Ahead of the Chancellor’s Budget Report on Wednesday, over half of people in Wales have admitted that they are worried about some aspect of financial security.
According to the Principality Building Society Saving and Spending Survey, 52% of people are concerned about their finances, including not having enough money for leisure time (14%), not having enough money to retire (14%), losing their job (9%) and generally not having enough money to live on (12%).
Only 29% of people in Wales describe their financial situation as healthy. With the majority (53%) saying they get by, but do not have a lot left after the usual outgoings have been paid for, and 18% describing their situation as ‘Tight’, ‘Struggling’ or ‘in trouble’.
But, when compared with Mintel’s recent Consumer, Saving and Investing Report for the UK, the picture in Wales fairs much better. A higher 40 per cent of people in the UK, more than double those in Wales, described their situation as ‘Tight’, ‘Struggling’ or ‘in trouble’.
The sixth Principality survey – carried out by Cardiff-based Research & Marketing and conducted among 500 people living in Cardiff, Swansea, Newport and Wrexham – provides a regular snapshot of the spending and savings habits of the people of Wales and shows that individual levels of saving across the country have been declining since May 2010.
Following the election of the coalition government, the average amount saved on a quarterly basis has decreased from £1088 between May and July 2010, to £801 between November 2010 and January 2011.
Graeme Yorston, Chief Operating Officer at Principality Building Society, said: "A difficult climate emphasizes the importance of saving and being financially prepared, but the squeeze on household budgets over the past couple of months has had a downward affect on savings – people simply cannot afford to put money aside for the future, despite rising university fees, requirements for a larger house deposit and changes to the state pension, all put greater emphasis on saving while you are young.
"We support the Building Societies Association in their call for Government action to assist savers and borrowers in this week’s Budget. Allowing two-way transfers of ISAs, from stocks and shares to Cash ISAs is just one simple measure that will provide a tax benefit to those on lower incomes.
In addition, We strongly feel that teaching children the benefits of saving from a young age can reap rewards in the future, helping them to budget more effectively, realise the value of money and steer them away from a future reliance on credit cards and while we support the introduction of a junior ISA as a means of achieving this aim, we would urge the Government to keep the structure of this product within the existing ISA framework and infrastructure to limit the amount of process change and cost incurred to institutions as a result of this. Increasing the £100 limit for tax exemption on interest from parent’s deposits into a children’s account would create an added incentive to encourage families to put money aside for their children’s futures – particularly following the end of the Child Trust Fund."
With house prices still vulnerable to setbacks, and continued lack of movement in the housing market, Principality is also urging the Government to continue support for borrowers, particularly first time buyers, in the upcoming Budget.
Graeme continued: "It is the mutual ideal to help people afford their own homes and we are committed to doing all that we can to help first time buyers get a foot on the property ladder. At a time when borrowers are facing multiple hurdles, we would urge the Government to make permanent stamp duty relief for first time buyers purchasing properties under £250,000 – we believe this will help to ease some of the transaction costs associated with buying a home. We would also welcome a more phased approach to stamp duty, away from the current ‘slab’ structure which encourages a bunching of transactions at prices just below the thresholds for different rates, in order to create a healthier housing market.
"As 2011 progresses, the outlook for unemployment is set to rise, placing more emphasis on the support available to borrowers facing difficulties. We remain committed to, wherever possible, help borrowers who are experiencing financial difficulty to remain in their homes and we urge the government to review the effectiveness of all of all its support measures, in particular, one of its most successful measures, Support for Mortgage Interest (SMI) and to bring the SMI rate more in line with borrowers mortgage rates.
"The financial outlook for the people of Wales is a concern. Chancellor George Osborne’s ‘budget for growth’ this year will undoubtedly be focussed on delivering a credible plan to deal with the budget deficit and promote a sustainable economic recovery. But with personal tax levels in the UK currently among the highest in the developed world, the Chancellor will need to introduce measures that will significantly boost both consumer and business confidence."
Notes to editors
• Formed in 1860, Principality is Wales's largest building society.
• The Society is committed to supporting the communities of Wales.
• With more branches (51) in Wales than any other building society, Principality is the 7th largest building society in the UK.
• The Society has assets of over £6 billion.
• Principality is committed to remaining a mutual organisation.