Will saving provide the light at the end of the budget tunnel

At the start of this week, David Cameron spoke of the dire state of our public finances – a much worse situation, he claimed, than he envisaged from the opposition benches. This may well be an exercise in softening the blow for what will undoubtedly be some tough spending cuts on 22 June. But it is not beyond the realms of the conceivable, that our national debt is in a shabbier shape than we had been led to believe. Our national debt stands at £770bn. Our payment on debt interest is set to reach £70bn in five years time. These are astronomical figures.

As part of deciding where the axe needs to fall, Osborne and Alexander – the latter whom is new to the Treasury but thrust into one of the most important roles this coalition government will have to undertake – have pledged to engage with all sectors of society. People understand that some tough decisions are going to be made, but it is important that the pubic have a say on where government spending will be restricted and we look forward to seeing how this process will unravel.Furthermore, it provides a golden opportunity for the 25 million regular savers in the UK to stand up and speak out against further damage to the prospects of those who are trying to save for the future. And as we move away from the big government of the last 13 years, to whatever the “big society” idea means, why do we not see a reinvigoration of our democracy through allowing the public more participation in the governance of our country. We should be able to have a greater say in what government does on our behalf, not least in creating a comprehensive, long-term savings policy.

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Simple, safe and rewarding – is that too much to ask of a pension system?

As normal government work gets back underway, we continue to look closely for signs that savings will be put on the political agenda. At the end of last week we learnt that the new Pensions Minister, Steve Webb, will be conducting a review into NEST, the previous government’s flagship progam to create an affordable pension scheme available to all. This internal review will focus on looking at how the proposed NEST system will affect the lowest income workers, and whether they will really benefit from being auto-enrolled. We share the many concerns that it will in fact be to their detriment, as their rewards from saving may well be outweighed by the loss of means tested benefits available to them.

But any changes to personal savings policy must seek to enact attitudinal and behavioural changes that will enhance both the frequency and volume of savings. Whilst it is necessary to determine, comprehensively, the real impact that NEST will have on those auto-enrolled, any review should be more holistic in its approach. The last thing savers in the UK need now is yet more government tinkering with system. Constant government meddling and ad-hoc changes to both pensions and savings mechanisms are at the very heart of the problems we have in the system today. However, as Rt Hon Frank Field MP forewarned at our launch earlier this year, NEST could well become the next big pensions mis-selling scandal.

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A coalition to save the Nation but will it make the Nation save?

After days of uncertainty following the 6 May general election, the historic coalition between Conservatives and Liberal Democrats have published their programme for government this week. It is a compromise of both policy and principle to gain a mandate for the effective administration of our country. Never have the stakes been higher for stable and long term government to combat rising unemployment, rising inflation and the biggest budget deficit in Europe. We only need to look as far as Greece to see the catastrophic consequences of the poor management of debt.

An integral part of readjusting our economy is to ensure it is well founded on savings. Yet low interest rates, combined with sustained increases in inflation, spells out further misery for savers. Those who have been prudent and saved for their futures are fast becoming the victims of the downturn; people on fixed-incomes who rely on their savings are being squeezed by poor rates of return and are now finding that there savings are being drastically diminished as inflation eats away at the real value of their funds. … Continue Reading

Manifestly uncommitted – Party manifestos a missed opportunity for comprehensive savings policy

As we reach a further milestone in this important election campaign, our political elite waste yet another golden opportunity to set out a clear, concise and comprehensive savings policy that the country desperately needs. All parties have been proud in endorsing their manifesto as the culmination of many years’ work. However, such flagrant disregard for the plight suffered by the 24 million savers in the UK – and the many more who aspire to save – shows the scale of the task we have in hand.

The task, of course, is to ensure that the next Government of our country realises the crucial role savings will play in securing our economic recovery. The culture of unchecked debt and irresponsibly cheap credit has to end. There were some nods in the right direction for savers by the main three parties in their manifesto, and it is important we recognise these. … Continue Reading

Savers need more than shadow boxing from budget manoeuvring

More than anything else, this country needs policies that will foster the right culture for savers, with proper rewards for those prudently putting money aside and for those building pensions for the future. Next week’s Budget is the set-piece moment when these policies should be announced. Mervyn King, the Governor of the Bank of England, has called on all the political parties to redress a situation in which “the proportion of our domestic output that we save has fallen by around a third over the past decade.” The Budget is the Chancellor’s moment to do just that. Equally, given the coming election, it is the moment for the Opposition parties to set out their stalls.

As we approach the Budget, the parties have – understandably – accentuated their differences on the question of the deficit. In the left-hand corner stands Mr Darling with his eager trainer, Mr Brown, coaxing him to be a little bolder with every scrap of stimulus he can muster. In the right-hand corner, Mr Osborne waves his gloves menacingly with warnings from business organisations, credit rating agencies and leading businessmen about the dire consequences of not cutting the deficit in round one. And perhaps this year more than ever the Liberal Democrat position will be carefully monitored; through the well respected Mr Cable they have tip-toed the tightrope between early cuts and waiting for growth to be secured, but have called on the Government to lay out a clear and specific plan for tackling the deficit. … Continue Reading

Rebalancing our economy: the myth of low interest rates

Our Government seems intent on squeezing prudent savers until the pips squeak! Does the government imagine that low interest rates will stimulate the economy by encouraging spending ?

Let us examine this a little. Those whose livelihood depends on an income from their savings now have precious little to spend.  Those about to retire have seen their pensions savaged by the low returns on annuities. So they will be slow to spend.  Many of those with debt are not going to be spending either.  They are taking advantage of low rates to pay off their debt whilst it is cheap to do so. As interest rates continue to remain low and inflation creeps up, borrowers will count their blessings – and savers their losses.

The truth is that abysmally low returns for savers do not just discourage saving. They also discourage spending in the present precarious state of the economy. People are wary about spending and their wariness reflects deep distrust about the economy and its management. Interest rates that provide a reasonable return, in relation to inflation, will encourage people to save. In the longer term, the confidence that comes from an economy that is better balanced between saving and spending will encourage people to spend. … Continue Reading

A future unfair for savers is unfair for us all

The Labour Party has just announced its election campaign slogan – A future fair for all. While the parties and economists battle over when to rein in public sector spending, the Government has decided that fairness for all requires putting off addressing our record deficit.  Fairness for all seems therefore also to mean further suffering for prudent savers.

One of the reasons Save Our Savers has launched its fightback for the nation’s 25 million savers is crystallised by this slogan.  There is no future that is fair for us unless it respects the saver and recognises the crucial role savings must play in our economic recovery.  The saver has been mistreated by successive governments and this is a clear indication that the situation is not about to change.

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Video introduction to Save Our Savers by Revd John Strain

Message from John Strain, spokesperson for Save Our Savers

It’s not that I don’t believe in Father Christmas. I couldn’t possibly admit that to my grandchildren. But we all have to come to terms with change. At primary school, the toy department of Woolworths was such a powerful intimation of Paradise for me, that when it came to abandoning some of what I had been told about Father Christmas, Woolworths was part of the process of letting go. Perhaps I reasoned Woolies was the elfin Toyland that Santa got his stuff from. I don’t know. It doesn’t matter now. But the shock of Woolworth’s closure in 2008/9 was a terrible talisman of economic trauma. It was much more than job losses in the retail sector. Banks, businesses and asset values crashed. People feared for their savings, their pensions and the entire banking system.

As well as being a Parish Priest I had just been made an adviser to the Diocese of Guildford on Work, Economy and Business. Trying to understand what had gone wrong in that diabolical meltdown became very important to me. There were lots of easy answers available. One Archbishop said it was the fault of hedge fund managers – robbers without masks. That was before someone reminded his grace that clergy pension funds had done rather well from hedge funds. Far more people told us it was greedy bankers. Bankers themselves said it was the Americans who handed out mortgages without bothering to ask about repayments. Leader writers said it was lack of regulation to blame, although the government sponsored lenders who defaulted in the USA, Fanny May and Freddie Mac were some of most heavily regulated institutions in the world.

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