View more on these topics

Restoring the savings culture

Conservative Shadow Treasury Financial Secretary Mark Hoban sets out his vision for the future of financial services


We have become a nation that spends too much and saves too little. Reversing this trend will be one of the most important tasks facing the next Government. That is why we have put restoring Britain’s savings culture at the heart of our manifesto – it will be one of the eight benchmarks against which an incoming Conservative Government should be judged, as part of our move to create a new economic model.

Conservatives have been criticised for talking about saving now, during an economic downturn. However, we believe this is exactly the time to talk about it – memories in politics are short. If we don’t talk about it now, the debate will move on and we will soon be on our way to inflating the next consumer debt bubble. So what can we do to get people to save more?

We need to begin by setting out a strategic approach to savings policy. We need to send a message from the top that if you put money aside for your retirement or for a rainy day, Government will support you. People need certainty that if they make the effort to save, they will be properly rewarded.

If we look at the climate of taxation and regulation that exists today, really it is little wonder that people aren’t saving enough? We have had Gordon Brown’s raid on dividend tax credits for pension funds, a direct attack on investment in our economy.

We have had the A-Day pension reforms agreed with industry, regulators and consumers which were then casually ripped up just a year later.
From the regulatory standpoint, we have seen a drastic fall in trust in users of financial services.

We cannot expect people to enter a market where misselling is rife and where neither the Government nor the regulator protects them, as we have seen with Equitable Life.

Finally, we have seen boom turn to bust in our economy so that interest rates had to be slashed to support lending, punishing those who had been responsible and saved. Who would save in a climate like this?


First and foremost, we need to restore growth that is sustainable. We cannot end the economic cycle but we must try and smooth it out so that people save during the good years giving them a buffer in the bad. That is why we will give the Bank of England clear responsibility for prudential regulation to monitor the levels of debt in the economy.

Trust is one of the principal barriers to saving. Scandals like Equitable Life and PPI misselling don’t help. We would address this first by taking clear, fast and decisive action on Equitable Life – this is an injustice that has lingered for long enough.

Secondly, we will create a new regulator, the Consumer Protection Agency with the sole aim of championing the interests of consumers in financial services. This will help to restore people’s confidence in the industry and encourage them to save more.

Over time, we will seek to restore the dividend tax credit and increase the value of pension saving. We will also put an end to what is effectively compulsory annuitisation to give people flexibility in their retirement. We will also offer a free financial healthcheck for all, giving families the advice they need to look after their finances, save for the future and get independent expert help on pensions, debt and other financial products.

This will address both mistrust and complexity which prevent people taking actions on savings.

These are the steps that a Conservative Government would take to promote savings and restore demand. It is then up to the advice community to match the supply. As we move back towards a savings culture, more people will need access to financial advice they can trust. As more take advantage of our plans to create flexibility in saving and investing for their retirement, they will need advice on the right products to deliver the income they want. The financial healthcheck will encourage a whole new cohort of savers to enter the market but they will need advice on choosing the right product.

Having a new regulator solely focused on the needs of consumers will increase confidence in financial services but these consumers will still need sound advice to help them get the best products to suit their needs.

Restoring the savings culture is a benchmark against which to judge the success of Conservative economic policy. In a market where consumers are naturally wary, Government cannot afford to send out the wrong message as it has been doing. We would change this by backing savings through our overall message, through our system of regulation and through the tax system. We envisage a new generation of people entering the market who have never saved before. I have every confidence that the advice community will be ready for them.


News and expert analysis straight to your inbox

Sign up


There are 4 comments at the moment, we would love to hear your opinion too.

  1. I am an Equitable Life With Profits Annuitant and it is absolutely scandalous that this Labour Government has refused compensation for 10 years for their own Regulatory failure and despite the Parliamentary Ombudsmans recommending compensation for the Regulatory failure.

  2. I’m sorry anyone who bought a Equitable life policy has had their just desserts, the company was bloated arrogent and badly run, as a policyholder and therefore at the time part owner of the mutual you should have questioned what they were up to, for shame for shame……

  3. Suther Craigland 8th April 2010 at 1:49 pm

    it has just been proven on bbc news that this man is a liar with regards to VAT to pay for millionaires tax cuts but he can not even tie his own shows, how can you trust him

  4. Julian Stevens 9th April 2010 at 9:37 am

    ISA’s are clearly the most popular savings/investment vehicle whilst Personal Pensions are growing steadily less popular. I, for one, haven’t signed up a new one for at least a year. That surely tells us something, does it not?

    What we need, of which Mr Hoban makes no mention, is drastic simplification of the latter. Fidelity some time ago proposed a retirement ISA but nobody in government took any notice. Instead, Old Labour is intent on pressing ahead with the NEST scheme, which is frankly a rubbish alternative, riddled with flaws and which fails totally to address all the things that people don’t like about Personal Pensions.

    Imagine how a Retirement ISA might look. Top rate tax relief on contributions of 35%. No tax on dividend income. Built-in Contributions Protection Insurance (WoP) with no more than a 3 months waiting period. No annuity trap, which would be replaced at retirement by a Pension Income Bond. Full inheritability of unspent retirement funds. A life insurance element, subject only to retirement contributions of at least, say, £50 p.m. or maybe £100 p.m. Commission no different from a Unit Trust ISA (it wouldn’t need to be any higher). Maximum contributions of 30% of earnings with one year’s carry-back. No relevant earnings limit. No LifeTime Allowance.

    There, job done. Any government that cannot or will not implement this as the obvious solution to the present retirement savings crisis doesn’t deserve to be in office.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm