Calls for families to contribute to the Child Trust Fund
The Economic Secretary, Kitty Ussher, has published the second annual Child Trust Fund (CTF) statistical report, highlighting the continuing success of the CTF.The report shows that three quarters of parents have actively opened their child's account; a third of children received an extra payment from the Government; and a quarter of children have had additional money saved into their accounts.
The Government has today announced three initiatives to promote increased parental engagement with the CTF, with a strong focus on harder-to-reach groups.
The new initiatives are:
voluntary and community sector organisations are being trained to help to provide face-to-face support to less financially-confident parents to help them engage with the CTF, following a successful pilot;
reminder letters to be sent to parents who have not used their child's voucher to open an account after eight months. This initiative was trialled earlier this year and parental opened accounts increased by eight per centage points; and
HM Revenue Customs (HMRC) to consult with account providers to see whether the requirement for parents to send in their CTF vouchers, in order to open an account could be removed, therefore making the account opening process easier.
Kitty Ussher said: "I am today calling on all parents, grandparents, friends and family of children born after 1 September 2002 to contribute to that child's Child Trust Fund if they possibly can. Every small contribution can make a big difference to the options open to children when they reach 18, whether it's for education, housing or simply to see the world.
"The Government is making its contribution - £250 for children at birth, and £500 for the least well off, with additional payments at age 7. It is now our responsibility to publicise the opportunity that the Child Trust Fund offers to children so that the benefits are spread as widely as possible.
"To help boost active account opening rates, I can announce today that we will be sending out reminder letters to all parents who have not used their child's voucher eight months after it has been issued - although, of course, already no child misses out as the Government itself opens accounts for children whose parents do not respond.
"We have already started to roll out a programme of face-to-face support for parents. Furthermore, I have asked HMRC to consult from today with account providers about whether the requirement for parents to send in their voucher in order to open an account might be removed, in order to make the account opening process easier."
Parents who did not open an account during their child's first year will receive a letter telling them about the Child Trust Fund account that the Government has opened for them. They can contact the provider with whom the account has been opened in order to find out more about the account and start to make contributions.
The Minister will also write to all MPs with details of account opening rates for their constituencies to enable them to consider ways of promoting awareness of the Child Trust Fund in their local areas.
The CTF was introduced for all children born in the UK on or after 1 September 2002, with a £250 voucher from the Government to start off each child's account, and a further £250 paid into the account at age 7. Children from lower-income households receive an extra £250 top-up at birth and at age 7. The latest figures show that for vouchers issued to 15 September 2007, a total of 3.02 million accounts were
opened: 2.36 million by the parents themselves and the remainder opened by HMRC on behalf of eligible children. HMRC are targeting marketing at areas that have shown low take-up and are furthering their work with voluntary and community organisations to reach parents who are less financially confident.
All parents who have not redeemed their Child Trust Fund voucher after eight months will automatically be sent a letter to remind them that they still have time to use their voucher plus a reminder leaflet demonstrating the simple steps to opening an account. HMRC will start sending these letters out from today. This scheme was piloted in February this year, when 50,000 reminder letters were sent out to parents who had not yet used their voucher after eight months.
The successful voluntary and community (VCO) sector face-to-face training pilot took place in Basildon, and East London for five months. Trainers from the VCO community will now train intermediaries working in Manchester, Liverpool, Northern Ireland, Greater London, Birmingham and Glasgow. The training will help intermediaries to provide face-to-face support to parents who need help with the process of opening an account. Training started in October 2007 and will continue through to March 2008.