New Chancellor John Healey is facing criticism for the government's Child Trust Fund scheme, a savings initiative launched when he previously served as a Treasury minister. The program, intended to provide a financial asset for newborns, has resulted in an estimated £1.6 billion remaining unclaimed, according to government admissions. Financial firms managing these accounts have also generated approximately £100 million annually in fees.
In his prior role under Gordon Brown, Healey was involved in the creation and launch of the Child Trust Funds. Under this scheme, £250 of taxpayer money was placed into a savings account for every newborn, accessible upon reaching 18 years old. The initiative, which ran from 2002 to 2011, saw a total investment of £2 billion for approximately six million babies.
A 2023 report by the Public Accounts Committee highlighted the scheme's laudable aims of promoting financial literacy and savings habits but criticized HM Revenue and Customs (HMRC) for inadequate long-term planning and insufficient efforts to inform or locate young account holders. The report suggested that the majority of the unclaimed funds likely belong to individuals from low-income backgrounds.
Reform UK's candidate for Chancellor, Robert Jenrick, criticized the scheme, stating it has become a significant source of revenue for fund managers while a substantial amount of money remains inaccessible to the intended recipients. Jenrick urged Healey to disclose the expenditure on locating these funds and to ensure the unclaimed money is returned to its owners.
In response, an HM Treasury spokesperson affirmed the scheme's objective to provide young people with financial assets. The spokesperson noted that efforts are underway to help account holders access their savings, including the recent establishment of a Child Trust Fund Taskforce aimed at reconnecting young people with over £1.6 billion in unclaimed funds. The taskforce is a collaboration between government departments and financial providers.