Whatever happened to the Child Trust Fund? The abandonment of universal savings for UK children

Abstract

Child development accounts (CDAs) provide subsidised savings accounts for children to help meet life course needs. While now largely forgotten, the Child Trust Fund was an innovative savings scheme for UK children that sought to generate a capital sum when they turned 18. The first children to receive these funds reached this point in late 2020 so it is timely to review the impact of this national scheme, which by 2022 had £10 bn saved in it. We consider how far the Child Trust Fund led to higher levels of savings for those children who were eligible for it and whether there is any evidence it created a savings habit in young people and their parents. We use six waves of longitudinal ONS Wealth and Assets Survey data. While we find a small effect on savings, with children from better‐off families benefiting the most, there is little evidence of a meaningful effect on savings habits. Nonetheless, the policy's impact on generating even small amounts of savings could be important, especially as most children in the UK have no savings. The study offers policy recommendations to support children's savings in the UK, based on the significant example of asset‐based welfare policy that the CTF provides.