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Household finances, debt and savings to be subject of new government inquiry

The Treasury Select Committee is launching an enquiry into household finances. Picture: Sonya Duncan

The Treasury Select Committee is launching an enquiry into household finances. Picture: Sonya Duncan

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Mounting concern over problem debts and dwindling savings has prompted a group of MPs to launch an inquiry into household finances.

The Treasury Select Committee (TSC) will hone in on areas including lifetime financial planning and the market’s ability to support low-income households.

Ashwin Kumar, chief economist at the Joseph Rowntree Foundation, Michael Johnson, research fellow at the Centre for Policy Studies, and Torsten Bell, director of the Resolution Foundation, will be called for questioning at the first evidence session on November 14.

As higher inflation and slow wage growth squeeze household finances, borrowing levels are rising and savings suffering as people attempt to keep spending.

TSC chairwoman Nicky Morgan said: “The UK’s household saving rate has fallen in the last year. Fifteen per cent of adults are over-indebted. And there is £200bn worth of consumer credit in the UK.

“It is therefore timely for the committee to launch an inquiry into household finances.

“Debt is a huge emotional burden for people. Unstable personal finances often emerge as problems raised by constituents, so we hope to take evidence for this inquiry from around the country.

“We will examine what policies could support households in achieving appropriate levels of saving, and the sustainability of the UK’s household debt and consumer credit.”

A slew of economic data over recent months has painted a worrying picture of the pressure on household finances.

Figures from the Office for National Statistics showed inflation surged to its highest level in more than five years at 3% in September, with wage growth continuing to lag behind.

Government data also showed that the number of people on strict debt repayment plans has reached an all-time high, after individual voluntary arrangements picked up by 18.3% to 15,523 in the third quarter.

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