Reactions from the other two main political parties suggest CTFs, launched just this week, are already in serious trouble with their future directly linked to political commitments.
The Tory Party has not even used the words Child Trust Fund in its spoiler press release out on the same day as chancellor Gordon Brown officially launched the product at his own press conference deep in the bowels of the Treasury.
”Under Labour, the amount of money people save has a fallen by nearly half. Gordon Brown's £5 billion a year raid on pension funds and the spread of means-testing have badly damaged confidence in savings,” the Tories thunder.
The alternatives to the status quo required to boost savings, according to shadow chancellor Oliver Letwin’s team are:
Liberal Democrat leader Charles Kennedy is more directly scathing, pledging to scrap CTFs at the first opportunity, instead investing the money in early years education.
This includes a pledge to limit class sizes to 20 for 5 to 7-year-olds.
The LibDem view is the £250m it estimates the Treasury will spend on CTFs annually would be better spent on education now than saving up for 18-year-olds to have some money with which to possibly offset “mortgage-style bill tuition fees” in future.
“We believe that it would be more farsighted to spend the billion pounds or more which is set aside in the Child Trust Fund to reduce class sizes to 20 for 5 to 7 year olds, than giving 18 year olds a bit of cash.”
Tony Blair does not sound like he is about to change his mind on the issue, even though CTFs did not take an overwhelming part of his speech yesterday outlining Labour’s vision of “prosperity for all”.
“The Child Trust Fund, available from this April, will extend this savings and assets culture more widely still - an endowment of up to £500 for every child born since 2002, which parents and friends can supplement tax free year by up to £1,200 a year more.”
Perhaps as a riposte to the Tory Party focus on savings throughout life rather than just in the early years, Blair’s speech dwelled far longer on the issue of pensions savings.
Blair says New Labour has helped pensioners but a worry over future pensions remains.
He mentions the future of employer-provided pension provision, with people living longer lives as a central concern, adding ‘underpinning’ security for pensioners would be a major challenge.
“Since 1997 pensioners at large have more than shared in the wider growth in prosperity. Pensioner households are on average nearly £1,400 a year better off, in real terms - and the poorest tenth of households more than £2,000 a year better off.
Government now spends £10bn a year more on pensioners in real terms than in 1997 - nearly £7bn more than if the basic state pension had been linked to earnings, through the commitment we have made to winter payments, free TV licences, the pensioner credit, and the minimum income guarantee for pensioners. Absolute pension poverty is down by two-thirds, and two-thirds of pensioners - more than ever before - now own their homes outright.”IFAonline
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