The Child Trust Fund scheme was promised in the Labour Party's 2001 general election manifesto[3] and launched in January 2005, with children born on or after 1 September 2002 eligible.
[5] Because the scheme allows for family and friends to top up trust funds, it has given a substantial boost to savings rates, particularly among the poor.
[6] Creation of new funds and government payments into them were scrapped in January 2011 by the Savings Accounts and Health in Pregnancy Grant Act 2010.
Asset-based egalitarianism[7] traces its roots to Thomas Paine, who proposed that every 21-year-old man and woman receive £15, financed from inheritance tax.
[3][8] This approach - termed "asset-based welfare" by Sherraden - saw asset redistribution less as an egalitarian measure than as one which supported poverty reduction by encouraging saving.
[3] The Child Trust Fund scheme was promised in the Labour Party's 2001 general election manifesto,[3] and launched in January 2005, with children born on or after 1 September 2002 eligible.
[9] According to the Institute of Public Policy Research The wealthy have always relied on assets to smooth the path into adulthood, but now every single child will be able to do the same.
The lumpy costs, the risky decision, and upfront investment involved in making ones way in life will be eased, whether that means spending money on training, starting a businesses - or simply buying the suit needed to attend an interview... CTFs recognise that assets, not just income, can bring security and opportunities.
[12]Child trust funds were opposed by the Liberal Democrats at the 2005 general election with the manifesto pledging to move the money into early years programmes instead.
"[13] In April 2010, Julian Le Grand argued strongly against Conservative Party plans to means test the funds (limiting them to households on below £16,000 per year income[6]), saying that "Confining CTFs to the poor would be divisive, and would result in low take-up and stigma.
Every child born on or after 1 September 2002 was eligible for the CTF, as long as: The children of Crown servants posted abroad – including the Armed Forces – qualify because they are treated as being in the UK.
Most advisers recommend equity-based CTFs, and the fact accounts allocated by HM Revenue and Customs are put into stakeholder products indicates that the government also believes equities are the best option over such a long period.