Introduction

The capacity for individuals to make choices that, individually and collectively, affect their lives is one of the essential characteristics of a liberal democratic society. Its relative absence for some groups defines their social exclusion. As Sen (1999, pp xi-xii) says, ‘the freedom of agency is inescapably qualified and constrained by the social, political and economic opportunities that are available to us’. Not the least of these constraints is the availability of credit or the possession of capital. Perhaps the single most distinguishing feature of the socially excluded in a society that has some kind of income safety net is their lack of assets and hence credit worthiness. This precludes risk taking, any feasible way of beginning a business, trading off between present and future income, investment in skills apart from those subsidised by the state, the capacity to overcome even minor disasters without becoming indebted to the state or local loan sharks. People are trapped in a narrow range of choice sets that make their lives different in significant ways from the lives of even working-class families with a steady, reasonably paid job. The capacity to change life's pattern of opportunities is highly constrained.

Much of the discussion about giving children assets at birth has emphasised the behavioural advantages of educating families into the ways of saving (Nissan and Le Grand, 2000; Regan, 2001; Regan and Paxton, 2001). For us, however, the starting point is the intrinsic importance of extending individuals’ agency, especially that of the poor. The growth of owner occupation has given most people a significant asset that gives them an enhanced chance of borrowing, financing their old age, moving jobs and living arrangements, giving opportunities to their children to move into owner occupation and much else. The gap between the asset-owning and the non-asset owning classes will grow and be self-reinforcing – unless we take positive steps to address asset deprivation.

The case for giving all citizens a more equal asset start can be traced back at least to Tom Paine (1987 [1797]). He argued that there should be a limit on the amount the aristocracy should be permitted to hand down to their descendants.