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Child Trust Fund is launched

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11th Jan 2005
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The Government officially launched the Child Trust Fund today.

Chancellor Gordon Brown and the Minister for Children, Margaret Hodge, announced a list of 75 official providers and distributors for the CTF. The first information packs and vouchers will be sent out in the coming days, and a major advertising campaign will begin next Monday.

Details of the fund are set out on the Child Trust Fund website.

A list of CTF distributors is available on that website but the list of providers has not yet been populated.

Providers are, however, listed in a Treasury press release.

The Chancellor said: "Our aim is a Britain of ambition and aspiration where not just some but all children have the best possible start in life. The Child Trust Fund is designed to ensure that every child in our country has assets and wealth and that no child is left out and all children in Britain have a stake in the wealth of the nation."

He added: "Today's list of 75 providers and distributors provides a powerful symbol that a wide range of firms, from small friendly societies to some of the largest institutions in the country, share this Government's vision for a strengthened savings culture."

Margaret Hodge said the CTF would improve financial awareness and offer "the real advantage of bringing financial education to life". Any discussion of the value of saving will be real rather than theoretical, she said.

The CTF, announced in Budget 2003, is a long-term savings and investment account for children. All children born since September 2002 will receive an initial voucher worth at least £250, with those from low-income families receiving an additional £250 paid directly into their accounts, making £500 in total.

Family and friends can contribute up to £1,200 a year to each account. There will be no tax liability on the income or gains arising on the monies in the account.

The Treasury said advance warning letters had already gone out to parents of children who may be eligible, letting them know that they will be receiving an information pack and voucher early this year.

Vouchers will begin to be sent to parents next Monday, 17 January, and the scheme will be fully operational from 6 April 2005.

Liberal Democrat education spokesman Phil Willis told the BBC that for children who choose to go to university, the CTF would be "a particularly hollow gesture as the government will give them a few hundred pounds in cash and at the same time a mortgage-style bill in tuition fees".

The Government announced in the December 2004 Pre-Budget report that it would consult on:

  • the value of the universal proposed payment into CTF accounts at age seven, and
  • the value of the additional payment to children of lower-income families at age seven.

The Government has proposed that these payments should be set at £250 and £500 respectively.

Andrew Goodall
[email protected]

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Richard Murphy
By Richard Murphy
11th Jan 2005 17:34

Tax Justice - not if you're my youngest son

He was born on 31 August 2002 and so missed out on this by 24 hours!

Mind you - he'll go to school a year earlier. Perhaps we should put what we save on nursery fees into an account for him instead. It will come to more.

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