MPs to investigate how to boost household savings

THE TREASURY Committee has announced plans to look into the level of savings among households and what would make them save more.

MPs in the select committee have unveiled an inquiry into household finances that will scrutinise problematic indebtedness, inter-generational issues, lifetime financial planning, and the effectiveness of the market in providing solutions and products to low income households.

The Committee will look at what the “right” level of savings is in the current economic conditions and how well products such as ISAs are targeted.

It will also assess whether the overall level of UK household debt and consumer credit is sustainable and how much of it is problematic.

Read more: Savings crisis “looming on the horizon”

“The UK’s household saving rate has fallen in the last year,” Nicky Morgan, chair of the Treasury Committee, said.

“15 per cent of adults are over-indebted and there is £200bn worth of consumer credit in the UK.
“It is therefore timely for the Committee to launch an inquiry into household finances.

“Debt is a huge emotional burden for people. Unstable personal finances often emerge as problems raised by constituents, so we hope to take evidence for this inquiry from around the country.

“We will examine what policies could support households in achieving appropriate levels of saving, and the sustainability of the UK’s household debt and consumer credit.”

Data from the Office for National Statistics shows the household savings ratio – the percentage of disposable income being saved – fell from 3.3 per cent at the end of 2017 to 1.7 per cent in the first quarter of 2017, the lowest level since records began in the first quarter of 1963.

The decline was attributed to increased income taxes as well as increasing inflation and subdued wage growth.

Read more: Inflation hitting higher income households hardest