§ 7. Mr. Wainwrightasked the Chancellor of the Exchequer what he estimates to be the prevailing savings ratio for the current year; and whether he expects a higher ratio in 1985–86
§ Mr. Ian StewartFigures so far available for 1984–5 show a personal saving ratio of around 10½ per cent.
§ Mr. WainwrightWill the Economic Secretary be good enough to answer the second part of my question: does he expect a higher ratio in 1985–86? If he does not, why is the Treasury so supine in the light of a declining savings ratio? Is he not aware that in the United States the public tend to save more when inflation is low? Will he reflect on the successful French experience of the last seven years of tax incentives for the public to invest in industrial shares?
§ Mr. StewartI shall certainly answer the second part of the hon. Gentleman's question. I left it out in the interest of brevity. As is explained in paragraph 342 of part III of the Financial Statement and Budget Report, there 971 will possibly be a small increase in the savings ratio during the coming year but it is unlikely to have any very substantial effect. As for the relationship between the savings ratio in this country and that in the United States, whatever the hon. Gentleman may say, the ratio of savings in the United States is very much lower than it is in this country. In fact, in this country the savings ratio has been above these levels only when inflation has been very high. I am glad to say that inflation has now come down.
§ Mr. EggarDoes the lack of any change on the taxation of pensions in the Budget mean that my right hon. and hon. Friends are happy about the very high proportion of savings that are channelled through institutional means?
§ Mr. StewartWe believe that savings should be channelled through both institutional means and direct investment. Many of the measures that we have taken should encourage direct investment by private individuals.