EDITORIAL: Nest Egg will require active management

The Government is selling it as one of its most significant measures to date against the social exclusion that stems from poverty. This is how Tony Blair put it: "Our baby bond bestows on each child the financial advantages that come from reaching adulthood backed by a financial nest egg, and extends the savings habit to all." The idea is that over 18 years the fund will have grown to several thousand pounds, enough for a modest deposit on a home, or to help towards the costs of further education or towards setting up a business.

Critics are calling it a handout that will be of far greater benefit to those who don't need it than to those who do. There is some truth in this. We have yet to see what the financial services industry comes up with by way of investment vehicles, but the more growth you want out of a sum of money, the more active management it requires. For the companies that will look after this money, 500 is simply too little to justify the effort needed to make it grow by much in real terms. That leaves the danger that the 18th birthday nest-egg will only really be of much significance for those whose funds have been generously topped up by families that are already in the saving habit.