Jayne Dowle: Please save us from this nanny state financial advice

I WAS always told that a sensible person should have three savings 'pots'. One must be short-term, easy access, for emergencies such as the washing machine going kaput or a must-have handbag in a sale. The next should be three months' salary put away in case of job loss or illness. And the third should be long-term, a pension pot bubbling away on the back burner, coming nicely to the boil as retirement looms.

Will the Budget bring about a savings culture?

I can only dream of such an arrangement. And I know I am not alone. Recent research commissioned by the Government suggests that almost half of UK adults have less than £500 set aside for emergencies. So much for those three savings pots. Some of us are lucky to have a pot at all.

You might well ask if this should be the Government’s business. Years ago, personal finance was just that: personal. What you had – or had not – in the bank was nobody’s business but your own. These days though, successive governments feel prevailed upon to stick their noses in and tell us how to organise our affairs.

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I suppose this is partly because the so-called financial services industry has let us down so badly. From rip-off PPI to worthless endowment mortgages, the trust between the public and professionals has been stretched to breaking point.

Add to this rising levels of personal debt, which never looks good when the national financial health is compared to that of other countries, rubbish interest rates and a mortgage and lending industry which runs to its own rules. No wonder our personal finances have become public property, to be squabbled over and used as political capital.

The cash in our pocket now comes under the long arm of the nanny state, alongside healthy eating, alcohol consumption and how we discipline our children. It seems that if we can’t be trusted to look after it correctly ourselves, Government ministers feel duty bound to step in and do it for us.

If the current political approach towards savings and pensions is really the best any of them can come up with, we might be better off if they left us to it. The ideas these politicians invent are out-of-touch, confusing, contradictory and clearly scribbled down on the back of a series of envelopes.

In the last year alone, we’ve had pensions reform, upping the personal ISA (Individual Savings Account) limit and a move to make the first £1,000 of savings tax-free. Misunderstandings over pensions have left millions confused and possibly bereft of funds. And according to reports, even the banks don’t know how the new savings rules work. Now into the mix comes Help to Save, this latest scheme launched at the Budget.

It will be open to around 3.5m adults who receive universal credit or tax credit. If these low-paid workers can manage to find £50 a month to pay regularly into a savings account, the Government will top it up. If the maximum amount is paid in over four years, a person could save up to £3,600, with £1,200 coming from public funds.

Presumably this is if they find the £50 to pay in every month, and keep paying it in for four years without ever having to draw on it? One broken boiler or nasty MOT on the car and those savings would soon evaporate. I don’t know how the Prime Minister can stand there and say: “I’ve made it the mission of this government to transform life chances across the country – that means giving hard-working people the extra support they need to fulfil their potential.”

If he cares that much, wouldn’t he be better off campaigning for better pay across the board and a higher standard of living? That way hard-working people wouldn’t be taxed in order to pay for a benefit which props up other hard-working people. The cut-off point for “Help to Save” is an income of £30,000 a year.

What of those middle-income earners just above this threshold? Who helps us? I’m not sure I want my taxes to be used to effectively bribe other people to save when I’m out there on my own worrying about the interest rate on my children’s Junior ISAs and trying not to think about my pension.

Rather, I would like to see a Government which takes financial education seriously. It should begin by making it mandatory in schools. Then I’d like more resources pumped into services which help educate people both before they find themselves in difficulty and when the debts get too much.

To this end, the work of the Money Advice Service, Citizens’ Advice and StepChange, the debt advice charity, deserve substantial support. And overall, I would like to see the instigation of a true “cradle-to-grave” savings culture – a Lifetime ISA perhaps – which puts the individual first and takes a responsible and joined-up attitude towards saving from childhood to post-retirement. A Government which proved itself capable of implementing this could truly claim it had our interests at heart, and not its own.