Child Trust Funds could become a casualty of the new coalition government’s plans if the Liberal Democrats get their way.
The scheme was announced as one of the areas under review by David Cameron and Nick Clegg yesterday in their new coalition document, which outlines their five year plan.
Although the policy document does not explain the proposal in great detail it says they 'will reduce spending on the Child Trust Fund and tax credits for higher earners'
The Lib Dems wanted to scrap the scheme all together, calling it costly and unnecessary but the Tories have proposed to review the scheme and make it available only to families on an income of £16,000 or less.
At the moment every child is given £250 at birth to be saved in an account until they are 18. Then at the age of seven a further £250 is offered but for families on lower incomes both payments are doubled to £500.
In response to the publication of the Coalition's plans, The Children's Mutual calls for the CTF to remain universal saying it encourages good saving habits from a young age.
David White, Chief Executive of The Children's Mutual said: “Apart from providing access to a savings tool for all children regardless of their economic background at birth, universality impacts public perception of and engagement with the CTF and gives the funds an additional educational value as children grow up.
“The Child Trust Fund has already helped the parents of over 5 million children to start saving for their futures and the initiative is widely seen as the one of the most successful government-backed savings schemes ever. We hope any changes to the CTF will help the government to tackle the current deficit challenges while still supporting all of Britain's children, to build a fund for their future.”
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