Affects of the Conservatives Child Trust Fund policy

The worth of the Child Trust Fund is a subject that has been much debated since its inception in 2002. The Conservative Party have now said that they will reduce the Child Trust Fund so only children from the poorest families will receive it should they win the 2010 general election. The have not yet specified by which specifications it will be decided who will receive it, and who will not.

Most people would agree that the poorer areas of society should receive more help from the state than those who don’t need it, and this is something that the Conservatives have taken on board with their policy. Poorer children can have a disadvantage when they are young adults, as wealthier parents are more able to help their children with University or getting on the housing ladder. Less wealthy parents are unable to help in this way even if they would like to. Some though, have argued that this benefit should not be limited in this way. Is this something that all children should be entitled to and not based on a child’s background? After all, is their any guarantee you will be wealthy just because your parents are.

Another question that has to be asked: are children from middle income families stuck in the middle. They may no longer be entitled to the Child Trust Fund and their families won’t be able to help them in the same way as the wealthiest. Although they have higher incomes than the poorest, they may also have higher overheads, such as a mortgage, so their disposable income is not necessarily any higher.

In theory children from the wealthiest families will not need the benefits of a Child Trust Fund. Certainly the Child Trust Fund amount (two payments of £250) is not a lot to the very richest members of society. Some parents, though, believe that children should find their own way in life so won’t give payouts to their children the way others might. Where this is the case, children will be punished because their parents are wealthy. Is it fair that children (and young adults) are treated according to their parents’ income?

The problems the Conservative Parties Child Trust Fund policy could cause can be compared to some of the issues of student loans and frees. These are means tested but not always to the benefit of those who need assistance. There are loop holes that mean those from wealthier backgrounds can end up benefitting from the system. Parents who are wealthy enough to be able to retire early do not count as being employed (especially if they are not receiving a pension). Therefore their children get the same assistance as students whose parents are unemployed. This is likely to apply to the very wealthiest families, so the extreme rich can benefit from a scheme that is supposed to help the poorest most. Another issue with this is that students whose parents are divorced get their assistance based on the parent they live with. Therefore if the parent they live with is relatively poor but their other parent is wealthy, then they will still receive the benefits. This means they could be receiving high student loans and having their fees paid, and at the same time be receiving money from one of their parents.

In theory the Conservatives Child Trust Fund policy is a good idea; it is most important to help those who need it. It needs to be dealt with the right way though, so those who do need this extra benefit don’t loose out, and there are no loop holes which mean the wealthiest are able to benefit from something not designed for them.

Andrew Marshall ©

Child Trust Fund