COMMONS

Household finances inquiry launched

08 November 2017

The Treasury Committee launches a new inquiry into household finances.

The Committee will take a broad look at the state of UK household balance sheets, including whether households are saving adequately in the current economic environment.

It will scrutinise problematic indebtedness, inter-generational issues, lifetime financial planning, and the effectiveness of the market in financing solutions and products to low income households.

The first evidence session of this inquiry will be on Tuesday 14 November with Ashwin Kumar (Chief Economist, Rowntree Foundation), Michael Johnson (Research Fellow, Centre for Policy Studies), and Torsten Bell (Resolution Foundation).

Chair's comments

Commenting on the launch of the inquiry, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, said:

"The UK's household saving rate has fallen in the last year. 15 per cent of adults are over-indebted. And there is £200 billion 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."

Call for written submissions

Overall savings levels and balance sheets

  • What determines the aggregate level of household net saving and the saving ratio in the macro-economy? Can policy affect the aggregate level of household saving?
  • What is the “right” level of saving for households and the UK economy more widely, in view of prevailing and potential future economic conditions? To what extent does the UK have a “savings gap”?
  • How do household balance sheets vary across generations?

Household lifetime saving and financial planning

  • What policies could support households in achieving appropriate levels of saving in cash and pensions? Are current policy interventions (e.g. ISAs) well targeted?
  • What actions can government take to improve levels of financial awareness and education, and what lessons can be learned in designing the successor to the Money Advice Service?
  • How do high house prices and declining rates of property ownership among younger generations affect lifetime financial planning?
  • What role can and should the state pension and triple lock have in supporting lifetime household finances?
  • Are retiring households receiving adequate and appropriate financial advice following the implementation of pension freedoms?

Household indebtedness and consumer credit and incomes

  • Is the overall level of UK household debt and consumer credit sustainable?
  • What is the scale of and trend in problematic debt and over-indebted households? To what extent is unmanageable debt being manifest in non-credit defaults (e.g. on utilities bills or council tax)?
  • Have household incomes become more variable as a result of more flexible labour markets and the “gig economy”, and does this raise the need for new credit products?
  • What are financial regulators doing to monitor the issues of problematic debt? Has the UK financial services market been effective in providing suitable credit products for low income households? What interventions can the Government make, including “breathing space” schemes?

Further information

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