BLOG: Has the Chancellor forgotten about Britain’s savers?
Delivering the Autumn Statement or indeed the Spring Budget has not always brought the best of headlines for George Osborne. Caravans, grannies and more memorably – pasties, brought a great deal of scorn and negativity for the Chancellor in budget of 2012.
However, 2013 has been different and in the eyes of most commentators, a good year for Mr Osborne’s reputation. Statistics will show that the UK never suffered a double-dip recession, the economy grew at the fastest rate in Europe and the UK leads the way across the continent for attracting foreign direct investment.
This news is welcome for individuals and businesses up and down the UK, but are we missing a trick here? The Chancellor is correct to address issues to help businesses and the property market, but what about the savers?
There was much anticipation in the run up to the Autumn Statement that the Chancellor would provide some incentives to those looking to put some money away. Yet, there was nothing radical and nothing of great note.
Next year’s ISA limit will be increased to £11,880, as will the Junior ISA and Child Trust Fund to £3,840, which is always welcome for those who can afford to put away that little bit extra, but the wider issues of why people choose not to save and how to incentivise them is yet to be addressed in any measure.
Savings need to be flexible to allow people to maximise what risks they can take and what they put aside. As the Chancellor confirmed today, the retirement age will increase to 69 by the 2040s, people may well be contributing towards their pension and retirement for longer, but it still doesn’t mean that they are saving enough.
As well as increasing the ISA limit to as much as £20,000, where are the measures that allow people to be flexible between their cash ISA or stocks and shares ISA? Why the delay in admitting peer to peer lending as part of the ISA wrapper?
There is a political agenda of course, but naturally there is an economic one too. Call it the paradox of the thrift, but most people understand that it is sensible to get people spending again before we can start to look at getting people to put away something for a rainy day, but it shouldn’t undermine developing a savings culture in the first place.
Making a healthy return on your savings has been difficult enough in recent years and as Tuesday’s figures from the Bank of England show, savers are withdrawing money from their accounts at the fastest rate for nearly 40 years. The Government should not see this as a short-trend that will recover in time. Saving is a socially responsible thing to do and needs to be recognised by the Government and the tax system.
How many more reports does the Government need to hear that we aren’t saving enough? It’s time to take some real action.
Simon Healy is managing director for savings at Aldermore Bank.