Bounty

Improving the savings culture of poorer households would help reduce inequality and help free them from "debt serfdom", a think-tank has said.

Respublica said that disadvantaged homes have 100 times less assets than the wealthiest, which overshadowed any difference in income.

It went on to recommend Child Trust Funds are revived in an urgent need to address this asset gap, in line with Government efforts to create a fair society.

The think-tank said that ministers create a tax-free savings account called Asset Building for Children using the retained infrastructure of Child Trust Funds, which would automatically be opened for all children aged under 18 on April 1, 2011.

It added that tax relief on contributions of up to £3,600 would encourage parents to save, along with a reward system offering money off activities such as local attractions, public transport and leisure facilities.