Savers are important people in a successful economy. We should want more people to make provision for their own future. We should welcome them providing finance for others to use intelligently to add to our national income and wealth.
The present government says it wants people to be more self reliant in the future. It welcomes the idea of people saving more for their retirement, putting aside more for bad fortune or ill health, buying their own homes and investing in their own business. A more self reliant enterprising society based on more personal ownership should be richer and happier, with more tax revenue to help those in need who cannot fend for themselves.
The problem is the inherited deficit and the planned way to reduce it are getting in the way of really helping actual and potential savers. The wish to raise more in tax revenue than people are prepared to pay, has already led to new raids on people’s pension funds. Whilst they have been mainly at the higher end, many more savers fear there could be further tax changes that will adversely affect them
Pension funds too have been undermined by the ultra low interest rates on government debts, thanks to Quantitative Easing. This has left funds with large deficits, and forced many companies to close their funds completely. Many people now in the private sector have no access to an employer fund anymore as a result.
The same ultra low interest rates hit the living standards of all those seeking to rely on or augment their income from interest on savings. People contemplating a cash ISA or a safe investment of a cash lump sum they have acquired face very poor returns.
Savers have then been hit by a higher rate of inflation than the Bank planned or promised. When inflation gets as high as 5% it eats away the money of the prudent at far too fast a rate.
The Chancellor would be well advised to make things a bit fairer for savers. Saving and making provision for your future is a good idea. Too many tax changes, too little return, too much inflation put people off saving or make it difficult.