Adam Creighton

Why save?

Why save?
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The Chancellor made much today about the government’s attempt to encourage saving. But with up to 40 per cent of people’s income taken away from them before they even get to see it (PAYE and NI) and another 18 and a half per cent of it taken away again when they spend it (VAT), what’s left to save with? It is little wonder that the household saving ratio is now under 4 per cent. 

Meanwhile, all the big issues in life have progressively been taken out of our hands since the War: social security, health, education. (Darling even proudly announced today the building of 70,000 new homes—should the government really be in the business of building our homes?). Life in Brown’s Britain requires far less common sense and judgement than was the case one hundred years ago, when saving habits were an essential life skill, where decisions about health, education, and retirement were far more relevant and pressing, and ultimately contingent on the ability to save. The dramatic fall in the savings rates is proof that people will behave like infants if that’s how they are treated.