Child Trust Fund payments to be scrapped for all
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The Government has announced it is axing Child Trust Fund payments by January, saving £520m.
Chancellor George Osborne has today set out £6bn worth of spending cuts, which sees the new Government change its stance on Child Trust Funds.
Last week’s coalition agreement stated that the Government would “reduce spending on the Child Trust Fund and tax credits for higher earners”, leading many in the industry to believe that CTFs would be retained in some form.
But Chief secretary to the Treasury David Laws has announced that all Child Trust Fund payments will be scrapped by 2011.
Before the general election the Conservative Party planned to restrict Child Trust Fund payments to the poorest third of families and the disabled while the LibDems were calling for CTFs to be scrapped altogether.
The Treasury says: “The Government intends to introduce legislation to scale back payments from August this year and then stop payments from Jan 1, 2011. Payments to disabled children due this year will be made, and the Government will ensure that the funding allocated for these payments in future years will be redirected to other forms of support for disabled children.”
The cuts also see £535m axed from the Department of Work and Pensions.
The DWP says it is cutting £200m through back-office and departmental efficiencies, £70m by stopping or delaying some IT projects and reducing spending on IT consultancy and £25m by renegotiating contracts on medical and IT services.
When asked whether IT savings will affect NEST, a DWP spokeswoman said the Government is “reviewing all recent spending approvals, to ensure that they are consistent with the Government’s priorities and good value for money”.
It is also saving £85m by reducing spending on discretionary areas such as marketing, travel and research, £15m by freezing almost all recruitment across the department and £5m from reducing the size of its estate.
The DWP says: “The remaining £335m will primarily come from refocusing recession measures where we believe we can make taxpayers’ money go further and benefit more people.”
A DWP spokeswoman says this includes scrapping all further allocations to the Future Jobs Fund, an end to the £1,000 recruitment subsidy offered to employers who recruit someone who has been out of work for over six months and ending the contracts of some temporary staff.
The Education Department’s budget slashed by £670m, the Ministry of Justice forced to save £325m and the Department for Business, Innovation and Skills cut costs by £836m.
Chancellors departments must save £451m, £95m will be slashed from IT budgets and the Government has promised to delay contracts, saving £1.7bn.
Laws says departments can choose to defer these cuts to the next financial year.
Laws also announced a freeze on all civil servant recruitment, apart from exceptional situations, and said the top rate of public sector pay, without his approval, is £142k.
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Readers' comments (28)
Anonymous | 24 May 2010 11:11 am
About time to - total wast of time and money
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Tracy | 24 May 2010 11:21 am
yes, total waste of time and money - on a personal note, shame my boy has just missed out on his next £250 payment at 7 !!!!! We'll live!
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Anonymous | 24 May 2010 11:26 am
What Exactly is a total waste of money ?
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Steve Laird | 24 May 2010 11:30 am
The end of one of Labour's more gimmicky policies. "Here's a few quid and, by the way, we've introduced university tuition fees which will take it back many, many times over."
On a personal note - just glad I don't have to talk to clients about it anymore!
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You Must Be Joking | 24 May 2010 11:34 am
Have to agree with the above comments.
Totally disagree with my taxes being used to fund other people's children!
If you have kids - accept responsibility for them and their finances or, if that is unacceptable, don't have them!
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gav fielding | 24 May 2010 11:38 am
The original idea was to educate the next generation of children to be financially aware and incorporate the CTF into the National Curriculum. It is only a waste of time if you think it is a good idea to have another generation that is financially illiterate.
The problem was Broon caved into the banks at a very late stage and offered the cash CTF which undermined everything else.
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Richard | 24 May 2010 11:42 am
The tip of the iceberg.. good start though, next tax credits to those over £50 k per year. tax fund was a nice bonus but as you say we will live.
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Jamie | 24 May 2010 11:49 am
Don't think it was a waste of money at all. My sons started nearly 18 months ago and he already has £1500. The child trusfund encourages people to save for their childrens future. When he hits 18 there will be enough for him to go to university or put a deposit down on a house. A reform of the child and working tax credits would make more sense. Yes it is based on earning but how about outgoings. It is cheaper to buy a property up North but they still receive the same benefits as someone living down south?
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Keith | 24 May 2010 11:59 am
excellent, why would we pay employers £1,000 to take on someone who's been out of work for 6 months - the employer would recruit anyway, what an insane waste of money this was.
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sandyb | 24 May 2010 12:02 pm
Good, this was one of the most stupid ideas of any government has come up with and a complete waste of money.
Next issue shoud be child tax credit.
The personal allowance should be raised to help the lower paid. What is the point in taxing someone and then having a complicated calculation to work out if they are entitled to reclaim some of this money.
Higher personal allowances is fairer and simpler, plus cuts out another layer of unnecessary paperwork.
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