James Moore: Why we should keep faith with child trust funds

Outlook Here is the Institute for Fiscal Studies with a contribution to the public spending debate. A "small but not insignificant" amount towards the £26bn Britain needs to cut by 2013 could be saved by axing the child trust fund.

CTFs, of course, offer every child born on or after 1 September 2002 a £250 voucher, with children from less well-off families receiving £500. A second voucher is sent out on their seventh birthdays, the first of which are now in the post.

The CTF always looked like something of a gimmicky policy, another way for New Labour to garner a few not-so-cheap headlines. The IFS also points out that alternative cuts to benefits or tax credits will limit the money parents have to spend on children as they are growing up.

But what the CTF does is provide an asset when children turn 18 that can be used to fund education or training. The rise of Neets – young people "not in education, employment or training" – has been a striking, and worrying, feature of this recession. It will be many years before the first generation of CTFs matures, but given that, it may ultimately prove to be a rather well targeted use of the benefits system. Withdrawing it now would be a kick in the teeth for future Neets.