Account plan to prevent poverty

13th October 2000 at 01:00
NEW community accounts to plug skills gaps in deprived areas are set to be piloted by the Government's favourite think-tank.

The left-of-centre Institute of Public Policy Research is set to launch new individual development accounts which could lead to a revolution in welfare by giving local communities more control over how money is spent. They are seeking Government backing for pilots, which are likely to be launched next year.

Even without government help, the IPPR is confident of raising the necessary funds and plans three two-year pilots of development accounts in areas where there are chronic, well-defined skills shortages. Unlike the Government's Individual Learning Accounts, IDAs would be run by local partnerships, including voluntary groups, and would be made available to anyone in that area. They could help people buy homes or start their own businesess as well as funding education.

Individuals would be expected to pay into the accounts and their contribution would be trebled or quadrupled by the localpartnership. In America, there are more than 200 community-based IDA schemes in 27 states.

This new approach to tackling poverty by centre-left political thinkers is based on the importance of savings and assets to life chances. "Asset-based welfare" aims to overcome capital shortages in deprived areas and prevent rather than combat disadvantage. US research suggests that people without assets have an inferior education.

Gavin Kelly, senior research fellow at the IPPR, says that a lack of access to capital also affects the health, well-being and labour market chances of adults and children in deprived areas.

He hopes that IDAs could be the precursor of "baby bonds" - accounts for children funded by government, and available for them to spend when they reach adulthood on education, training or buying their own homes.

These accounts have been championed by both the IPPR and former American Labour Secretary Robert Reich. However, they are unlikely to be included in Labour's next election manifesto.


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