Background
Asset-based egalitarianism traces its roots to Thomas Paine, who proposed that every 21-year-old man and woman receive £15, financed from inheritance tax. In 1989 LSE professor Julian Le Grand proposed a similar idea, calling it a "poll grant". Subsequently the related concept of Individual Development Accounts was developed in the United States by Bruce Ackerman and Michael Sherraden. This approach - termed "asset-based welfare" by Sherraden - saw asset redistribution less as an egalitarian measure than as one which supported poverty reduction by encouraging saving. Sherraden argued that owning an asset led to people changing their way of thinking, being more likely to plan and invest in their future - in a way that providing people with an equivalent flow of income does not.
In the UK the idea took off in 1999/2000 with a number of contributions to the New Statesman in 1999, including an article from Robert Reich endorsing the idea; and support in 2000 by the influential Institute for Public Policy Research. Sherraden's Center for Social Development collaborated with the IPPR, and a briefing paper by it remarked "It would be impossible to overstate the leadership and contributions of the Institute for Public Policy research in informing and shaping this new policy direction in the United Kingdom". This carried through into proposals being included in the Labour Party's 2001 election manifesto.
The Child Trust Fund scheme was promised in the Labour Party's 2001 election manifesto, and launched in January 2005, with children born after 1 September 2002 eligible. Over the course of the development of the policy up to implementation, it became increasingly focussed on encouraging the poor to save and to develop their financial skills, with less emphasis on the egalitarian redistribution of assets.
According to the Institute of Public Policy Research
| “ | The wealthy have always relied on assets to smooth the path into adulthood, but now every single child will be able to do the same. The lumpy costs, the risky decision, and upfront investment involved in making ones way in life will be eased, whether that means spending money on training, starting a businesses - or simply buying the suit needed to attend an interview... CTFs recognise that assets, not just income, can bring security and opportunities. | ” |
Sherraden argued that possessing wealth in your early adulthood improves life outcomes by its effect of changing attitudes:
| “ | Income only maintains consumption, but assets change the way people interact with the world. With assets, people begin to think for the long term and pursue long-term goals. In other words, while income feeds peoples' stomachs, assets change their minds. | ” |
Read more about this topic: Child Trust Fund
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