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Child Trust Fund given the green light

09 April 2003

The Institute for Public Policy Research (ippr) today welcomes the Chancellor’s firm commitment to implementing the Child Trust Fund which was developed by ippr.

The Child Trust Fund will see hundreds of pounds put into savings accounts for all newborn babies. The fund will provide a nest egg for all young adults and is aimed at opening up opportunities for all.

The announcement comes at a time of growing inequalities in wealth: between 1998 and 2000 the top one percent of the population increased its share of personal wealth from 17 to 23 per cent. The richest 2.4 million households own wealth totalling about £1,300 billion, while the combined wealth of the poorest households is about £150 million.

Matthew Taylor, ippr Director said:

“The Chancellor is clearly signalling to voters that the government is serious about creating more equal life chances. The Child Trust Fund is that rare thing in politics – a popular and progressive new policy idea”

Will Paxton, ippr Research Fellow said:

“The financial buffer that middle class families can offer their children allows them to protect their privileged position in society. Improving people’s income alone will not lead the poor to have the opportunity to fulfil their full potential. To do this the government also needs to build up their wealth and this is exactly what the Child Trust Fund will do.”

“The Child Trust Fund will increase opportunities, help young people manage the transition into independent adulthood and improve financial literacy.”

Notes to Editors:

The Structure of the Child Trust Fund:

- A universal endowment paid into an account at birth for all newborn babies with a higher endowment for poorer families.

- Extra top up payments at ages 5, 11 and 16, again with more for those from low income backgrounds.

- Additional contributions can be made by parents, grandparents and others.

- Financial education will be closely tied to the account as it matures.

- The fund will remain locked away until the age of 18.

- There will be no restrictions on how to spend the money.

· ippr is the leading centre of expertise on asset-based welfare policies such as the Child Trust Fund. It established the Centre for Asset-based Welfare three years ago and has since produced five publications.

· Equal Shares by Will Paxton will be published by ippr in May. The report will examine the wider implications of asset-based welfare.

· A further analysis of the Child Trust Fund can be found in the attached fact sheet.

Contacts:

Media enquiries:

Beatrice Stern, Media Officer 020 7470 6125 / 07971 851 145 / b.stern@ippr.org

Other enquiries:

Will Paxton, Research Fellow 020 7470 6131 / 07949 730 875 / w.Paxton@ippr.org