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Asset-based Welfare – steps towards a fourth pillar?

Asset-based Welfare – steps towards a fourth pillar?. Will Paxton and Dominic Maxwell Institute for Public Policy Research. Three questions. How important are assets in influencing life-chances? What are the options for the next steps with the Child Trust Fund and the Saving Gateway?

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Asset-based Welfare – steps towards a fourth pillar?

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  1. Asset-based Welfare – steps towards a fourth pillar? Will Paxton and Dominic Maxwell Institute for Public Policy Research

  2. Three questions • How important are assets in influencing life-chances? • What are the options for the next steps with the Child Trust Fund and the Saving Gateway? • How significant should asset-based welfare be in the long term? Should it be a ‘fourth pillar’ of welfare?

  3. Assets and life chances 1 • Intergenerational social mobility – importance of assets in early adulthood • Intragenerational income and social mobility – assets can act as a buffer and open opportunities over the lifecycle • Assets as a outcome – home ownership / shared ownership and tenant equity stakes • Need for further research – forthcoming from LSE and IPPR

  4. Assets and life chances 2 Raises questions about inheritance and inheritance tax?

  5. Next steps 1: The Child Trust Fund • Generosity – sources of funding? Link to Inheritance Tax reform? • Progressivity – decisions on top-ups at ages of 7 and ? • Matched savings incentives for low income households • ‘Stakeblowing’ – options for encouraging responsible use of funds

  6. Next steps 2: experience with Saving Gateway pilots • 31% are loan parents (compared to 15% amongst eligible population) • 15% are unemployed (12%) • 25% had no current account (14%) • 30% with household income below £99 (24%) • Deposits were made in 74% of months, averaging £16 per month. (Kempson, McKay and Collard, 2004)

  7. Next steps 3: The Saving Gateway • Roll out – targeted at either deprived areas or low income? • Match rate – would a lower rate be as effective? • Account length - restricted to a few years or used across the life time? • Could the Saving Gateway evolve into part of a new progressive life-time account?

  8. Assets as a fourth pillar? • ‘Roll-up’ existing provision? Some possibilities but limited for social democrats Therefore asset-based welfare largely additional to current provision • Reform saving incentives? Stronger case – what is appropriate support across people’s lifecycle? • Link to tax changes? Possible but politically difficult. Inheritance tax / Stamp Duty / Land tax

  9. Three questions • How important are assets in influencing life-chances? • What are the options for the next steps with the Child Trust Fund and the Saving Gateway? • How significant should asset-based welfare be in the long term? Should it be a ‘fourth pillar’ of welfare?

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