HC Deb 31 January 1991 vol 184 cc1094-6
7. Mr. Ian Bruce

To ask the Chancellor of the Exchequer what are the latest estimates for the savings ratio.

The Chancellor of the Exchequer (Mr. Norman Lamont)

The latest figures show that the personal sector saving ratio was nearly 9 per cent. in the third quarter of 1990.

Mr. Bruce

I thank my right hon. Friend for the excellent news about savings going up. Does he agree that probably the best way to reduce inflationary pressures and interest rates is to encourage further spending—[HON. MEMBERS: "Oh!"]—further savings? Does my right hon. Friend agree that the Government's new TESSA scheme is probably the best form of saving and probably the best way of encouraging saving in the nation?

Mr. Lamont

I thought for a moment that my hon. Friend was announcing a novel fiscal principle, but I agree with his revised remarks. A high level of savings is extremely important for countering inflation. Of course, interest rates play an enormous part in balancing savings and investment. As my hon. Friend said, we have introduced a number of measures, including personal equity plans and TESSAs, which have been extremely popular and TESSAs have got off to an excellent start. I note what my hon. Friend said, but I cannot anticipate any further measures that might be in the Budget. I should tell the House that, as forecast in the press, the Budget will be on 19 March.

Mrs. Wise

As it is impossible for anyone to save without an income, what is the Chancellor's message to the 5,000 or so shop workers employed by Lewis's department stores who went to work this morning to find the doors closed for trading until further notice with no guarantee of wages after today?

Mr. Speaker

Order. Is this about savings?

Mrs. Wise

It is about savings and what comes before saving—eating. What will those shop workers hear from the Government about the state of the economy? What is the Chancellor's message to them?

Mr. Lamont

We have made it clear that we expect unemployment to rise this year, but it remains a fact that Britain has experienced fast growth in employment and that unemployment here is still much lower than the European average.

Mr. Hind

Does my right hon. Friend agree that one of the best ways of fighting inflation is to encourage people to save and that through TESSAs, PEPs and other measures the Treasury has encouraged that development? Will he continue to pursue that policy in the forthcoming Budget to help to press down inflation?

Mr. Lamont

As I told my hon. Friend the Member for Dorset, South (Mr. Bruce), I note my hon. Friend's comments, which I assume are early Budget representations.

Ms. Abbott

We listened with much interest to what the Chancellor said about the savings ratio. In giving evidence to the Treasury and Civil Service Select Committee, Sir Jack Hibbert, director of the Central Statistical Office, said that the savings ratio is subject to quite a wide margin of error and that small differences from quarter to quarter should not be regarded as significant. [HON. MEMBERS: "Reading."] Does the right hon. Gentleman agree that savings are an important indicator of the economy? If he wants evidence of the Government's disastrous stewardship of the economy, he should consider the statistics on savings as a percentage of gross domestic product in the past 10 years which have halved—[HON. MEMBERS: "Reading".]

Mr. Speaker

Order. It would help if the hon. Lady did not look at that bit of paper.

Ms. Abbott

Savings as a proportion of gross domestic product have halved in the past 10 years from 8.2 per cent. under the previous Labour Government to 4.6 per cent. in 1989.

Mr. Lamont

On the hon. Lady's point about the margin of what is statistically significant, the rate has increased from 51/4 per cent. to 9 per cent. in the third quarter of 1990 which is well outside what might be called the margin of error. She made a serious point—that for a long time Britain has been a low-savings country. One reason is that many people borrow to purchase houses. None the less, as my hon. Friends have said, the quite sharp rise in the savings ratio in the recent past has been extremely welcome.