Savers

Part of Opposition Day — [1st Allotted Day] – in the House of Commons at 4:27 pm on 21 January 2009.

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Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury 4:27, 21 January 2009

No, I will not give way at present.

The catastrophic collapse of lending by our banking system has been precipitated in no small part by the excessive dependence on wholesale markets. Effectively, those wholesale markets hoover up deposits of households in countries which save and recycle them as lending to countries such as ours which borrow. Under this Government's watch, the UK savings ratio has declined from 9.7 per cent. in 1997 to just 1.8 per cent. at the last count. If we want Britain to kick the debt habit, and if we want to rebuild our economy on a sustainable basis and correct the huge external imbalances we have been running by borrowing money from foreigners so we can use it to buy their goods from them, we need to reinvent the savings culture in Britain. We need to undo the damage done by a decade of Government-encouraged borrowing and attacks on saving, like the Prime Minister's £5 billion a year tax raid on pension funds, and rebuild confidence after the fiasco of the lost pensions and Equitable Life, which has already been mentioned. We need to start the process now if Britain's economic recovery is to be built on a secure and stable financial footing.

The proposal that we put before the House today is one that delivers immediate help for hard-pressed savers, who have behaved responsibly during the age of irresponsibility, and clear support for savings after a decade of Labour's debt binge. It is paid for by restraint and prudence in the growth of Government spending—outside that spent on schools, health, defence and aid—now, not next year, as Labour is planning. We seek a culture of thrift at the heart of government and a culture of saving at the heart of our economy. These changes will help people through the recession and provide strong foundations for the new economy that the Conservatives plan to build as Britain emerges from it, and I commend them to the House.