The end of the Child Trust Fund
One less publicised area of agreement between the Coalition partners was the plan to hammer home that they had inherited an economy on the verge of Greek style collapse and public finances managed by the political equivalent of Sarah Ferguson. I can’t blame them. Every incoming Government trashes their predecessor’s record and the effective absence of an official opposition makes this an open goal Salomon Kalou would find it hard to miss. By the time he or she is elected, the next Labour leader will find they are running a party deeply associated in the public mind with economic irresponsibility.
So, as a former Labour insider, I have zero credibility in bemoaning any of the Conservative Liberal cuts that are now being announced. But still I can’t help but be sorry to see the abolition of the Child Trust Fund, a policy I had a small part in helping to get implemented. The Conservatives had intended to means test the fund but the Liberal Democrats have long championed its abolition so this is another important victory for Mr Clegg.
As I say, none of us linked to the discredited ‘New Labour junta’ are in a position right now to criticise, but here are some minor points of which I hope ministers were at least made aware before they made their decision:
While changes in tax and benefits have meant income inequality has remained roughly the same over the last decade, asset inequality has grown enormously. Indeed an RSA audience was recently told by the social geographer Danny Dorling that the ratio between the wealthiest 20% and the most asset-poor 20% in London now stands at an unprecedented 2000:1. By giving every child, including the poorest, some savings and topping this up, the CTF was trying to make a small contribution to reducing asset inequality
While the CTF is being abolished the massively more expensive tax reliefs on middle class savings – private pensions and ISAs – are staying in place.
Although the CTF was fairly new as a policy – no 18 year old would have been able to access their account for another ten years – the policy had been gradually growing in public awareness. Most significantly there was evidence of low income families topping up the accounts, excited that for the first time their own children might get the kind of nest egg other teenagers take for granted.
Asset based welfare (the generic name for polices like the CTF) have often managed to get support across the political spectrum. Left of centre parties like the redistribution while right of centre ones like encouraging thrift and self reliance. Pragmatists on both sides were impressed by the evidence that having savings seems to do more for poorer people’s self esteem and sense of resilience than having an equivalent increase in income.
So it’s sad personally to see something of which I was very proud disappear. But much more importantly it also means that we will have to continue to reconcile ourselves to a large minority of the British people living without the realistic aspiration of ever having savings they can rely on in adversity or draw on to make a dream come true.