Introduction

This chapter is the first of two that critically discuss policy responses to wealth and the wealthy, starting with wealth. Under the Labour government 1997–2010, there was much discussion of asset-based welfare policies but relatively little accompanying policy action. ‘Asset-based welfare’ was never a holistic policy on assets but focused on financial savings primarily for people on low incomes. Policy has, indeed, rarely joined up the links between pensions, housing and savings, and one goal of a comprehensive policy on assets would be to do this. Such a policy would also need to consider how more affluent groups are affected by policy (for example, through the existence of tax relief on private pensions and the provision of tax-free Individual Savings Accounts, ISAs). Such a policy would also need to consider policies on assets in relation to the other ‘pillars’ of the welfare state and in particular income-based policies and services.

We begin this chapter with a discussion of the possible goals for a comprehensive policy on assets. We then turn to asset-based welfare and policy on savings before considering policy in housing wealth and pension wealth. The role of the tax system is also vitally important here alongside the various schemes that exist in relation to different forms of wealth. Much of the discussion of assets assumes that they are a household resource, shared equally by members of the same household. But we saw in Chapter Four that this is not necessarily the case, and so we consider the implications of this for policy.

This chapter does not merely document the different policies but also critically assesses their role. For example, should those on very low incomes be encouraged to save rather than spend on their current needs? Should those on very low incomes be encouraged to become home owners and potentially risk mortgage debt and repossession? Should people on low incomes save in private pensions if the state is providing a means-tested benefit in retirement that might make them little, or no, better off in retirement for having saved?

The goals of a comprehensive policy on assets

In Chapter One we documented the shift from collective responsibility and risk through state welfare provision towards more individual responsibility and risk through private welfare provision.