There is no good reason to scrap the Child Trust Fund
The government’s decision to abolish the Child Trust Fund is staggeringly short-sighted.
The decision not only to cut the Child Trust Fund but to abolish it completely from next year may look like an easy win for a coalition of two parties never deeply committed to this policy. It is nonetheless staggeringly short-sighted.
The government wants to see families save more and borrow less, so why axe the one part of the welfare system that encourages them to build up a nest egg for their children? And why abolish this important step in ensuring that all children get a fair start as they enter adult life?
The answer, the new Chief Secretary to the Treasury, David Laws, tell us, is that it is unacceptable that "government payments into the scheme are essentially being funded by public borrowing". But this, of course, is nonsense. Public spending in the UK is not hypothecated to particular taxes or borrowing. It would make just as little sense to say that the police force was being abolished because it was being funded by borrowing.
The real reason is that this is a policy still in its infancy whose sceptics were too impatient to test its effectiveness. Introduced in 2002, the Child Trust Fund could never prove its worth until its first recipients received payments when they turned 18 -- another ten years from now.
And despite 4.8 million families having taken up the scheme, the government could be pretty confident that most would be too weary by the comings and goings of family life to take to the streets in protest.
So there you have it. Tomorrow's generation of adults gets to pay for the mistakes of today's.
No doubt every cut that the government announces this week and in the future will be greeted by squeals from some vested interest. But before we develop the stiffest of upper lips, could we just clarify some basic principles?
The new coalition government has made great play of its commitment to fairness. Indeed, in reference to the impending tide of cuts, the coalition agreement states:
Difficult decisions will have to be taken in the months and years ahead, but we will ensure that fairness is at the heart of those decisions so that all those most in need are protected.
Hasn't this government failed its own fairness test already?
Lisa Harker and Carey Oppenheim are the co-directors of the Institute for Public Policy Research.