Background to the report
The government paid more than £2 billion into CTFs for 6.3 million children born between 1 September 2002 and 2 January 2011. By April 2012, around 6.1 million CTF accounts had been set up through the scheme. The remaining 0.2 million accounts were set up after April 2012 for eligible children where there had been a delay opening an account.Jump to downloads
Most children received around £250 each from the government at the time their account was set up. Children from low-income families and children in care received an additional £250 from the government (around £500 in total). In some years, other groups of children received additional government payments on top of the initial payments, such as children receiving specific benefits. In total, 2.2 million (36%) children received additional government payments.
Children from low-income families were less likely to receive additional payments into their CTFs from family and friends than children from families with higher incomes. Available data show that between the scheme beginning in 2005 and 2010, 37% of CTFs received additional funds into them from sources other than the government, mainly family and friends. In 2011-12, the first year after the scheme closed to children born after 2 January 2011, 11% of CTFs for children from low-income families received additional payments with an average payment of £202, compared with additional payments made into 27% of CTFs from higher-income families with an average payment of £342.
Scope of the report
HMRC statistical data on CTFs from April 2012 onwards are incomplete, as HMRC prioritised other activities during this period. HMRC published annual statistics on the scheme covering the years that new-born children were eligible for CTFs. It paused publishing statistics when the scheme closed to children born after 2 January 2011. HMRC published the final annual statistical release from this period in 2013, based on data as at 5 April 2012. HMRC began to publish annual statistics on CTFs again in 2021 as the first children reached the age of 18, when their CTFs would mature. Its most recent published statistics, released in June 2022, presented the situation as at 5 April 2021, seven months after the first CTFs reached maturity and the first account holders could access their money. The data in this statistical release have known weaknesses.
By April 2021, around 175,000 out of 320,000 18-year-olds had claimed and either withdrawn or re-invested a total of £376 million from their matured CTFs, but a further £394 million remained in unclaimed matured accounts. By April 2021, around 320,000 CTFs had matured in the seven months since the first CTF account holders reached the age of 18 in September 2020. Of these, 175,000 (55%) had been claimed by the account holders and the accounts closed, and 145,000 remained unclaimed. More recently, the Investing and Saving Alliance estimated that, by August 2022, the proportion of CTFs that had matured at least one year earlier and which remained unclaimed had dropped to around 27%. The total market value of matured CTFs in April 2021 was £0.8 billion, of which around half belonged to matured CTFs that had yet to be claimed by the account holders, and the total value of unmatured accounts was £9.7 billion.
In trying to establish how many young people may have lost track of their investments in Child Trust Funds, we found that the evidence available is limited. However, estimates indicate that more than one-quarter of accounts remain untouched one year after maturing. This suggests that a substantial proportion of young people have not attempted to manage their accounts when they reached the age of 18.
We have previously found that departments across government can struggle to keep institutional knowledge and learning from past programmes. A re-evaluation of the scheme after a significant proportion of CTFs have matured would improve the evidence base available to the government for future savings and assets policy proposals, including any changes to the Junior ISA scheme.
- Report - Investigation into Child Trust Funds (.pdf — 534 KB)
- Summary - Investigation into Child Trust Funds (.pdf — 111 KB)
- ePub - Investigation into Child Trust Funds (.epub — 954 KB)
- ISBN: 978-1-78604-477-8 [Buy a hard copy of this report]
- HC: 1197 2022-23
View press release (14 Mar 2023)