Government confirms savings account for children in care
Janaki Mahadevan
Tuesday, November 1, 2011
Children who have been in care for more than a year will receive £200 to start a junior ISA savings account, children's minister Tim Loughton has confirmed.
It is estimated that more than 55,000 young people in the UK will benefit from the savings account and initial payment after the first accounts are opened in 2012.
The scheme, worth £16.7m until 2015, will be accessible on the account holder's 18th birthday.
Chancellor George Osborne first announced that a savings account would be available for children in care in March this year. The government is now also considering how to provide financial education to children in care and their carers.
Loughton said: "The best way to learn about the value of savings and investments is with real money in real accounts. Like any parent, the government wants to provide the best support to children in its care and make sure they gain the same experience as any other young person.
"The savings will help them when they reach 18 and they are facing serious choices as they start out in the adult world. I am confident that, when combined with financial education, holding a real financial asset in a savings account will encourage these young people to learn about how to manage their money well."
The Department for Education worked with charities Action for Children and Barnardo’s in developing the scheme.
Action for Children chief executive Dame Clare Tickell said: "Not only will the new junior ISA for children in care ease their move to financial independence, but it will help to show these vulnerable children that someone cares, and that someone is planning for their future."
This announcement comes on the day that the government’s junior ISAs are launched, which will allow parents to open a taw-free account for their children.
However, think tank the Institute for Public Policy Research (IPPR) said many low- to middle-income earners do not feel they can afford to open one and criticised the abolition of child trust funds.
IPPR director Nick Pearce said: "Child trust funds were a bold attempt to ensure that all young people, whatever their background, could start adult life with a nest egg. But Labour failed to make child trust funds popular or to persuade the public that they should be a permanent fixture in Britain, even in times of austerity.
"Only time will tell whether the new junior ISAs are going to work, but because the government will not provide an initial voucher to kick start the account, many low- to middle-earner families may not feel they can afford to open one."
