As part of the government's plan to claw back some of the nation's deficit, the ill thought out and little used Child Trust Fund was severely cut back today, with an aim to completely axing it by 2011.
The scheme, which we partook in for Emily, gave new born children £250 to be invested in a special account under their name (£500 for poorer families). Ostensibily, this was to help pay for college or other life changing events once they turned 18. However, most critics pointed out that as the scheme was in the child's name, it could equally be used to pay for a massive drunked party as it could be to pay for further education and that parents were better off opening accounts for their children they could monitor.
Under the terms announced today, the £250 is trimmed back to £50 for the next year (£100 for poorer families) and then cut altogether.
To explain the cuts, a government official explained to BBC:
"At present, the child trust fund is based on the claim that young people will build up an asset which they can use later in life.
"But since government payments into the scheme are essentially being funded by public borrowing, the government is also storing up debts which will have to be repaid by the same young people."
We took the £250 and left it at that, so Emily when she turns 18 will get £250 plus 18 years worth of interest. There was to be a top up payment of £250 at age seven, but this has been axed as well.
It'll be interesting to see if any replacement comes about when the good (economic) times kick in.