A report published by the Institute for Public Policy, 'Asset-based welfare takes centre stage', poi...
A report published by the Institute for Public Policy, 'Asset-based welfare takes centre stage', points out that the UK is being marked by a move towards asset based welfare from income based welfare.
According to the report, this is denoted by UK government proposals to introduce asset-based policies such as the Child Trust Fund and the Savings Gateway.
The report reveals that in 1996, 93% of all the wealth of the UK was held by the top 50% of the population, while over the period 1979 to 1997, the percentage of households not owning any assets doubled from 5% to 10%.
Wealth is explained to be the net worth of assets held by an individual, including housing and pension funds.
While providing an argument for asset-based welfare, Will Paxton writes in the report: "Just as polarisation of income is seen as unjust so should vast differences in asset holding in society".
The ownership of asset, as argued by Michael Sherraden in the early 1990s, is said to have a more positive psychological impact.
"Assets enable people to look forward in the future with greater confidence and security, allowing them to make long-term plans," said Sherraden.
The report uses this argument to back the action of saving. Saving is therefore an incentive to acquire assets, argues the IPPR.
So far, welfare provisions in the UK were provided with an income-based approach, which the report argues as being passive rather than proactive.
An income-based approach suggests an individual is better off because of the level of his income. whereas an asset-based approach rates a person's wealth according to the amount of assets owned.
This, it is argued in the IPPR report, can represent a door for more equality and saving prospects for low-income earners.
A move to change society's thinking towards an asset-based approach is necessary, argues the IPPR, because of large one-off costs related to investment in education and training, resistance to taxation such as the gradual erosion of state support for higher education and increasing uncertainty with changing work patterns.
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From 6 April 2019