Panel Paper: The End of Asset-Based Welfare In Britain? the Abolition of the Child Trust Fund

Saturday, November 10, 2012 : 2:25 PM
Preston (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Karen Rowlinson, University of Birmingham (UK)


The Coalition Government, which came to power in the UK in 2010, abolished the two flagship asset-based welfare policies which had previously been introduced by the Labour Government.  These were the Child Trust Fund and the Saving Gateway, both of which had been demonstrated to increase savings, particularly for people on low incomes, and appeared to be supported by the Opposition Conservative party.  Every child born in Britain from September 2002 had been given a Child Trust Fund and by April 2010, this amounted to 5.8 million children with £3 billion in the accounts.  The Saving Gateway was a matched-savings scheme for people on low incomes which had been through two rounds of piloting before its scheduled introduction in July 2011.  The Coalition government cancelled the scheme just weeks before it was due to be launched nationally. The reason given for the abolition of these schemes was the need to tackle the budget deficit.  At the same time, however, the government increased the amount people could save in tax-free Individual Savings Accounts which benefit those on middle and high incomes. 

The paper will draw on data from the Wealth and Assets Survey (which collected data from over 30,000 households in 2006-8) to illustrate the extent of wealth inequality in Britain, with inequality in financial savings being even greater than inequality in housing wealth or private pension wealth.  It will then draw on data to evaluate the two asset-based welfare schemes: official statistics relating to Child Trust Fund Accounts from Her Majesty’s Revenue and Customs; and survey data from the two evaluations of the Saving Gateway – the first involving 1,500 accounts and the second involving 22,000. 

As well as evaluating the success of these schemes, the paper will also consider the politics around asset-based welfare policies.  One of the main reasons for the abolition appears to be the lack of a strong lobby group for such policies.  The anti-poverty lobby may see them as a luxury compared with maintaining basic benefit levels while the ‘losers’ from the abolition are children and people on low incomes – two groups with relatively little (or in the case of children, no) electoral power.  The arguments for asset-based welfare therefore need to be made more strongly if such policies are to survive in a time of austerity.