Ministers must act now to make Child Trust Funds accessible for disabled children
Tony Blair as Prime Minister visiting the Ann Tayler Centre in Hackney to talk about child poverty, 2002 (PA Images)
4 min read
Remember the Child Trust Fund?
This was one of many ways in which the last Labour government invested in the next generation. For those born between 1 September 2002 and 2 January 2011, the government invested an initial £250 into an ISA. Child Trust Funds offered a financial foundation for every child, to be accessed when they turned 18, and families were encouraged to top them up. Enhanced payments were also given to thousands of disabled children, in special recognition of their circumstances.
The practical implications for families with children lacking capacity (under the 2006 Mental Health Act) when they reached adulthood were not anticipated, however. To this day, an estimated 80,000 disabled young adults and their parents remain unable to access the funds set aside for them. The National Audit Office has estimated that this equates to around £1,900 in unclaimed funds per child.
This really is a solvable problem. A year into this Labour government, we are urging ministers from the Ministry of Justice, Department for Work and Pensions and the Treasury to secure a workable solution as quickly as possible.
Currently, as these children reach adulthood, their families face a disproportionately complex court process to help them access their trust fund. Government statistics show that between 2020 and 2023, only one in 10 disabled young people were able to enjoy their Child Trust Fund savings, with only 70 court applications being made.
Families simply cannot justify the time and cost of court action, which means disabled young people are at present effectively locked out of their accounts. For families and carers of children with severe disabilities, life is difficult enough – they are facing battles on every front to ensure their children get the support they deserve.
A solution must be found to support families to access the funds that are ringfenced for their child and to which they are entitled. It is up to both the government and Parliament to seek to rectify the inadvertent oversight in the current interpretation of the law. This has been raised through questions and debates over 50 times over recent years, but we are nowhere near closer to rectifying the situation. It was reported back in 2021 and 2023 that progress was being made, but there has been little movement since then. In fact, the problem was replicated in the new Junior ISA scheme, which also means people are hesitant to invest money for a disabled child amid concerns about accessing the funds when they turn 18.
There are a number of practical solutions, which – if government, courts and industry can agree on – could be implemented immediately to make the process of accessing the funds less burdensome. These include introducing a one-off order process for Child Trust Funds, or extending the existing terminal illness process within the Child Trust Fund to cover mental capacity. The DWP Appointee Scheme could also be extended to cover Child Trust Funds. Industry and trade bodies already use this appointee status as proof of a parent’s existing authority to manage money for their child, and this would avoid the need for a court process.
The government has made encouraging statements on its intent to fix this problem for thousands of disabled children. Like all young people, they deserve the best start to adulthood. As parliamentarians from both the Commons and the Lords who passionately want to see every child thrive and access opportunity, we believe action to make Child Trust Funds accessible for disabled children should be on the ‘urgent’ list for the ministers responsible.
The young people affected deserve to have their voices heard. Now is the time for government to cut through the bureaucratic obstacles, set aside spurious arguments for inaction, and solve this problem once and for all.
Lord Blunkett is a Labour peer and former cabinet minister, and Sarah Smith is the Labour MP for Hyndburn
