Recommendations & Conclusions
26 items
2
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
Providers are charging fees for passively managing many Child Trust Funds and some could do more to connect young adults with their accounts. Providers can charge fees up to a cap of 1.5% per year on ‘stakeholder’ accounts, the most common type of Child Trust Fund account, which equates to …
Government response. The government agreed and stated the recommendation is implemented. HMRC is an active participant in a CTF working group, will continue to encourage providers, and highlights new FCA consumer duty rules requiring firms to deliver good outcomes and fair value.
HM Treasury
3
Recommendation
Sixty-Seventh Report - Child Trust Funds
Accepted
The Child Trust Fund scheme is not easily accessible for the families and carers of children and young people lacking mental capacity. The Ministry of Justice estimates that between 63,000 and 126,000 young people may not have the mental capacity to access and manage their matured Child Trust Fund when …
Government response. The government agreed and detailed existing legal avenues (Mental Capacity Act, Court of Protection) for accessing CTFs for those lacking mental capacity, clarifying the application process and correcting cited statistics. It also provided application data for Northern Ireland and explained …
HM Treasury
4
Recommendation
Sixty-Seventh Report - Child Trust Funds
Accepted
The objectives of the Child Trust Fund policy have not been achieved, but there is still time for HMRC to act. After establishing the scheme, HMRC showed little interest in achieving the wider objectives planned from government’s £2 billion investment. It regards the Child Trust Fund policy as having ended …
Government response. The government agreed and stated the recommendation is implemented. It outlined HMRC's ongoing evaluation of CTF operational aspects that inform changes to other savings schemes, and described existing quarterly meetings with DfE and The Share Foundation regarding CTFs for looked …
HM Treasury
5
Conclusion
Sixty-Seventh Report - Child Trust Funds
Acknowledged
HMRC does not collect the data from providers needed to plan timely action to improve young people’s engagement with their accounts and assess whether its actions are working. HMRC’s understanding of Child Trust Fund accounts that have matured but are yet to be claimed is nearly two years out-of-date: its …
Government response. The government agreed, stating the recommendation is implemented. HMRC has reviewed its awareness and tracing strategy, is confident in its current approach, and will continue to explore new routes and monitor unclaimed accounts to determine when further intervention is appropriate.
HM Treasury
6
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
HMRC is not planning to re-evaluate the scheme or learn lessons from its implementation that could help in the design or improvement of similar schemes. HMRC published an interim evaluation of the scheme in 2011 but has not reassessed the scheme since young adults first started claiming their money from …
Government response. The government agreed with the recommendation to evaluate the CTF scheme, stating a more detailed plan for evaluation will be formalised in Winter 2023. It also committed to publishing external research programmes and evaluation lists in line with good practice.
HM Treasury
1
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Revenue & Customs (HMRC) and The Share Foundation regarding the Child Trust Fund scheme.1
Government response. The government stated it has processes to contact young people about unclaimed CTFs, published updated information in June 2023, and actively engages with partners to raise awareness. It has also developed a detailed communications plan targeting different age groups and …
HM Treasury
7
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
HMRC told us that some young people may have consciously chosen not to claim their savings yet, but The Share Foundation told us that accounts typically go unclaimed because the young person does not know that the money is there and the account provider does not have their current address.9 …
Government response. The government agrees and states the recommendation is implemented, detailing HMRC's ongoing processes to find and contact young people with unclaimed CTFs. This includes engaging external partners, working with other government departments, and implementing a detailed communications plan targeting specific …
HM Treasury
8
Conclusion
Sixty-Seventh Report - Child Trust Funds
Deferred
Providers can charge fees up to a cap of 1.5% per year on ‘stakeholder’ accounts, the most common type of Child Trust Fund account, which The Share Foundation described as equating to nearly £30 per year on a typical account. HMRC does not track how much providers are charging. The …
Government response. The government agrees with the Committee's observation on CTF provider fees but states that providers have the lead responsibility for terms and conditions, which are industry matters. HMRC will encourage providers via a working group to adhere to their responsibilities …
HM Treasury
9
Conclusion
Sixty-Seventh Report - Child Trust Funds
Deferred
Providers are making even more money from some Child Trust Funds in other ways, as other types of Child Trust Fund have no cap on fees. Around 1.3 million Child Trust Funds (0.3 million stocks and shares accounts and 1.0 million cash deposit accounts) are not subject to the cap …
Government response. The government agrees with the Committee's observation on uncapped CTF fees but states that providers have the lead responsibility for terms and conditions, which are industry matters. HMRC will encourage providers via a working group to adhere to their responsibilities …
HM Treasury
10
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
In many cases, the providers are likely to be making profits off savings mostly composed of government money. From the start of the scheme until 2010, just over one- third of Child Trust Funds (37%) received additional payments into them other than from the government. More recently, in the 2020–21 …
Government response. The government agrees with the 'recommendation' (which was a conclusion) and states it's implemented, explaining that HMRC is actively involved in a working group to ensure Child Trust Fund providers trace and engage with account holders under FCA rules.
HM Treasury
11
Conclusion
Sixty-Seventh Report - Child Trust Funds
Deferred
We heard that only four providers, out of around 55 in total, have been proactive and voluntarily worked in partnership with the Tracing Group—a commercial service for tracing the owners of dormant accounts—to set up a Child Trust Fund register separate to the one held by HMRC. The register contains …
Government response. The government agrees with the Committee's observation regarding provider proactivity in tracing accounts but states that CTF providers have the lead responsibility for tracing. HMRC will continue to encourage providers through a working group to adhere to their responsibilities under …
HM Treasury
12
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
To access the Child Trust Fund of a young person who lacks mental capacity, their family or carer must gain legal authority to do so by applying to the Court of Protection for a deputyship order if living in England and Wales. The Ministry of Justice estimates that between 63,000 …
Government response. The government agrees and states the recommendation is implemented. It highlights ongoing cross-government work (HMRC, MoJ, DWP) to support families, including publicising fee waivers for access to Child Trust Funds and explaining legal aid provisions in Scotland and Northern Ireland.
HM Treasury
13
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
Families have reported finding the deputyship application process difficult, time- consuming, and costly.18 Fees are waived if families are only applying to access a Child Trust Fund but there are other barriers – we heard examples of a six-page GP letter being needed as part of the process. The Down’s …
Government response. The government agrees and states the recommendation is implemented, detailing ongoing cross-government work and the existing fee waiver for Child Trust Fund access applications. They also mention provisions for legal aid in Scotland and the application process in Northern Ireland, …
HM Treasury
14
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
Providers, the Ministry of Justice and HMRC are aware of the issue. Some providers have, at their own risk, allowed families of young people without the capacity to manage 14 Qq 26, 35; C&AG’s Report, para 8; HM Revenue & Customs, Annual savings statistics 2022, June 2022. See Child Trust …
Government response. The government agrees and states the recommendation is implemented, outlining ongoing cross-government efforts and previously publicised fee waivers for Child Trust Fund access. They describe existing legal frameworks and support for accessing funds in all UK nations, aiming to balance …
HM Treasury
15
Conclusion
Sixty-Seventh Report - Child Trust Funds
Rejected
HMRC regards the Child Trust Fund policy as having “ended in 2011”, and as an “old scheme” as opposed to an existing scheme.22 This is despite the scheme being very much live, as most young people who benefitted from the scheme have not yet reached the age at which they …
Government response. The government disagrees with the Committee's observation that HMRC views the CTF scheme as 'ended' or 'old'. It reiterates its commitment to ensuring all children and families can access matured CTFs and believes existing savings frameworks address the underlying policy …
HM Treasury
16
Conclusion
Sixty-Seventh Report - Child Trust Funds
Rejected
HMRC saw its role as setting up of the accounts and transferring government funding into them, which it believes it did effectively.24 The Child Trust Fund scheme’s policy objectives also include helping people understand the benefits of saving and investing; encouraging parents and children to develop the habit of saving …
Government response. The government disagrees with the Committee's concern regarding HMRC's role in financial education related to CTFs. It asserts that existing policies like Help to Save, Junior ISA, and Lifetime ISA, alongside statutory PSHE and guidance from MAPS, adequately address financial …
HM Treasury
17
Conclusion
Sixty-Seventh Report - Child Trust Funds
Rejected
HMRC made clear its view that the duty to implement the policy was not fully its responsibility. HM Treasury has not given HMRC dedicated funding for the scheme. The Share Foundation believes that HM Treasury is not allowing HMRC to do more with Child Trust Funds, despite some in HMRC …
Government response. The government explicitly rejects the recommendation, stating it believes the existing policy framework for savings (Help to Save, Junior ISA, Lifetime ISA) and current collaborative efforts already address the need for financial education and access to funds.
HM Treasury
18
Conclusion
Sixty-Seventh Report - Child Trust Funds
Rejected
We are concerned that Child Trust Funds will become another example of a legacy financial product that is not given the necessary attention by government to succeed against its aims over the long-term. We have noticed in other projects that legacy products often have very high fees because they are …
Government response. The government explicitly rejects the recommendation (even though it's a conclusion), stating it remains committed to ensuring access to CTFs and addresses barriers through cross-government collaboration. It then explains its broader policy framework for encouraging savings through other schemes like …
HM Treasury
19
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
HMRC’s understanding of accounts yet to be claimed is nearly two years out-of-date: its most recent estimate of the number of Child Trust Fund accounts yet to be claimed 22 Qq 27, 86; Hansard, HC written answer, Child Trust Fund, UIN 181783, answered 24 April 2023 23 Q 1; C&AG’s …
Government response. The government agrees to provide more timely information on CTFs, with a target implementation date of Summer 2024. HMRC is exploring opportunities for more timely publication, has reminded providers of return requirements, and has already published updated statistics up to …
HM Treasury
20
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
HMRC receives annual returns from providers with information about Child Trust Funds, including the number of accounts held and the number that have not been accessed by their owners. It told us that in the period when new accounts were being opened it received fortnightly returns from providers, but it …
Government response. The government agrees and aims to implement by Summer 2024, committing HMRC to explore publishing more timely Child Trust Fund information, remind providers of return requirements, and improve analytical processes. HMRC has already published updated statistics and addressed issues with …
HM Treasury
21
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
HMRC judged that, by 2013, the risk of tax loss from people opening Child Trust Funds they were not entitled to had fallen significantly. Few Child Trust Funds were opened after this point. We questioned whether HMRC had also assessed the risk of Child Trust Funds being mismanaged, such that …
Government response. The government agrees and aims to implement by Summer 2024, committing HMRC to exploring publishing more timely Child Trust Fund information, reminding providers of return requirements, and improving analytical processes, which would implicitly aid in assessing mismanagement risks.
HM Treasury
22
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
HMRC has not kept its records on Child Trust Funds up to date, affecting the quality of its tracing tool. This means young people trying to trace their accounts through the Government Gateway are receiving data from HMRC that have not been updated since their account was originally opened, typically …
Government response. The government agrees with the 'recommendation' (which was a conclusion) and commits to improving Child Trust Fund data quality by exploring more timely information, reminding providers of return requirements, and enhancing analytical processes by summer 2024.
HM Treasury
23
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
HMRC has not published an evaluation of the scheme since 2011. It has not reassessed the scheme now that young adults are claiming their accounts, stating that there is no “particular appetite” for this.35 The Share Foundation described “quite a bit of international interest” in the outcomes of the Child …
Government response. The government agrees and commits to formalising a detailed plan for the evaluation of the Child Trust Fund scheme by Winter 2023, with a target implementation date of Summer 2025. HMRC will also be open to external researchers accessing its …
HM Treasury
24
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
HMRC told us that from a policy perspective it learns lessons from previous work and creates ‘playbooks’ for future policies. While we are glad to hear that HMRC does this, we expressed concern that it is in a position to offer advice to ministers only on how to implement a …
Government response. The government agrees and commits to formalising a detailed plan for evaluation by Winter 2023 (targeting Summer 2025 implementation). This commitment to evaluation, including allowing external researchers access to data, aims to capture lessons and inform future policy, implicitly addressing …
HM Treasury
25
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
The engagement of the Share Foundation to manage Child Trust Funds on behalf of children in care has given a focus to those accounts. The Share Foundation told us about the disciplined handover process it has introduced to ensure that when young people whose accounts it manages approach the age …
Government response. The government agrees with the committee's conclusion, stating the recommendation is implemented. They highlight ongoing evaluation of the CTF scheme, regular quarterly meetings with The Share Foundation, and continuous monitoring of its performance.
HM Treasury
26
Conclusion
Sixty-Seventh Report - Child Trust Funds
Accepted
When we questioned HMRC on what would trigger it to evaluate the scheme, it told us that it would need ministers to request it. We queried the extent to which looking at the impact of a scheme is a political policy decision, as opposed to a decision for officials, and …
Government response. The government agrees with the committee’s concern, committing to formalising a detailed evaluation plan for Winter 2023 and publishing its external research programmes by Summer 2025. They acknowledge the need for careful and proportionate evaluation, especially for discontinued schemes like …
HM Treasury