This Tuesday, 1 September, people turning 18 will for the first time be able to access their Child Trust Fund accounts, the innovative government-funded savings scheme introduced by the last Labour Government and abolished by the Conservatives a decade ago.
Child Trust Funds were introduced so that every young person had access to savings and a financial springboard at the start of their adult life, so they had savings they could build on for later in life, or could put down a deposit on a flat, buy a car, start a business or whatever else they chose. Labour wanted to extend to every young person the options that wealthier families took for granted, with bigger initial payments for the children from the least well off backgrounds.
Until the Conservatives closed the scheme in January 2011, 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. In Wales, the Welsh Labour Government put extra money in when children reached primary school age. 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.
Bridget Phillipson MP, Labour’s Shadow Chief Secretary to the Treasury, said:
“A generation ago, a Labour government looked ahead to the future of today’s young adults. People turning 18 today and for years to come will be the beneficiaries of their foresight and Labour’s determination to make lives better and society fairer.
“The contrast with the mishandling of young people’s futures – on public health, on schools, on exams, on jobs – by the current government in Westminster could not be starker.
For every 18-year-old, this is the difference a Labour government makes in spreading power and opportunity in our society. Labour’s generation, the school-leavers for whose futures the last Labour government planned, meanwhile has been let down by a Tory government which doesn’t do its homework.”