THIS is an urgent call to parents whose children have money in a Child Trust Fund. You need to act now to ensure they get a decent return, as the scheme has been semi-kiboshed and the signs aren’t good.

Unsurprisingly, this flagship Labour scheme to give free cash to every UK child, poor or rich, was scythed down as part of George Osborne’s mammoth spending cull. Yet confusion is now rife as to how it’ll work going forward.

The scheme may be semi-buried, but it isn’t completely dead and millions of parents of under-sevens may need to act to ensure their child’s cash is still working for them. So here’s a Q&A to ensure you know exactly what to do.

What are Child Trust Funds (CTFs)?

They’re a tax-free wrapper for you to save or invest for your child where you can put up to £1,200 a year. The big boon was that the state also added a £250 voucher or £500 for families on low income when a child’s born, and again when the child reached seven. That means each child gets free cash of between £500 and £1,000. Though, of course, that’s all about to change.

Why was it introduced?

Labour’s aim was a touch of social engineering. The idea wasn’t just a hand-out, but also to teach children some financial responsibility and independence, as well as promote a “college savings fund” here in a similar way to the US.

I must admit, I’ve never been that much of a fan, not the free cash, but the structure of the system. The main problem is that on a child’s 18th birthday, they gain full responsibility of the cash, which actually risked leaving parents in a difficult position.

While it sounds harsh, when looking at an adorable baby wrapped in swaddling cloth, who knows whether your child will be a socially and fiscally responsible 18-year-old.

As one parent said to me, “what do I do if they’re a drug addict and they spend all the cash?”

Understandably, such concerns have put many parents off and they have just used their own tax-free ISA allowance as an alternative.

When will it be scrapped?

From August 1, the Government will stop all free cash payments to seven-year-olds and, at the same time, slash payments for newborns to £50 or £100 for low earners. Then all free money stops from January 1.

What happens to existing Child Trust Funds?

There’s no change. The Government will still to allow people to save up to £1,200 a year tax-free each year.

Money that has already been put into Child Trust Funds can stay there earning money tax-free.

What will happen to rates?

This is where we need a really big warning. Ultimately, they are likely to become bit-players in the personal finance market, much as old TESSA money did when ISAs were introduced. So my suspicion’s that rates will plummet, as there will be very little need for providers to compete for business. So, from now on, if your children have money in Child Trust Fund, it will be worth keeping a close eye on it to make sure that the rate is decent.

Sadly, if all rates were to plummet, you’re stuck, you cannot withdraw money once it’s in a CTF, it belongs to your child and it must stay there until they’re 18.

How do I get the best rate?

Simply transfer the cash to a better payer. To do that, just pick a new provider and ask it to move the money across for you. The current top payer is the Yorkshire Building Society, which pays three per cent AER, which includes a year-long 0.7 per cent bonus. It can be opened in branches or by phone.

The next top payer is the Chorley BS, which pays 2.9 per cent AER and the account can be opened by post via downloading an application form from its website or in branches.

Got an unused voucher sitting there?

If you’ve got a newborn and have just received a voucher, the most important thing is that you put the money somewhere quickly. If you don’t do it, it’s not earning interest, so even if you get it in anywhere, then transfer it. At least you’ve started the process. There’s no point in letting it just sit there. You are throwing money away.

What about investment Child Trust Funds?

The other option with a CTF is put it in investment rather than savings products. In other words, how it performs relates to how stocks and shares the investment is based on do.

At this point I’ll hold my hands up and say I don’t cover investments, it’s simply not my area. As long as you are prepared to take a risk that the cash may shrink, in the hope it will grow more quickly there’s nothing wrong with doing it. Over 18 years, you’d typically expect the stock market to out-perform savings accounts, but there’s no guarantee.

If the money’s not integral to your family finances, and you are happy to take a gamble with it, you may as well put your child’s cash into an investment- based Child Trust Fund.

However, if it’s the only cash your child is likely to have access to, you may want to play safe and go for a savings account.

Cheapest iPhone

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A new hotel in Westminster has rooms for 1p a night, from August 30 to April 30 next year. There are 1,000 at 1p available throughout July – book via tunehotels.com. Sign up to Tune Hotel’s Facebook page to get alerts when the rooms go on sale.

■ TV money guru Martin Lewis runs the consumer revenge website MoneySavingExpert.com. Ensure you get his weekly email so you’re constantly saving money.

Have vegetables, will travel...

FOOD lovers have the opportunity to enjoy delicious meals straight from the fields this summer when Riverford brings its Travelling Field Kitchen restaurant to North Yorkshire.

The Field Kitchen has been touring the UK since the end of May and comes to Home Farm, in Newby Wiske, near Northallerton, between August 5 and 15 to serve lunches and suppers for the public.

Riverford is the fastest growing veg box scheme in the country and delivers fresh produce from Home Farm to customers across Yorkshire and the North-East.

The Travelling Field Kitchen is based on the original award-winning Riverford Field Kitchen restaurant in Devon, where Sunderland-born head chef Jane Baxter has been cooking up a storm since 2005, taking what is best in the fields and transforming it into a feast of fantastic flavours.

The roving restaurant aims to encourage people to become passionate about cooking and use fresh local ingredients.

Peter Richardson, owner of Home Farm, says: “We are on a mission to get Britain using fresh, seasonal vegetables again.

Although seasonal produce is very in vogue, we believe that after 40 years of neglect very few people have the culinary skills to commit to cooking with fresh ingredients every day. We want to show people just how exciting cooking from scratch with seasonal produce can be and inspire them back into their kitchens.”

Riverford veg boxes come complete with a weekly newsletter including recipe suggestions to inspire people to cook with ON THE MOVE: The travelling restaurant local, fresh produce. riverford.co.uk