Child Trust Funds

Public Accounts Committee Closed Inquiry
Opened: 29 Mar 2023 Closed: 24 Sep 2023 Parliament page
A Child Trust Fund (CTF) is a long-term tax-free savings account for children born between 1 September 2002 and 2 January 2011, which they can access when they turn 18. The government paid more than £2 billion into CTFs for 6.3 million children born during this period. Most children received … Read more
2 Recommendations
24 Conclusions
1 Report
1 Oral session
1 Letter
1 Event
Activity timeline 5 events
24 Sep
2023
Report published
26 Jul
2023
Report published
19 Jun
2023
Correspondence
18 May
2023
Oral evidence
18 May
2023
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
18 May 2023
View on parliament.uk
Child Trust Funds
Anthony Walker · The Share Foundation Emily Antcliffe · HMRC Gavin Oldham · The Share Foundation Jim Harra CB · HM Revenue and Customs
Title HC No. Published Items Response
Sixty-Seventh Report - Child Trust Funds HC 1231 26 Jul 2023 26 Responded
Recommendations & Conclusions
18 results
Clear
2 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
Incentivise Child Trust Fund providers to contact young people and charge fair, proportionate fees
Providers are charging fees for passively managing many Child Trust Funds and some could do more to connect young adults with their accounts. Providers can charge fees up to a cap of 1.5% per year on ‘stakeholder’ accounts, the most … Read more
Government Response
The government agreed and stated the recommendation is implemented. HMRC is an active participant in a CTF working group, will continue to encourage providers, and highlights new FCA consumer duty rules requiring firms to deliver good outcomes and fair value.
HM Treasury
View details
3 Recommendation Accepted
Sixty-Seventh Report - Child Trust…
Set out steps and statistics to ease Child Trust Fund access for young people lacking mental capacity
The Child Trust Fund scheme is not easily accessible for the families and carers of children and young people lacking mental capacity. The Ministry of Justice estimates that between 63,000 and 126,000 young people may not have the mental capacity … Read more
Government Response
The government agreed and detailed existing legal avenues (Mental Capacity Act, Court of Protection) for accessing CTFs for those lacking mental capacity, clarifying the application process and correcting cited statistics. It also provided application data for Northern Ireland and explained data collection limitations for Scotland, directly addressing the request for statistics and steps taken.
HM Treasury
View details
4 Recommendation Accepted
Sixty-Seventh Report - Child Trust…
Require HMRC to immediately maximise Child Trust Fund benefits and assess similar future savings schemes.
The objectives of the Child Trust Fund policy have not been achieved, but there is still time for HMRC to act. After establishing the scheme, HMRC showed little interest in achieving the wider objectives planned from government’s £2 billion investment. … Read more
Government Response
The government agreed and stated the recommendation is implemented. It outlined HMRC's ongoing evaluation of CTF operational aspects that inform changes to other savings schemes, and described existing quarterly meetings with DfE and The Share Foundation regarding CTFs for looked after children. The response also highlighted how technological advancements in newer schemes (LISA, Help to Save) reflect lessons learned from the older CTF design.
HM Treasury
View details
6 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
HMRC is not planning to re-evaluate the scheme or learn lessons from its implementation that...
HMRC is not planning to re-evaluate the scheme or learn lessons from its implementation that could help in the design or improvement of similar schemes. HMRC published an interim evaluation of the scheme in 2011 but has not reassessed the … Read more
Government Response
The government agreed with the recommendation to evaluate the CTF scheme, stating a more detailed plan for evaluation will be formalised in Winter 2023. It also committed to publishing external research programmes and evaluation lists in line with good practice.
HM Treasury
View details
1 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
On the basis of a report by the Comptroller and Auditor General, we took evidence...
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Revenue & Customs (HMRC) and The Share Foundation regarding the Child Trust Fund scheme.1
Government Response
The government stated it has processes to contact young people about unclaimed CTFs, published updated information in June 2023, and actively engages with partners to raise awareness. It has also developed a detailed communications plan targeting different age groups and will explore further tracing methods in 2024-25.
HM Treasury
View details
7 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
HMRC told us that some young people may have consciously chosen not to claim their...
HMRC told us that some young people may have consciously chosen not to claim their savings yet, but The Share Foundation told us that accounts typically go unclaimed because the young person does not know that the money is there … Read more
Government Response
The government agrees and states the recommendation is implemented, detailing HMRC's ongoing processes to find and contact young people with unclaimed CTFs. This includes engaging external partners, working with other government departments, and implementing a detailed communications plan targeting specific age groups to raise awareness.
HM Treasury
View details
10 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
In many cases, the providers are likely to be making profits off savings mostly composed...
In many cases, the providers are likely to be making profits off savings mostly composed of government money. From the start of the scheme until 2010, just over one- third of Child Trust Funds (37%) received additional payments into them … Read more
Government Response
The government agrees with the 'recommendation' (which was a conclusion) and states it's implemented, explaining that HMRC is actively involved in a working group to ensure Child Trust Fund providers trace and engage with account holders under FCA rules.
HM Treasury
View details
12 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
To access the Child Trust Fund of a young person who lacks mental capacity, their...
To access the Child Trust Fund of a young person who lacks mental capacity, their family or carer must gain legal authority to do so by applying to the Court of Protection for a deputyship order if living in England … Read more
Government Response
The government agrees and states the recommendation is implemented. It highlights ongoing cross-government work (HMRC, MoJ, DWP) to support families, including publicising fee waivers for access to Child Trust Funds and explaining legal aid provisions in Scotland and Northern Ireland.
HM Treasury
View details
13 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
Child Trust Fund deputyship application process remains difficult, costly, and presents accessibility barriers.
Families have reported finding the deputyship application process difficult, time- consuming, and costly.18 Fees are waived if families are only applying to access a Child Trust Fund but there are other barriers – we heard examples of a six-page GP … Read more
Government Response
The government agrees and states the recommendation is implemented, detailing ongoing cross-government work and the existing fee waiver for Child Trust Fund access applications. They also mention provisions for legal aid in Scotland and the application process in Northern Ireland, aiming to address reported difficulties and costs.
HM Treasury
View details
14 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
Ministry of Justice rejected proposals for easier access to small Child Trust Funds, despite recognized difficulties.
Providers, the Ministry of Justice and HMRC are aware of the issue. Some providers have, at their own risk, allowed families of young people without the capacity to manage 14 Qq 26, 35; C&AG’s Report, para 8; HM Revenue & … Read more
Government Response
The government agrees and states the recommendation is implemented, outlining ongoing cross-government efforts and previously publicised fee waivers for Child Trust Fund access. They describe existing legal frameworks and support for accessing funds in all UK nations, aiming to balance safeguarding with ease of access.
HM Treasury
View details
19 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
HMRC's data on unclaimed Child Trust Fund accounts remains significantly out-of-date.
HMRC’s understanding of accounts yet to be claimed is nearly two years out-of-date: its most recent estimate of the number of Child Trust Fund accounts yet to be claimed 22 Qq 27, 86; Hansard, HC written answer, Child Trust Fund, … Read more
Government Response
The government agrees to provide more timely information on CTFs, with a target implementation date of Summer 2024. HMRC is exploring opportunities for more timely publication, has reminded providers of return requirements, and has already published updated statistics up to April 2022 in June 2023.
HM Treasury
View details
20 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
HMRC significantly reduced Child Trust Fund monitoring and compliance activity since 2013.
HMRC receives annual returns from providers with information about Child Trust Funds, including the number of accounts held and the number that have not been accessed by their owners. It told us that in the period when new accounts were … Read more
Government Response
The government agrees and aims to implement by Summer 2024, committing HMRC to explore publishing more timely Child Trust Fund information, remind providers of return requirements, and improve analytical processes. HMRC has already published updated statistics and addressed issues with missing returns.
HM Treasury
View details
21 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
HMRC has not actively protected Child Trust Fund customers or monitored provider behaviour.
HMRC judged that, by 2013, the risk of tax loss from people opening Child Trust Funds they were not entitled to had fallen significantly. Few Child Trust Funds were opened after this point. We questioned whether HMRC had also assessed … Read more
Government Response
The government agrees and aims to implement by Summer 2024, committing HMRC to exploring publishing more timely Child Trust Fund information, reminding providers of return requirements, and improving analytical processes, which would implicitly aid in assessing mismanagement risks.
HM Treasury
View details
22 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
HMRC's outdated Child Trust Fund records hinder tracing tool, making account retrieval challenging.
HMRC has not kept its records on Child Trust Funds up to date, affecting the quality of its tracing tool. This means young people trying to trace their accounts through the Government Gateway are receiving data from HMRC that have … Read more
Government Response
The government agrees with the 'recommendation' (which was a conclusion) and commits to improving Child Trust Fund data quality by exploring more timely information, reminding providers of return requirements, and enhancing analytical processes by summer 2024.
HM Treasury
View details
23 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
HMRC has not evaluated Child Trust Fund scheme since 2011, despite international interest
HMRC has not published an evaluation of the scheme since 2011. It has not reassessed the scheme now that young adults are claiming their accounts, stating that there is no “particular appetite” for this.35 The Share Foundation described “quite a … Read more
Government Response
The government agrees and commits to formalising a detailed plan for the evaluation of the Child Trust Fund scheme by Winter 2023, with a target implementation date of Summer 2025. HMRC will also be open to external researchers accessing its data for analysis.
HM Treasury
View details
24 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
HMRC lacks detail on how policy lessons are learned or captured for future schemes
HMRC told us that from a policy perspective it learns lessons from previous work and creates ‘playbooks’ for future policies. While we are glad to hear that HMRC does this, we expressed concern that it is in a position to … Read more
Government Response
The government agrees and commits to formalising a detailed plan for evaluation by Winter 2023 (targeting Summer 2025 implementation). This commitment to evaluation, including allowing external researchers access to data, aims to capture lessons and inform future policy, implicitly addressing concerns about the scope of HMRC's advice and how learning is captured.
HM Treasury
View details
25 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
Share Foundation provides essential financial training to care leavers for Child Trust Funds
The engagement of the Share Foundation to manage Child Trust Funds on behalf of children in care has given a focus to those accounts. The Share Foundation told us about the disciplined handover process it has introduced to ensure that … Read more
Government Response
The government agrees with the committee's conclusion, stating the recommendation is implemented. They highlight ongoing evaluation of the CTF scheme, regular quarterly meetings with The Share Foundation, and continuous monitoring of its performance.
HM Treasury
View details
26 Conclusion Accepted
Sixty-Seventh Report - Child Trust…
HMRC lacks independent evaluation trigger and transparency for evaluation spending
When we questioned HMRC on what would trigger it to evaluate the scheme, it told us that it would need ministers to request it. We queried the extent to which looking at the impact of a scheme is a political … Read more
Government Response
The government agrees with the committee’s concern, committing to formalising a detailed evaluation plan for Winter 2023 and publishing its external research programmes by Summer 2025. They acknowledge the need for careful and proportionate evaluation, especially for discontinued schemes like CTF.
HM Treasury
View details
Government Response AI assessment · 26 of 2 classified
Accepted 18
Acknowledged 1
Deferred 3
Rejected 4
Total 2 recs + 24 conclusions
Correspondence 1 letter
19 Jun 2023 Correspondence from Jim Harra, Chief Executive and First Permanent Secretary, HM Revenue and Customs, re Following the hearing on Child Trust Funds on 18 May 2023, dated 7 June 2023
Parliament page