Sunday, August 01, 2010

Last Day of Child Trust Fund 'A Blow to Deepening Social Inequality' in Britain say Christian Democrats

Commenting on the demise today of the Child Trust Fund (CTF), a spokeswoman for the Christian Peoples Alliance said the coalition government's cuts are short-sighted and a blow to tackling social inequality in Britain. Children born today are the last to receive full payments to their Child Trust Funds, with the scheme that began in 2002 to encourage long-term saving, to be phased out as a cost-cutting measure. After today the 250 pound payment will fall to 50 pounds, or a hundred pounds for low-income families.

Susan May is a senior manager in social housing and stood for the CPA in the last general election. She is pointing out that the the Child Trust Fund cost far less than tax breaks on pensions and Isas and yet had a higher take-up, with 75% of children having a CTF with half of those topping it up. This compares to 40% of people with a pension scheme and 29% with an Isa. She said:

"This is a short-sighted cut by the government as the CTF helped families get into the important habit of saving for the future. It is also a blow to the problem of deepening inequality as we know that it has been low-income households who have taken this scheme to heart and invested into it. Children of families in homes with below median income once had the prospect of a lump sum at aged 18. This would have made a difference on their likelihood to go through the cost of university. In one stroke, the government have ended that."

Research by the Children's Mutual society shows that more people at lower levels of income took up the scheme compared to higher earners, with 40% of those who have not taken up the fund coming from affluent categories. Low-income households have seen a sea-change in saving habits, with one third of children whose parents have a combined income of just £19,000 each benefiting from £19 put away for their futures each month.

Susan May says that as a housing professional she is concerned about other attacks on the poorest in Britain, such as the cap on housing benefit and the disproportionate impact of the rise in VAT. She added:

"Inherited wealth is passed down from the well off to allow their children, particularly in their early adult lives, to have opportunities that others lack: such as training and education, to travel and learn, to get onto the housing ladder or set up a business of their own. The CTF was a good policy that both re-balanced that kind of inequality and also fostered the important lesson that saving for the future is better than living in personal debt."

At present, the Child Trust Fund (CTF) costs about £525 million per year.

ENDS

For more information: press@cpaparty.org.uk or visit www.cpaparty.org.uk

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