The House of Commons’ Treasury Committee has launched an inquiry into the state of British households’ finances.
The Committee will look into the sustainability of current levels of consumer credit and household debt, and whether new credit products are needed as income streams become less stable due to flexible work contracts.
Additionally, it sets out to assess the trends in bad debt, by looking not only at credit defaults but also at households’ inability to pay utility bills.
It will also consider how to implement a “breathing space” scheme, whereby debtors in duress could enter a six-week period during which all charges on debt would be frozen. Such a provision already exists in Scotland, and the government has recently opened a call for evidence on the issue.
Finally, the Committee will examine how lifetime saving plans are being affected by a fall in home ownership, and whether households are receiving appropriate financial advice.
Nicky Morgan, chair of the Committee, said: “The UK’s household saving rate has fallen in the last year. 15 per cent of adults are over-indebted. And there is £200 billion worth of consumer credit in the UK. It is therefore timely for the Committee to launch an inquiry into household finances.
“Debt is a huge emotional burden for people. Unstable personal finances often emerge as problems raised by constituents, so we hope to take evidence for this inquiry from around the country.
“We will examine what policies could support households in achieving appropriate levels of saving, and the sustainability of the UK’s household debt and consumer credit.”