Speaking at the Conservative Conference in Manchester yesterday, Shadow Chancellor George Osborne suggested that Child Trust Fund payments from the Government should be reduced in a bid to cut costs.
Child Trust Fund provider The Children's Mutual has said that it is "disappointed" by Mr Osborne's suggestion that they should be limited to only the poorest families, because they offer to save young adults from "a sea of debt."
Currently, each child born after 1 September 2002 receives a £250 savings voucher which can be paid into a Child Trust Fund, and family and friends can then top this up by a maximum of £1,200 a year. The child receives a further voucher for £250 when they turn seven, and cannot access the money until their eighteenth birthday.
Children from lower income families receive an additional £250 voucher on their seventh birthday, but Mr Osborne would see all Child Trust Fund payments limited to the poorest third of families.
David White, chief executive at The Children's Mutual, believes this goes against the ethos of creating a savings culture in Britain.
Commenting on the shadow chancellor's speech, Mr White said: "We're surprised and disappointed by Mr Osborne's statement today. If it is the intention to create a savings culture in this country we must preserve the Child Trust Fund for all families."
Doing away with Child Trust Funds for the majority of children would reverse the positive effects the system has had, Mr White warned, such as trebling the amount that families save for their children.
"Research suggests that this is the one thing that is really getting savings moving again," Mr White stressed. "In this period of record indebtedness the Child Trust Fund has become the savings vehicle of choice for families looking to provide a better future for their children. Quite clearly this would reverse that trend. We are reporting record opening of savings accounts and overall increases in saving. We believe the evidence shows that this is the most successful savings product ever."
Mr White believes that Child Trust Funds offer young adults a lifeline in a sea of debt, amid a culture where education is becoming less affordable, and getting on the property ladder is turning into a pipe dream for many.
"We need to pull future generations from the sea of debt," he urged. "Removing the most successful savings initiative ever at this juncture will condemn the young people of the future to the same fate as today's generation."
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