Today sees the launch of a new campaign group, the Save Child Savings Alliance, which is seeking to throw a lifeline to the Child Trust Fund.
Save the Child Trust Fund? Hasn't the Coalition already decided to abolish it?
The Alliance acknowledges the government is set to reduce and then, as of 2011, end payments into new Child Trust Fund accounts. It is not seeking to prevent this.
But the Alliance is pressing for the government to retain the underlying framework of the Child Trust Fund program. In the Alliance's words:
'The Save Child Savings Alliance calls on the Coalition Government to retain the core framework of the Child Trust Fund so that parents can still set up simple and tax efficient savings accounts for their newborn children after Government contributions cease in 2011. That way, it would also be cheap and easy for Government contributions to resume once the economy picks up and the public finances are in a healthier condition.'
At present, the Child Trust Fund (CTF) costs about £525 million per year. The vast bulk of this consists of the government contribution into the accounts (£250 for most children at birth rising to £500 for children in low income households). The Alliance estimates that the cost of maintaining the basic framework, under which all parents would be given the opportunity to set up CTF accounts, is around £2 million. So the Child Trust Fund would still be taking a spending cut of 99.6 %.
Given the Coalition's position, the Alliance's proposal has much to recommend it. It is possible that even without the initial government contribution, retaining the program in this form will still have the 'nudge' effect of promoting increased saving for children.
Of course, in this form the CTF will lack the crucial element of a 'citizen's inheritance' that has been part of its attraction. The asset position of young people will depend entirely on the voluntary efforts of their families and not at all on the government meeting our collective responsibility to guarantee all young people an asset on maturity as of right.
However, as the Alliance points out, if the basic administrative framework of the CTF is retained, then it will be relatively easy to restore a citizen's inheritance element to the scheme in future. Government can start paying back into new CTFs at any point as the fiscal situation improves.
Not only is this a good proposal, it is one that ought to command wide, cross-party support. Those on the left should support it as a way of throwing a lifeline to the CTF, a policy crucial to equality of opportunity. Conservatives should support it as a means of encouraging a savings culture.
The proposal also offers an opportunity to the Lib Dems.
In a recent New Statesman article, Richard Grayson argues that social liberals within the Lib Dems '...should be arguing for a new political economy that puts issues of power in the workplace and the ownership of assets back on the political agenda in the way that the old Liberal Party once did.' And in a recent exchange at the Social Liberal Forum blog site, James Graham accepts that the Lib Dems got it wrong on the Child Trust Fund (see the comments thread following this post). Well, here's a chance for the Lib Dems who agree with Richard Grayson and James Graham to do something about it.
And, if memory serves, the line that Nick Clegg took during the election was that the CTF is a great idea in principle but just not one we can afford right now.
If this is what Mr. Clegg thinks, how can he possibly object to throwing a lifeline to the CTF - a lifeline which still enables the government to save over 99.5% of the CTF's cost?