Andy Burnham urged to unlock £1.6bn in forgotten Child Trust Funds for young people
His boldest pledge yet is a devolution agenda, handing responsibility for tackling youth unemployment to local authorities and regional mayors. He’s also considering tax relief to help young people save for a house deposit.
He’s right to look forward and deliver the change young people are asking for, but I would urge Andy Burnham to finish the job on a Labour initiative created 21 years ago that, delivered properly, could immediately unlock hundreds of millions of pounds for young people.
That initiative is Child Trust Funds (CTFs), savings accounts set up by Gordon Brown during his time as Chancellor in 2002, to give every child born in Britain a financial asset to start adult life with, regardless of family income. Around 6.3 million accounts were opened for children born between 1 September 2002 and 2 January 2011.
Today, 70% of CTFs are owned by young adults - each account worth £2,200 on average - yet huge numbers of disadvantaged young people don’t even know they exist. It’s money they could use towards a house deposit, a car, or simply keep up with the cost of living.
Labour’s newly created CTF taskforce, of which my charity The Share Foundation is a member alongside Nationwide and HSBC UK, is a step in the right direction. It aims to improve coordination between government and account providers, who between them hold £1.6 billion in unclaimed funds.
But despite best efforts, we risk excluding exactly the people who need this money most – and that’s disadvantaged young people.
Some 28% of CTFs were never opened by a family. They were allocated automatically by HMRC because no one acted before the child’s first birthday. These accounts, not the family-opened ones, belong overwhelmingly to disadvantaged young people. Over half are owned by those from low-income backgrounds - 70% higher than the rate among family-opened accounts. And they go unclaimed four times as often. Nobody has ever told their owners the money is there.
It’s why I have spent the past two years calling for the government to automatically release HMRC-allocated funds using the same National Insurance-linked channels that already distribute benefits, payroll and student loans. We’ve even volunteered to run it ourselves.
The government has agreed to write to unclaimed account owners once they turn 21. But ministers are refusing automatic release itself, citing “legal, data and operational” barriers. The real problem is that this issue hasn’t been given the priority it deserves. It is unfair on the hundreds of thousands of young adults from low-income backgrounds who are still waiting for money the government itself has agreed they are owed.
Eighty-two young people, having already tracked down their own CTFs, have written to their local MPs urging the government to introduce automatic release, so others don’t have to rely on luck or persistence to get the money that’s waiting for them.
Andy Burnham has spent this campaign talking about helping young people build a future they can afford. Automatic release does this. And unlike almost everything else waiting for him at No 10, it needs no new spending, no new legislation and no lengthy review. Just a decision.
My ask to Andy Burnham is to grant the power to release HMRC-allocated CTF money automatically once account holders turn 21. For a young adult on a low income, £2,200 is life-changing. Gordon Brown gave them that stake two decades ago. Andy Burnham must now be the one who hands it over.
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