Children in care are to gain tax-free savings accounts, chancellor George Osborne announced ahead of today’s budget.
Speaking in the House of Commons, George Osborne told MPs that the savings accounts would be available “as soon as possible”.
It follows a report from Barnardo’s and Action for Children which claimed the loss of child trust fund ISA savings accounts – which ceased from January, to be replaced by the junior ISA which parents can pay money into voluntarily – unfairly disadvantaged children in care. They proposed the government invested £6.6m of the £500m saved by scrapping the funds in savings accounts for looked-after children.
Osborne told MPs: “Barnardo’s and Action for Children have proposed that these accounts be used to support saving for looked-after children. I know these children face particular challenges, and I can tell the House that the Department for Education will work with others to make the necessary funding available to ensure that we can provide the support that they deserve.”
Osborne said the new £5m scheme would be available to children throughout the UK. The government will work with charities and interested parties to develop detailed proposals funded by the government, “so that junior ISAs can best support these children”, he said.
In the joint proposal, On Our Own Two Feet, the charities suggested that any child who remained in the UK care system for more than 13 weeks should have an account opened for them by HM Revenue and Customs (HMRC) and receive an initial payment of £250.
Local authorities would be responsible for informing HMRC if the child spends more than 26 weeks of the next year in care, after which time HMRC would make a further contribution of £100. The same applies to any subsequent year the child spends in care until they leave care.
Anne Marie Carrie, Barnardo’s chief executive, said: “The cost of running MPs’ second properties in 2009-10 was £6.8m, but the effect this money can have for care leavers is huge.”
She congratulated the government for living up to its responsibility as corporate parent for children in care. “This modest investment into savings accounts for looked-after children will help these young people achieve their goals and avoid negative outcomes such as homelessness or falling into cycles of debt. We look forward to hearing from the government about their wider financial package for vulnerable children and young people in the budget,” she said.
Action for Children’s chief executive Dame Clare Tickell agreed: “Leaving care can be a frightening and isolating time and, in the absence of support from their families, this financial support will make all the difference to care leavers, helping them to stand on their own two feet as independent adults. We look forward to working with the government to make it happen,” she added.
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