Shadow Chancellor George Osborne today told the Conservative Party conference that he plans to ‘stop new spending on child trust funds for better off families’ in a move aimed at saving the Government £300m a year.
Mr Osborne supported making child trust fund (CTF) payments to the poorest families and encouraging them to use them more, but added that ‘handing out new baby bonds to the rest of the country is a luxury we can no longer afford.’
In a further announcement, the Conservatives also pledged to stop paying means-tested tax credits to families with incomes over £50,000. However, child benefit would be preserved as a universal benefit under a Tory administration.
‘Too much focus on taxpayer-funded handouts’
Jason Hollands, director of CTF provider F&C Investments commented: ‘We accept that politicians of all parties are having to face up to some very tough spending decisions given the parlous state of the nation’s finances.
‘However, we believe that when it comes to child trust funds, there is a real danger of “throwing the baby out with the bathwater”, since limiting or abolishing taxpayer-funded contributions need not mean closing these plans to voluntary contributions. There has been too much focus on the taxpayer-funded handouts when the real focus needs to be on encouraging people to change their own savings habits.’
CTF proposals should not stop consumers shopping around
Which? senior researcher Martyn Saville commented: ‘Even if the Conservatives win the next general election and these proposals are introduced, that’s no reason to stick with your existing CTF provider if it’s offering you a poor deal. If your child already has a CTF, you should make the most of the investment you receive from the government by picking the best deal.’
We’ve analysed 14 cash CTFs to find Which? Best Buys offering up to 3% on your child’s savings. And if you’re confused about how child trust funds work, find all the answers in the Which? guide to child trust funds.
Even if your child doesn’t qualify for a CTF, they can still get a great deal with a Best Buy children’s savings account.
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