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Why are we still waiting for the child trust fund?

The budget was exceptionally thin on announcements this year, many of us will thank God for that!

But it shows that the Chancellor has little room for grand gestures. His “modest” increase in borrowing works only if growth picks up. Not breaching so-called borrowing limits over the cycle was amusing, bearing in mind that according to the Chancellor he has abolished the economic cycle!!

There was little for the finance industry with the Chancellor ignoring pleas to maintain the tax credit on equity Isas. Nor was the threshold for inheritance tax lifted significantly, trapping more and more investors into paying this tax. In particular hitting those who are capital rich through their house but income poor.

The Child Trust Fund has long been trialed. So why, despite it being backdated, will it not be implemented until 2005 and still no detail in product specification, who can offer it, investor risk etc. Of course with a time span of 18 years the greatest danger is that investment risk will be too limiting, thus reducing potential returns. While it may help educate children in university when they are older (past 12) the amounts are too small to make a huge difference to low income families. At 6 percent growth a year it will be worth around £1,400 – inflation adjusted at 2.5 per cent, about £900 by age 18, with enough to pay a few weeks of university costs or an old banger car.

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