The 'baby bond'

January 14, 2005 ,

THE Chancellor of the Exchequer, Gordon Brown, was in Cardiff this week.
He came to highlight the new Child Trust Fund, or ‘baby bond’.

This month about 9,000 children in Cardiff, born since September 2002, will have a savings account opened for them by the government.
A first deposit of £250, and up to £500 for the less well, off will be paid into the account by the Treasury.

Answering my question at Prime Minister Question time before Christmas, Tony Blair confirmed that the Chancellor will also pay interest backdated to the date of the child’s birth.

Parents and grandparents will be able to add extra tax-free payments every year to build up their child’s account.
At seven years old the government will add an extra payment to the growing account, which itself is tax free.

At the age of eighteen the youngster will be able to access the Trust fund to help them make a start in adult life.
It will be entirely up to them how they choose to use the money in the account.

I recently discussed the Child Trust Fund with MPs from the two other major parties on Simon Mayo’s programme on Radio Five Live.

They both said they would abolish the Child Trust Fund because young people at eighteen would simply waste the money.
I find that attitude short-sighted and patronising.

We need to encourage responsible saving amongst our future citizens.
In our culture of instant credit and consumer debt, this scheme will mean that millions of young people who currently have no savings will have a pot to call their own.
It is an idea, which I believe other countries will copy.

As you would expect with Gordon Brown, it is a policy with the word “prudence” written all over it.