Stephen Morgan MP has called for the government to continue access for young people to the Child Benefit Fund (CTF), as people turning 18 today will for the first time be able to access their Child Trust Fund accounts.
The innovative government-funded savings scheme was introduced by the last Labour Government but was abolished by the current government in 2011.
The scheme was introduced with the aim that every young person had access to savings which could then be used to build on for later in life, such as: putting down a deposit on a flat, buying a car, starting a business or whatever else they chose.
Before its abolishment, the Labour Government invested at least £250 in a fund that only the beneficiary can access, and only when they turn 18. The money went into an account their parents could open with a financial services provider, using a voucher sent out by the government – and for children whose parents didn’t use their voucher, the Government set up an account for them.
Parents and others could pay more money into the account too, subject to an annual cap. Children with disabilities were entitled to extra annual payments into their Trust Fund from the Government, because of the extra needs young adults with disabilities face.
Around 55,000 children every month will come of age and benefit from the scheme, from now until January 2029, but only if they know about the scheme and know where their account is.
Stephen Morgan MP commented:
“Child Trust Funds were an innovative and bold policy introduced by the last Labour government to ensure every child could have the best possible start to their adult life.
This scheme will prove incredibly vital for young people both across Portsmouth and the country over the next decade, and the government must now continue to keep this in place as we navigate our way through the economic recovery, to ensure a generation is not left behind.”
According to HMRC, around 6 million children hold a CTF with an estimated value of ‘over £7.4 billion’ in 2015-16. Meanwhile consumer group Which? has estimated that this could apply to as many as 3 million children and young people for accounts containing as much as £2.5 billion.
However, with the scheme effectively dormant for the best part of a decade, many children (and their parents) may be either unaware that their account exists, unsure how to access their account, or have lost the details of their account.
Mr Morgan added:
“We know this is an incredibly difficult period for both young people and their families, so schemes like CTF are a real lifeline for young people both now and in the long-term, with many setting off to university later this month.
It’s why it incredibly important the government provides all the support and guidance it can for young people who are eligible for the scheme, as many will understandably be unaware of this vital initiative.”
