Select Committee on Treasury Thirteenth Report


1  Introduction

Saving matters

1. Saving is crucial to the financial welfare of many people living on low incomes and of other people who may be financially excluded. An absence of appropriate saving is a key indicator that people are outside the financial mainstream; effective measures to encourage appropriate saving can play an important role in bringing people into the financial mainstream and giving them greater security and independence. We examined financial inclusion in a wide-ranging inquiry in 2006 which led us to publish three separate Reports on different aspects of financial inclusion.[1] In reporting on our work, we identified the need for saving to be accorded a higher priority in the Government's approach to financial inclusion.[2] The importance of saving in its broadest sense and the risks associated with some forms of informal saving were also highlighted by the collapse of European Home Retail plc and its wholly-owned Christmas hamper scheme subsidiary, Farepak Food & Gifts Ltd, in October 2006. We undertook the inquiry on which we are now reporting to examine how the Government and others were responding to our proposal for saving to be moved up the financial inclusion agenda and to see how public policy was responding to the challenges associated with informal as well as formal saving, as well as to review the responses of the Government and others to our earlier Reports more generally.

Conduct of our inquiry

2. We announced our intention to hold this inquiry on 29 March 2007. We invited written evidence on the role of saving in the Government's strategy on financial inclusion, on the Saving Gateway, on financial capability in the context of the shorter term savings market and on the design, promotion and regulation of products in the shorter term savings market, including hamper products, Christmas savings accounts and other similar products and potential products. We stated that we were not seeking written evidence on the restitution of Farepak creditors, issues for investigation by the Insolvency Service following the collapse of European Home Retail plc, lines of credit associated with the purchase of goods and services or the longer term savings market, including the Government's proposals for Personal Accounts.[3]

3. We received a range of written evidence, all of which is published with this Report. We held three evidence sessions, taking evidence from Mr Brian Pomeroy, Chairman of the Financial Inclusion Taskforce and author of a Government review of Christmas saving schemes, Professor Elaine Kempson of the Personal Finance Research Centre at the University of Bristol, Citizens Advice, the National Consumer Council, the Park Group, the Association of British Credit Unions Limited (ABCUL), the Office of Fair Trading (OFT) and Ed Balls MP, the then Economic Secretary to the Treasury. We are most grateful to all those who gave evidence during our inquiry.


1   Treasury Committee, Twelfth Report of Session 2005-06, Financial inclusion: credit, savings, advice and insurance, HC 848-I; Treasury Committee, Thirteenth Report of Session 2005-06, "Banking the unbanked": banking services, the Post Office Card Account, and financial inclusion, HC 1717; Treasury Committee, First Report of Session 2006-07, Financial inclusion: the roles of the Government and the FSA, and financial capability, HC 53 Back

2   HC (2005-06) 848-I, para 118 Back

3   Treasury Committee press notice No. 40 of Session 2006-07, available at http://www.parliament.uk/treascom Back


 
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Prepared 9 October 2007