Draft Press Release on Child Trust Funds for Looked After Children

The Board of Who Cares? Scotland is disappointed to learn that the new UK Coalition Government is set to end the Child Trust Fund by January 2011. With this decision the Government has reneged on promises made in the Conservative Party’s election manifesto to continue payments for the most vulnerable children. In making the announcement, Chief Secretary to the Treasury, David Laws, acknowledged that promises had been made in relation to trust funds for disabled children, and announced that this money would instead go to provide respite care. However, Mr Laws made no announcement about similar promises to the UK’s looked after children who began receiving annual top-up payments to their trust fund accounts in 2008-9.

Who Cares? Scotland supports the principle of trust funds for looked after children, designed to provide a degree of financial security when leaving care. This is an aspect of the care system which has not been well developed. Having access to individual asset accounts can make an important contribution to the future wellbeing of children in care by providing a sense of security and encouraging planning for the future. Adequate financial support is particularly important for care leavers progressing to further and higher education. All political parties have expressed concerns at the poor outcomes of a high proportion of looked after children. Access to a fund at age 18, coupled with financial advice from an earlier age would provide a young person with a degree of independence in making choices about further study and training for employment.

Who Cares? Scotland also considers that the Scottish Government and Scottish local authorities should give more consideration to financial planning for looked after children as an important aspect of the corporate parent responsibility. In the absence of a UK Child Trust Fund scheme, we propose that a Scottish asset account scheme for children in care be established under devolved powers.Notes for EditorsThe Child Trust Fundi (CTF) is a universal financial provision introduced in 2005 as a way of encouraging parents to make savings for their children’s futures. The mechanism is a voucher issued to the child’s ‘registered contact’, the person with parental responsibility, usually the birth mother, following the registration of birth, and again when the child reaches the age of seven. Vouchers can be paid into a CTF set up with an approved ‘provider’ (financial institution). A parent, or anyone else, can make payments into a child’s CTF up to a limit of £1,200 in a single tax year. The child cannot access the money saved in a CTF until the age of 18 but can manage the account at age 16.

Looked after children are much less likely than non- looked after children to receive additional payments into trust funds. As a result, the fund which might typically accrue by age 18 is likely to be modest. To address this deficiency, annual ‘top-up’ payments of £100 for each looked after child who had spent a full year in care were introduced from fiscal year 2008-9. Within the UK, arrangements for looked after children are matters devolved to the Scottish Parliament, Welsh Assembly and Northern Ireland Assembly, while the Child Trust Fund, in common with other aspects of the benefits system, is reserved to Westminster. As an example of different arrangements under devolved powers, the Welsh Assembly Government has been adding to the UK Government’s top-up to give looked after children an additional £200 annually and has also encouraged local authorities to make regular payments.

On 24 May 2010, the UK Coalition Government announced the scrapping of the Child Trust Fund as part of cuts aimed at reducing the budget deficit1. This is consistent with the Liberal Democrat party manifesto but is at odds with the Conservatives’ promise to continue payments for children in the poorest third of families and for disabled children.Media Contacts:

David Dunne (Chairperson) 07564040280 david.dunne1@hotmail.co.uk

Graham Connelly (Board Member) 07770920267 g.connelly@strath.ac.uk

Heather Gray (Chief Executive) 07712867295 h.gray@whocaresscotland.org