Martin Lewis: 80,000 teens' Child Trust Fund cash locked away. Government holds the key – my letter to the Children's Minister
Between 2002 and 2011, every UK child was given £100s in a tax-free savings Child Trust Fund (CTF) by the state, which parents could then add more on top. The money was set to be accessible when the child turned 18 – giving everyone some cash to start their adult life. Now many with CTFs have hit that age, but for 80,000 children in England and Wales with special educational needs or disabilities, their cash can't be accessed without a nightmare, costly, often unaffordable process for their parents.
I questioned the Children's Minister about this while presenting Good Morning Britain. She said she wasn't aware of the issue, but would look into it, so I said I'd send her a letter and a briefing. That went today, here's a copy below...
Dear Claire Coutinho MP
I asked you on Good Morning Britain about the 80,000 children with special educational needs or disabilities (SEND) whose money, given to them by the state to access at age 18, is locked away, without effective access in Child Trust Funds. While most 18 year olds can simply withdraw the money, in practice for this group of SEND 18 year olds, their parents are unable to access the cash without the substantial pain, stress and cost of the Court of Protection.
You said you'd look into it, and I promised to send you a briefing – which my team have prepared below.
This is a powerful issue. The money in Child Trust Funds was intended to level the playing field, so young people from all backgrounds had some savings behind them when they became an adult.
This is particularly important for children with disabilities, who unquestionably face additional financial challenges in adulthood. Yet it is those most in need who are now being disenfranchised.
I'm aware Government has done a cursory look at this already, but frankly the 'do very little' solution that it came up with isn't good enough. To leave things because it's tricky is a very poor outcome for everyone.
I would ask you to look at this and please champion within Government.
Founder, The Money & Mental Health Policy Institute
Tens of thousands of young people with learning disabilities now face being locked out of their own starter savings – and while the Government has looked at some perfectly workable solutions, it has so far failed to meaningfully act to remove these barriers.
More than 80,000 young people with learning disabilities could be affected, as the only way to gain access to their savings is for their parents to go through a costly and time-consuming process through the Court of Protection.
Child Trust Funds were set up in 2005 and designed to encourage children to save for the future, untouchable until the child turns 18. Until 2011, the state gave all parents of children born from 1 September 2002 tax-free vouchers for the accounts, worth £250 both at birth and again on a child's seventh birthday – rising to £500 each time for low income households. Many parents then added to these accounts over the years in the hope of giving their children some financial resilience as they start their adult lives.
However, due to protections put in place by the Mental Capacity Act, the only way for parents of young people with learning disabilities to access this money on their behalf is through a Deputyship Order (DO) via the courts. The same issues also apply to Junior ISAs.
For many – especially the most disadvantaged – the amount of money it costs to gain access to the accounts outweighs the amount saved. Parents need access to legal advice or lawyers, they must have forms filled out by a GP (often at cost), as well as often paying fees directly to the court, and then additional annual fees to the Office of the Public Guardian (OPG) – which can be hundreds of pounds a year. This can add up all-in-all to an initial cost of nearly £1,000 – not including legal help – plus ongoing yearly payments.
But clearly, it's not just about the cost. The time it takes to go through the court is a nightmare for parents who are already often living time-squeezed, stressful, difficult lives – there can be as many as 90 pages of forms to read and fill out, and court delays mean it can take up to 6 months to get the DO. Even then, an already-stretched Deputy also needs to submit reports on financial expenditure every year.
On top of this, those young people with learning disabilities who could benefit from using their funds, but are unable to access them, could also see their Universal Credit entitlement cut if they have more than £6,000 stuck in these accounts.
There are solutions, but the Government has so far not taken any meaningful action. Most recently, the Government decided against implementing the small payments scheme it consulted on – after taking a year to publish its decision and giving many affected false hope – that was a gut punch.
A small payments scheme would allow a person, who could prove their suitability, temporary access to a Child Trust Fund for a 6-month period so they could withdraw up to £2,500 on behalf of the account holder. As access to the account would only be for a short-term one-off period, the person would not need to go through the courts. This is a sensible solution that would help the majority of those affected, as the average amount in an account is just over £2,000.
A second solution is to extend the DWP's appointee scheme – already in place so that parents are able to receive benefits on behalf of their children – to cover Child Trust Funds/Junior ISAs. The amount of money handled by appointees for benefits, in most cases, far outweighs the amount contained in the Child Trust Funds, so it is frustrating to see this overlooked as an alternative.
The Government's preferred approach of increasing awareness through its new toolkit is, quite frankly, a cop out. The toolkit doesn't lighten the financial burden of getting a DO, and it doesn't make much material difference to the time spent or frustration experienced by families forced to go through this process. Furthermore, it does nothing to support the policy's original aim of giving young people – particularly those facing additional life challenges – a leg up and some financial resilience as they enter adulthood.
I urge the Government to rethink its decision against implementing the small payments scheme, and act to help the tens of thousands of young people in this situation.
We have worked with the charity Contact and the campaigner Andrew Turner on this and are thankful for their input.
Additional sources of information:
· Contact, Child Trust Fund access issue – progress update and impact assessment, March 2023
· Renaissance Legal, Child Trust Fund Access Campaign – Summer 2022 update, accessed July 2023