Tuition fees see a return to savings culture

A study by the ING Direct bank found that many parents had started a special fund for their children’s higher education or had increased their savings in response to the higher fees.

A survey of 1,300 adults also revealed that a third planned to cut down on their debts this year, while almost half said the VAT rise would hit their spending plans.

ING Direct chief executive Richard Doe said: “While we’ve seen savings levels decline for much of the year, the final quarter has brought with it an unexpected bounce, clearly driven by parents saving in response to the proposed hike in tuition fees. We’ll have to wait and see if this leads to any sort of savings renaissance, as while Britons are clearly determined to restore their cash reserves in 2011, there will be a number of obstacles which will make saving difficult.”

James Knightley, ING Group senior economist, added: “2010 was a tough year for savers and, unfortunately, the environment will become even more difficult in 2011.

“With wages failing to keep pace with the cost of living and households continuing to pay down debt, this leaves us with two possible outcomes for savers. We suspect the most likely is that they further run down their savings to fund ongoing spending.

“Alternatively they can save more, but this will mean less money to spend on goods and services – a situation that will put the UK economic recovery at risk.”