Letters: Child trust funds and the asset effect
Bill Willoughby wants to know the research showing the benefits of owning assets (Letters, 22 April). John Bynner’s analysis of the National Child Development Survey shows that several hundred pounds lead to better personal outcomes. In the US, work at the Center for Social Development on assets has a similar message. Although still controversial, there is growing evidence for an “asset effect”. I will be exploring this in the seminar I am organising in Washington DC that Julian Le Grand mentioned (Letters, 17 April) as part of work I am doing for the Economic and Social Research Council.
ESRC-funded work I’ve done shows that while some young people would “stakeblow”, more would use it training, buying a car or saving for a home.
Better-off parents are more likely to open a child trust fund and add to accounts. But two-thirds of lower-income parents open a child trust fund. The Family Resources survey for 2006-07 shows that roughly a quarter of households have no savings at all, with this figure rising to 53% for lone-parent households. The child trust fund provides a grant to all young people and so is not simply a middle-class tax benefit.
Much of the debate sees the child trust fund as a savings policy. But this misses how others see it as a contribution to citizenship. Thomas Paine wanted a capital grant for all. The child trust fund is a modest step in this direction and seeing it in this way would keep it universal but push it on a different reform path.
Rajiv Prabhakar
London School of Economics
• A fully funded and well-managed child trust fund, under the current rules, could net a child on maturity in the region of £50,000 (at a cost of about £21,000). A fund placed in a cash account without additional support will yield about £600. Professor Le Grand may believe CTFs are tools for overcoming social injustice, but the practical realities suggest otherwise.
Lawrence Barber
London
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