Conservative Party CTF plans contradict aim to create savings culture
The Conservative Party will not achieve its aim of creating a savings culture in the UK if they cut the Child Trust Fund (CTF), says Family Investments.
George Osborne, shadow chancellor, said he wants to ‘restore our savings culture', however, he also plans to cut CTFs for the better-off.
John Reeve, chief executive of Family Investments, said: "We fully support the Conservative Party's desire to restore a savings culture in the UK - we just believe that by cutting the CTF they will be removing one of the tools most likely to help achieve this.”
Child Trust Funds were designed to provide all children with a financial asset when they turned 18. The initial government contribution was designed to ensure that all children benefitted and also encourage parents to save for their children's future.
Reeve continued: "The CTF is clearly creating a culture where parents save more for their children. Nearly a third of all CTF accounts receive regular top-ups, with an estimated two million parents and relations adding £22 million a month to CTFs.
"Recent research by Family Investments shows that 96% of parents with a CTF think they are a good thing and are an effective encouragement to save for children. The CTF has encouraged those who can save but have not previously done so to start saving.
"The most worrying aspect of the Conservative Party's plans is the lack of clarity over which families it will affect. Whilst saying they are only planning to cut government contributed CTFs for the better-off, the plans they have announced so far will mean any family earning more than £16,040 a year will not receive one. This means that it will be hard-working, low to middle income families who will be really hit by the cuts. These are exactly the kind of families who may want to save for their children's future but need the help and encouragement to do so.
"It seems strange that one of the few definite spending cuts George Osborne has announced is one that will have such a negative impact on their stated policy aims. We call on George Osborne to clarify how he will help hard-working, low to middle income families, save for their children's future, if he cuts their CTF."
