attainment of Looked-after Children and Care Leavers. Huw Lewis, Labour Co-operative National Assembly for Wales member for Merthyr Tydfil and Rhymney, said the following during the debate:
We had looked to introduce extra financial support for looked-after children through the child trust fund, and had put in an extra £100 in Wales for each looked-after child, to add to the £100 that they already receive through a scheme that we administer on behalf of the UK Government. I hope that the Members opposite will begin to fully comprehend the level of concern, and even bitterness, on this side of the Chamber as regards the demise of the child trust fund. It is not just the general run of Wales’s children who will suffer, although of course they will, but the most vulnerable children of all [...] That [nest egg] would have cushioned their transition into adult life in an entirely innovative way. It is because of the effect on those two groups of children, if for no other reason, that Members on this side of the Chamber are deeply disappointed at the decision of the UK Government to wind up the child trust fund.
Brian Gibbons, Welsh Assembly Government Minister for Social Justice and Local Government, reminded us, in reply, to:
importance of the child trust fund, particularly for looked-after children, who often cannot go back to their parents to get that extra few hundred pounds to furnish a flat and so on.
A lot has been done for looked after children. I was speaking to a teacher in Barnet last week who reminded me that 20 years ago the education of these children was not properly considered, and now there is extra funding and considerable attention, provided in accordance with the Care Matters white paper.
To most this doesn’t rate very highly, but the last government did a huge amount of good for, not only looked after children, but all vulnerable young people. The CTF was one further move that really ought to have married progressives rooting for universalism with those who perceived investment as a progressive measure. But the most centre-ground government we have had in this country that the Conservatives have had any part in, will take measures to scrap what should have been a non-controversial pot of money, that transcended political colours to give young people a nest egg to use as senisbly or insensibly (it’s all a learning curve) as they wish.
David Laws will probably have to resign later, and though he is one of the most unpleasant orange-bookers in the coalition, I’d say he is one of the luckiest of the cabinet.