End of child trust fund will harm vulnerable children's life chances, think tank cautions

Chancellor George Osborne announced in May that the fund would end as part of the government’s drive to reduce the national debt. Under the reform no child born after midnight on 1 January will be eligible for the payment.

However, the Institute for Public Policy Research (IPPR) has said stopping the child trust fund for children in care will mean tens of thousands of vulnerable children losing a vital nest egg for the future.

According to the IPPR, scrapping the fund for these children would only save the government £14m a year.

IPPR director Nick Pearce said: "The cost to the taxpayer is tiny, while the small amount of savings that the child trust fund would give to teenagers in the care system could make a significant difference to their lives.

"These young people have to establish an independent life much earlier than children who have been brought up in a family home. If they had some money in a child trust fund it would help them go to college, take driving lessons or pay for a deposit on their first rented flat."

Pearce added that the "junior ISA" account being considered as a replacement for the fund would not help children who do not have a parent to save for their future.

The Welsh Assembly recently pledged to spend an extra £3m on children in care and those with disabilities to help offset the end of the child trust fund.