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Walking the Tightrope - Savings and Debt Inequality in Great Britain
Many households earn too little to pay for basic necessities, and to save for an uncertain future. Over a third of households now owe more in debt that they have saved, and millions more face falling into trouble in the event of a financial shock they cannot avoid. In our new briefing note, Walking the Tightrope - Savings and Debt Inequality in Great Britain, we find that:
- 6.5 million households are in debt, or face the prospect of falling into debt within a month, should they lose their jobs. Over 40 per cent of non-retired households have too little saved to pay even a month’s worth of household bills.
- 5.5 million households owe more in debt than they have saved.
- Many families are also vulnerable to one-off financial shocks. Over a quarter (28%) of non-retired households has too little saved to pay the £540 needed for a boiler to be replaced.
- While the richest 10 per cent have on average £49,500 saved, the poorest 10 per cent of households have just £100 saved on average.
- The Government could significantly boost the savings of those on low incomes by channeling funding from its lifetime ISA scheme to its Help to Save scheme.
Current Government savings policy exacerbates the problem, by supporting the well-off but not those on low incomes. We call on the Government to scrap its lifetime ISA scheme and instead channel funding to its Help to Save scheme, which would help millions of struggling households to save for a rainy day.