Child trust funds : second report of session 2003-04, report, together with formal minutes, oral and written evidence

The Committee's report examines the Government's proposals for the establishment of Child Trust Funds or 'baby-bonds", as set out in the Child Trust Funds Bill (HCB 1, session 2003-04; ISBN 0215703278) published in November 2003.

Under the provisions of this Bill, all children in the UK born from 1st September 2002 will receive a Government endowment of [pound]250 and children in families receiving full Child Tax Credit will be eligible for an additional [pound]250.

The Child Trust Fund account will be in the child's name, who will have unrestricted access to the account from the age of 18 years old.

Family and friends will be able to contribute up to [pound]1,200 a year to the fund, with all income and capital growth exempted from tax.

The aim of the programme is to promote the benefits of saving and investing, and to ensure that all children have a financial asset at the start of their adult life to invest in their future.

The Committee concludes that this ambitious scheme has the potential to make a significant impact on people's attitude to saving. However, as it involves a significant expenditure commitment from this Government, as well as its successors, it is vital that the Government gets the details and implementation of the scheme right.