Child trust funds face poverty trap

Plans for child trust funds to which families and friends can
contribute will do little to help those on low incomes, campaigners

Martin Barnes, director of the Child Poverty Action Group, said
he supported the aims of the child trust fund but many families
would be too poor to contribute.

Under the scheme, confirmed last week, all children born on or
after 1 September 2002 will receive an initial sum of £250,
rising to £500 for the poorest children.

Between them, families and friends will be able to contribute up
to £1,200 a year. The children will access the fund when they
reach 18. The government will also make a contribution when the
child is seven.

Barnes said reforms to the social fund, which is intended to
help vulnerable families with essential lump sum costs and
expenses, would have been more helpful.

“The annual cost of the child trust fund is twice the grants
budget for families struggling to meet the basics today,” he

Nancy Kelley, principal policy officer at children’s
charity Barnardo’s, highlighted the under-claiming of child
tax credits. She said families must be made aware of the trust
funds and how to pay into them.

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