MPs launch probe into household finance and debt

Iain Gilbert WebFG News | 08 Nov, 2017 07:02 - Updated: 05:35 | | |

treasury uk

An influential group of MPs has launched an inquiry to determine whether British households are saving adequately in the current economic environment and how government policy could be changed to improve household finances.

The Treasury Committee intends to scrutinise the problem of indebtedness, inter-generational issues, lifetime financial planning, and the effectiveness of the market in financing solutions and products to low income households.

Concerns around debt have increased in recent months, with the Bank of England calling for banks to increase the amount of capital they hold as it warned that risks from rising debt are building in the UK and overseas based on people's overconfidence that recent benign lending conditions will continue.

But only last month the Bank found levels of consumer lending continue to rise, with households borrowing in order to smooth their consumption as their real incomes are being squeezed by rising inflation and slow wage growth.

First evidence session of the Committee's inquiry is planned for 14 November with Ashwin Kumar, chief economist from the Rowntree Foundation; Michael Thomas, a research fellow at the Centre for Policy Studies; and Torsten Bell, director of the Resolution Foundation all giving evidence.

Nicky Morgan, chair of the Committee, said, "The UK's household saving rate has fallen in the last year. 15% of adults are over-indebted. And there is £200bn worth of consumer credit in the UK.

"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," she added.

The inquiry will also look into what determines the overall level of household saving in the macro-economy and whether policy can affect the aggregate level of household saving, and if so, what policies could support households in achieving appropriate levels of saving.

“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,” said Morgan.

More news

00:20 US close: Wall Street mixed ahead of Thanksgiving holiday

Wall Street finished mixed on Wednesday, following the record highs set the day before and amid lighter-than-usual trading volumes ahead of the Thanksgiving holiday on Thursday.

22 Nov Jefferies upgrades Kingfisher to 'buy', raises target price

Analysts at Jefferies upgraded home improvement products retailer Kingfisher (KGF) to 'buy' from its previous 'hold' rating on Wednesday, raising its target price from 310p to 400p along the way.

22 Nov Europe close: German stocks give back gains amid political impasse

Stocks ended the session modestly lower as traders waited for the release of the minutes of the US Federal Reserve's last rate-setting meeting in the evening and monitored the news-flow out of Germany, amid speculation that a 'grand coalition' between Germany's two main political parties, the centre-right CDU/CSU and the Socialist SPD, may yet be possible.

22 Nov Lebanon prime minister Hariri retracts resignation

Saad al-Hariri has revoked his resignation as Lebanon's prime minister, according to a local news report on Wednesday.

22 Nov Budget: Planning probe spooks builders, mixed reaction for stamp duty cut

A range of new housing policies were proposed by Chancellor Philip Hammond in his Budget statement, including more funds for smaller housebuilder, a probe into potential holding of land by major housebuilders and a stamp duty cut for first-time buyers.

22 Nov US open: Shares hold ground ahead of FOMC minutes

Wall Street is holding its ground following the record highs set the day before, albeit amid lighter than usual trading volumes ahead of the Thanksgiving Holiday on Thursday, with investors looking to the release of the minutes of the most recent meeting of the Federal Open Market Committee.

22 Nov London close: Stocks higher on UK budget

Shares closed higher on Wednesday as investors sifted through corporate releases as well as the Autumn Budget.

22 Nov FTSE 250 movers: Qinetiq boosted by Berenberg note as Thomas Cook tanks

The FTSE 250 index was up around 0.50% on the day in which Chancellor Philip Hammond revealed his budget for the upcoming year.

22 Nov Higher margins offset declining sales volumes at Cambria

Motor dealer Cambria Automobiles managed to successfully grow profit and revenue throughout the financial year, as per-unit profits counteracted a slide in sales volumes.

22 Nov First production at Texas asset transforms Pantheon Resources into full-cycle energy and power business

Oil and gas exploration firm Pantheon Resources announced "another year of progress" in its full-year results on Wednesday, as it completed the transition from a pure-play exploration company to a full-cycle energy and power business.