Latest government figures on the takeup of CTF accounts have been criticised and lauded in equal measure ahead of Child Trust Fund Week commencing 15 January.
The figures themselves suggest a continued trend of fewer accounts being opened by parents as a proportion of all government vouchers issued, while the number of accounts being opened on children’s behalf by HMRC has increased.
From a high of 76% for vouchers issued in the second quarter of 2005, only some 42% of vouchers issued in the July-September 2006 period have yet been cashed in by parents opening accounts for their eligible children.
Figures for the last quarter of 2006 will be published by March this year. So far the government has issued some 2.7 million vouchers with a minimum value of £250.
Of those, the government claims some 2.48 million accounts have been opened. The figures thus suggest 1.95 million have been opened by parents, with the remainder opened by HMRC.
Criticising the latest numbers is Vince Cable, Liberal Democrat shadow chancellor, who says the fact about half a million accounts have had to be opened by HMRC suggests the scheme is increasingly failing to attract parents into acting on their children’s behalf.
Likewise, instead of putting public money into accounts where it will be locked away for 18 years, Cable says the money could be better spent on education to meet children’s current needs. There is still a big risk people who gain access to funds when they turn 18 in future may simply spend it on entertainment or holidays rather than further education, he adds.
Countering the negativity, The Children’s Mutual chief executive David White says he welcomes the latest figures because the overall impact to suggest an ongoing change in savings habits nationwide.
“For three quarters of parents to make an active decision about their child’s financial future is a fantastic achievement,” he says.
“It may seem a small step for parents to take, but for the nation as a whole it’s a giant leap, showing people are recognising the value of long-term savings. It’s not only great news for children but could have a positive knock-on effect for all generations, including those thinking about long-term saving for retirement.”
Additionally, having a CTF Week in January will help focus consumers’ minds on the importance of long term savings for children, he adds.
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