Government called on to save child trust funds

Pressure is on the government to maintain the framework of child trust funds so that newborn children have a savings scheme for friends and relatives to pay in to.

The Save Child Savings Alliance is calling on the government to abandon plans to dismantle child trust funds completely as it scales back the scheme to save money.

The Alliance, which is made up of charities, academics, think tanks and members of the financial industry, said leaving the structure in place would make it easier for government contributions to resume once the nation's finances are back on track.

In May, the coalition government announced plans to scale back child trust funds from next month before phasing them out completely next year.

Regulations to reduce the payments from 250 to 50, or to 100 in the case of children from lower income households, will be laid before Parliament today.

But alliance spokesman Julian Le Grand said: "We are calling for the coalition government to retain the core framework of the child trust fund so that parents can still set up simple and dedicated savings accounts for their 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.

"Both the Conservatives and Liberal Democrats say they agree that the child trust fund is a good way to help promote family saving, but claim that the economy cannot currently support government contributions into it.

"We are campaigning to help protect the best of what we have, while saving the government money in this time of austerity."