Saving matters even more for the least well-off in society than for the better-off. Saving needs to be accorded a higher priority in the Government's actions to tackle financial inclusion. In this Report, we welcome the progress the Government has already taken in response to our 2006 Reports on financial inclusion, but identify further priorities for action.
We propose the formulation of a more ambitious target for increasing savings among lower income households, based on a public policy which understands their motivations for saving and the range of saving options available to them.
We note the progress made in protecting consumers in the Christmas "hamper" market, but draw attention to the need to address wider and continuing risks relating to prepayments as a matter of urgency.
We argue that the most important single step the Government could take to increase the level of saving among low income individuals and households would be the launch of a targeted national Saving Gateway scheme with the Government matching savings by low-income individuals with its own contribution. The annual public expenditure commitment for such a scheme seems likely to be little more than one tenth of the annual subsidy for Individuals Savings Accounts and Personal Equity Plans.
We call for the Government to complement its objective of achieving a step-change in the coverage of third-sector lenders with an objective to achieve a similar change in third-sector savings. We identify the key changes to credit unions legislation needed to promote such an objective.