Economy: Personal Savings

Lord Suri Excerpts

Thursday 12th July 2018 Lords Chamber

[Lord Suri (Con)]

My Lords, I thank my noble friend Lord Leigh for introducing this most important debate. I welcome my noble friend Lord Lilley, whom we used to see guest speaking when my noble friend Lord Young of Cookham was our MP.

Saving is a necessity. Without savings, or a bank account to put savings into, it is practically impossible to meaningfully participate in the modern economy. Even travel is increasingly difficult without a bank account and some healthy savings to draw upon. I consider that my success is partly based on a strong habit of saving, and the savings of others made available to me through loans and guarantees. The fact that some do not have savings or a bank account is the scourge of financial exclusion, and ought to be considered a contributor to economic malaise. It is a surprising fact that nearly 2 million people in this country do not have a bank account. That ought to give us pause for thought. This country has one of the most advanced financial systems in the world. A few minutes away in the City of London, we have some of the finest minds and technology in existence figuring out new and innovative methods of banking, but we overlooked an issue piling up on our own front door.

In my view, the issue starts from an early age. If one is born into a family without a regular habit of saving or with an inability to save, one does not learn the habits required at an early age, such as setting aside a portion of the pay cheque, shopping around for the best perks and rates, and understanding how to use a bank account and receive or send funds. This is regrettable, if understandable, but we can make changes through the national curriculum. I am pleased that financial literacy has been a statutory requirement as part of the curriculum since 2014, but more needs to be done.

Given all that we teach children, it seems to me that a greater focus is needed on important tasks that all of us here probably take for granted. If children and teenagers are given some practical advice on saving and banking, I strongly believe that they will be more disposed towards participating. Young people are far more likely to be at risk of financial exclusion: some 8% of them do not have a bank account, compared with 0.7% of the national population. Since there is to be education targeted at younger people, it ought to be accompanied by a range of accounts targeted at them too.

The public sector should not seek to get involved with this, bar the notable exception of the National Savings and Investments Bank. Instead, there ought to be a partnership with banks to create these new products and market them sensibly so that young people can make an informed choice. If they get into the habit of putting money into the bank early, they will not lose it. There is a quiet joy in putting in the pennies and seeing the pounds take care of themselves.

The other area this feeds into is universal credit. At present, claimants face enormous difficulties accessing their social security payments if they do not have a bank account. Furthermore, the monthly payment risks those without good spending habits running out of money. I support monthly payments as they mimic normal wages, but further emphasis should be put on financial education as this system is brought online and more people are switched over.