Personal Savings: Inflation

Treasury written question – answered on 1 June 2023.

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Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential impact of trends in the level of inflation on the assets of long-term savers.

Photo of Andrew Griffith Andrew Griffith The Economic Secretary to the Treasury

The government recognises the importance of getting inflation down, and there are three key things the government is doing to deliver on the plan to halve inflation.

Firstly, remaining steadfast in our support for the independent MPC at the Bank of England, as they take action to return inflation to target. Secondly, making difficult but responsible decisions on tax and spending so we are not adding fuel to the fire. Third, tackling high energy prices by holding down energy bills for households and businesses, alongside investing in long-term energy security.

Both the Bank of England and the Office for Budget Responsibility (OBR) forecast that inflation will fall notably this year. The government recognises the challenges faced by households due to elevated cost of living and has provided support worth £3,300 per household on average, across 2022-23 and 2023-24.

In addition, the Government has a number of savings tax reliefs to support to support savers.

Individuals can save up to £20,000 into their ISA each year and coupled with the Personal Savings Allowance of up to £1,000 for basic rate taxpayers and up to £500 for higher rate taxpayers, around 95% of people with savings income pay no tax on that income. ISAs have been a well-regarded and highly utilised investment and savings vehicle for many. Around £72 billion was subscribed to Adult ISAs in 2020 to 2021.

The government keeps ISA policy under review to ensure it remains and appropriate vehicle for savers.

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