Working class Trustafarians……

May 25, 2010

Special pleading always seems invidious but what got my goat today were Government plans to do away with Child Trust Funds to knock £320m off the bankers’ bail-out deficit.

In part this was because I hadn’t expected to be directly affected so soon.

For the past few years, at birthdays and Christmas I’ve been putting a few quid into the Trust Funds of my nieces’ kids. There are 2 funds set up by their Mums just now. This will grow to 4 when the twins of a third niece get theirs. Another youngster is due by August, so all being well it’ll be 5 by Christmas this year.

They all live miles away, have plenty of toys already and I wouldn’t know where to start in getting them clothes for presents. Sizes, styles and designer brands are, for me at least, a mystery, objectionable or both.

In the past I’d probably have put a cheque in the post and left it to their mothers to use wisely. The money would have been spent not saved. Neither household has ever been flush with money; my eldest niece was until recently a lone parent undergraduate having to concurrently negotiate the student loan and benefit systems.

Child Trust Funds offered an opportunity to provide direct help for their kids’ future in a way they would probably not be in a position to do themselves for many years.

They also had the virtue of being untouchable by parents. I know from my own experience the stress that comes with unexpected and unavoidable bills and their capacity to wreck longer term financial planning, however well intentioned.

No parent raids their kid’s piggy bank unless they really have to. The desperation needed to discuss it with them if they’re old enough – because, after all, it’s theirs – and trying to explain it’s the only resource available, I find heart-rending. I took part in discussions like that myself – as a kid. Child Trust Funds help avoid those situations. They were and remain a good idea.

Tax-free savings accounts will continue of course; it’s just that they won’t be solely for kids’ benefit at 18 and untouchable for anything else. Trust funds will also continue, but I foresee no-one in my extended family, or anyone else I know, engaging a lawyer to draw up a deed to benefit their children at 18.

Financial planning is a world away from those whose low income means a hand-to-mouth existence; where loan applications, credit checks and servicing debt are abiding features of family life.

For example, my nieces wouldn’t know what to make of http://www.tom-brown.com; the website which provides “Your independent guide to private schools” and lists 8 options to “get the Inland Revenue to ‘subsidise’ your school fees”. It simply doesn’t apply to them. They want the best for their kids no less than anyone else but that means they’re vitally concerned that their local SureStart doesn’t close.

To provide my nieces’ kids with what, until May 6th, they could have expected on reaching 18; just to ensure they each receive an equal benefit from their Child Trust Funds will probably cost me an extra £1100 over the next few years. I’ll consider it money well spent.

Should I be around at the time to talk it through, I’m hopeful it’ll provide a useful part of their political education.

If they remain as inquisitive as they already are, I’m sure they’ll want to understand why it was that a government during their childhood decided it was wiser to feather-bed speculators and gamblers running banks and hedge-funds than to invest in them and their future.

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