Police Scotland has outlined urgent action to maintain effective policing within the funding available to the organisation.
Policing’s funding allocation for 2023-24 represents a real terms reduction, meaning more than £50m of savings are required to ensure a balanced budget.
Police Scotland has been clear hard choices are necessary and we have been required to reduce our budgeted officer establishment from 17,234 to 16,600.
Deputy Chief Constable Designate Fiona Taylor QPM provided an overview of work to prioritise resources to keep people safe and protect the vulnerable and was clear our service to the public will be impacted.
DCCD Taylor said: “Our financial planning in March made it clear that our funding allocation for 2023-24 represents a real terms reduction, meaning we have been required to reduce the number of police officers we have from 17,234 to around 16,600.
“Of necessity, we will reduce police staff costs in proportion to the reduction in officer numbers and reduce overtime spending.
“Hard choices are being taken now to maintain effective policing within the funding available to us. Action is being taken to achieve savings and deliver a balanced budget for 2023-24. Areas which encounter the greatest demand and which carry the greatest risk are being prioritised to ensure we continue to effectively reduce harm and protect the vulnerable.
“As part of this urgent action we have paused police staff recruitment other than for reform or externally funded posts; for roles based in our Contact, Command and Control (C3) Division or Resource Deployment Unit; for Police Custody and Security Officers; and for Public Enquiry and Support Assistants.
“Recruitment of Probationary Constables will continue and our commitment to no compulsory redundancies for police staff remains.”
DCCD Taylor also said funding challenges underlined the need to accelerate changes which made savings or supported operational policing, including the successful transformation of the police estate.
DCC Taylor said: “This work will shape our Service and define core policing. It seeks to reduce demand and increase capacity, and accelerate those changes which save money and provide benefits to operational policing. This includes the ongoing transformation of our estate. We will also review support services and our command structures.
“Consequently, some of the things that we do may need to be done differently or take us longer. The level of service we provide in some areas will reduce.”
Police Scotland returns more than £200m to the public purse every year compared to legacy arrangements.
The Scottish Government’s budget for 2023/24 confirmed an £80m core funding uplift for policing, with £37m required to fund the ongoing cost of the 2022-23 pay award, leaving £43m to fund unavoidable pay and other inflationary costs for the current financial year.
Chancellor outlines reforms to boost pensions and increase investment in British businesses
the ‘Mansion House Reforms’ could unlock an additional £75 billion for high growth businesses, while reforms to defined contribution pension schemes will increase a typical earner’s pension pot by 12% over the course of a career
comprehensive reforms will increase pension pots by as much as £16,000
The reforms will also unlock up to £75 billion of additional investment from defined contribution and local government pensions, supporting the Prime Minister’s priority of growing the economy, and delivering tangible benefits to pensions savers.
The United Kingdom has the largest pension market in Europe, worth over £2.5 trillion. Over the past ten years Automatic Enrolment has helped an extra ten million people save for their futures, with £115 billion saved in 2021, but how this money is invested is limiting returns for savers. Comparable Australian schemes invest ten times more in private markets than UK schemes, reaping the rewards that UK savers are missing out on.
To level the playing field, the Chancellor and the Lord Mayor have supported an agreement between nine of the UK’s largest Defined Contribution pension providers, committing them to the objective of allocating 5% of assets in their default funds to unlisted equities by 2030. These providers represent over £400 billion in assets and the majority of the UK’s Defined Contribution workplace pensions market.
This could unlock up to £50 billion of investment in high growth companies by 2030 if all UK Defined Contribution pension schemes follow suit.
More effective investments by defined contribution pension schemes will also increase savers’ pension pots by up to 12%, or as much as £16,000 for an average earner.
Chancellor of the Exchequer Jeremy Hunt said:“British pensioners should benefit from British business success. By unlocking investment, we will boost retirement income by over £1,000 a year for typical earner over the course of their career.
“This also means more investment in our most promising companies, driving growth in the UK.”
Secretary of State for Work and Pensions Mel Stride said:“British workers should have the confidence that their pension savings are working as hard as they are.
“Our reforms will benefit savers and society – unlocking investment into pioneering UK businesses, growing the economy, and helping the record number of people in this country saving into a pension to achieve the retirement they want.”
The Chancellor’s Mansion House Reforms will also deliver better returns for savers through a new Value for Money Framework which will make clear that investment decisions made by pension firms should be based on overall long-term returns and not simply costs. Pension schemes which are not achieving the best possible outcome for their members will be wound up into larger, better performing schemes.
Analysis shows that over a five-year period there can be as much as 46% difference between the best and worst performing pension schemes. This means that a saver with a pot of £10,000 could have notionally lost £5,000 over a 5-year period from being in a lowest performing scheme.
The Mansion House Reforms will be guided by the Chancellor’s three golden rules: to secure the best possible outcome for pension savers; to always prioritise a strong and diversified gilt market as we seek to deliver an evolutionary, rather than revolutionary, change in our pensions market; and to strengthen the UK’s position as a leading financial centre to create wealth and fund public services.
To ensure that the money unlocked by these reforms is invested quickly and effectively, the Chancellor has asked the British Business Bank to explore the case for government to play a greater role in establishing investment vehicles, drawing upon the BBB’s skills and expertise.
This will complement the £250 million of support that government has made available through the Long-term Investment for Technology and Science (LIFTS) initiative to incentivise new industry-led investment vehicles.
The government will also encourage the establishment of new Collective Defined Contribution funds which can invest more effectively by pooling assets as well as launch a call for evidence to explore how we can support pension trustees to improve their skills, overcome cultural barriers and realise the best outcomes for their pension schemes and subsequently their members.
Defined Benefit pensions
For the Local Government Pension Schemes a consultation will be launched on setting an ambition to double existing investments in private equity to 10%, which could unlock £25 billion by 2030. The consultation proposes a deadline of March 2025 for all Local Government Pension Scheme funds to transfer their assets into LGPS pools and setting a direction that each pool should exceed £50 billion of assets.
To improve outcomes for savers in a highly fragmented market, with over 5,000 Defined Benefit Schemes, the government will set out its plans on introducing a permanent superfund regulatory regime to provide sponsoring employers and trustees with a new way of managing Defined Benefit liabilities.
A new call for evidence will also launch tomorrow on the possible role of the Pension Protection Fund and the part Defined Benefit schemes could play in productive investment whilst securing members’ interests and protecting the sound functioning and effectiveness of the gilt market.
Capital Markets
The UK has the largest stock market in Europe and one of the deepest in the world – the London Stock Exchange had the most Initial Public Offerings (IPOs) outside of the US in 2021.
A comprehensive set of reforms will help attract the fastest growing companies in the world to grow and list in the UK. Prospectuses will be simplified, another milestone of Lord Hill’s UK Listing Review, replacing the EU’s outdated regime.
Firm’s prospectuses for investors will be easier to produce, more accessible and understandable, saving companies time and money and attracting more firms to do business in the UK.
Protectionist rules inherited from our time in the EU will be abolished. The Share Trading Obligation and Double Volume Cap have held back UK businesses and will be removed so firms can access the best and most liquid markets anywhere in the world.
The government has also accepted all of Rachel Kent’s Research Review published today, paving the way for a new ‘Research Platform’ that will provide a one-stop-shop for firms looking for research experts. It also sets the path for potentially removing the unbundling rules – an inherited EU law that requires brokers to charge a separate fee for research.
The Chancellor will set out plans to establish an entirely new kind of stock market that allows private companies to access capital markets without floating on a stock exchange. This ‘Intermittent Trading Venue’ would be a world first and will help firms grow and boost the UK economy. It will be complemented by a move to make shares fully digital rather than written on paper, saving businesses time and money.
This builds on the Chancellor’s Edinburgh Reforms and Solvency II reforms which will unlock over £100 billion of productive investment from insurance firms across the UK over a decade.
Seizing the opportunities of the future
To ensure the continued success of the UK’s world-leading financial services sector, firms must be ready to innovate faster, with regulators willing to support them as they do.
Following the Financial Services and Markets Act 2023 passing into law, the government has announced that it is commencing repeal of almost 100 pieces of unnecessary retained EU law for financial services, further simplifying the UK’s regulatory rulebook.
The government launched an independent review into the future of payments – led by Joe Garner, former Chief Executive Officer of Nationwide Building Society – to help deliver the next generation of world class retail payments, including looking at mobile payments.
The government also welcomes a report suggesting ways to move to fully digital shares, scrapping outdated paper-based shares. This will make markets more efficient and modernize how people own shares.
Further information
The Mansion House Compact members are: Aviva; Scottish Widows; L&G; Aegon; Phoenix; Nest; Smart Pension; M&G; Mercer.
The package of reforms announced yesterday could help increase pension pots for an average earner who starts saving at 18 by 12% over their career – over £1,000 more a year in retirement – all whilst supporting UK economy, businesses, and employment.
Analysis shows a difference in returns between schemes over a 5-year period of up to 46% in some cases. This means that a saver with a pot of £10,000 could have notionally lost £5,000 over a 5-year period from being in a lowest performing scheme.
Reaction to the Chancellor’s Mansion House Reforms
Jamie Dimon, Chairman & CEO, JPMorgan Chase said:“Great financial centers stay competitive by responding to the market and evolving through the kinds of important iterations that the Chancellor has announced.
“It’s also good to see the U.K. preparing for the industries of tomorrow considering the great promise of life sciences and A.I. as cornerstones of the economy in the years to come.”
Sir Jon Symonds CBE, Chair, GSK said:“I welcome these important reforms which will further strengthen the UK capital markets and support economic growth.
“The changes will help increase investment returns for pension savers through improved access to all asset classes including in high growth sectors, and ensure the UK’s most innovative companies are better supported by UK capital to stay in this country as they scale to maturity.”
Brent Hoberman, Executive Chairman & Co-Founder, Founders Forum, Founders Factory said:“The planned pension reforms will enable for capital to be productively invested in funds and scaleup companies in the UK.
“This should be welcome news to the UK industries of the future, their ability to attract more capital will create more national champions and generate growth, jobs and increased tax revenue.
“The reforms will enable the UK to build on the positive momentum in these key parts of the economy drive further synergies between it’s world class financial institutions and entrepreneurial base.”
C. S. Venkatakrishnan, Group Chief Executive, Barclays said:“The UK has needed a bold, forward-looking policy agenda and industrial strategy to grow the economy.
“These Mansion House Reforms are an important step in the right direction in mobilising private capital to support growth and innovation.”
Irene Graham OBE, CEO, ScaleUp Institute said:“The package of measures announced by the Chancellor today are very much welcomed by the ScaleUp Institute.
“They contain significant and innovative solutions which will help to enable easier and simpler access to capital markets and patient growth capital. These new initiatives, coupled with the reforms already underway, will support and fuel the global ambitions of our scaleups, and high-potential scaling businesses, across all sectors and all areas of the UK.”
Miles Celic, Chief Executive Officer, TheCityUK, said: ““The competitiveness and attractiveness of any successful international financial centre must, by definition, always be a work in progress. The Chancellor is right to be ambitious in building on the UK’s successes and recognising that we can’t afford to be complacent.
“The Mansion House Reforms are ambitious, pragmatic and necessary. They will underpin the UK industry’s future success. Most importantly, their main beneficiaries will be the British people, who will gain from greater investments in growing businesses, revitalising communities and improving retirements.”
Chris Hulatt, Co-Founder, Octopus Group said: ““We welcome government’s efforts to make the UK a more attractive place to start a business, and support measures that provide additional opportunities for private companies to raise capital.
“Finding new ways for the most skilled and talented entrepreneurs to access capital as they build businesses is fundamental to helping the UK maintain its place as the best place to start, build and scale a business.”
Noel Quinn, Group Chief Executive, HSBC said:“I welcome the strong and comprehensive package of measures announced by the Chancellor in his Mansion House speech.
“Unlocking equity to support companies in innovative high-growth sectors such as technology and life sciences is vital to the future growth of the UK economy.”
Lord Mayor, Nicholas Lyons said: ““These reforms and the Mansion House Compact mark a historic turning point that will accomplish the dual aim of securing a brighter future for retirees and channelling billions into our economy.
“I’m proud to have convened key industry players to make this commitment to unlock £50bn in capital by the end of the decade which will improve returns for pension savers and support firms to grow, stay and list in the UK.”
Tim Orton, Chief Investment Officer, Aegon UK said: ““Aegon UK is proud to be a founder signatory of the Mansion House Compact which will help deliver better long-term outcomes for our customers.
“We are committed to ensuring our customers can access and share in the growth and success of innovative companies we invest in. We will use our scale and expertise to develop investment solutions seeking to improve the retirement outcomes of the millions of members of the defined contribution pension schemes we support. The Compact will also create opportunities that help deliver our climate targets as we progress towards net zero.”
Sir Nigel Wilson, Group CEO, Legal & General said:“As the UK’s largest manager of money for pension clients, L&G is pleased to support the ambition set by the Compact.
“Increasing investment in science, technology and infrastructure will support better returns for the tens of millions saving for their retirement, as well as stimulate much needed long-term growth for the UK economy.”
Mark Fawcett, CEO, Nest Invest said:““For many years now, illiquid assets have been integral to diversified DC pension schemes around the world.
” It’s been a key driver behind Nest setting up our own private market mandates to ensure our members aren’t missing out. Nest will continue to increase our investment in unlisted equities, helping our 12 million members benefit from the strong returns these types of deals can typically offer.”
Ruston Smith, Chair, Smart said: ““Smart Pension is committed to securing better outcomes for long-term savers. Giving UK savers access to higher net returns by investing in unlisted equities, including innovative, high-growth UK companies as part of a well diversified portfolio, will deliver these outcomes over time.
“We are pleased to be a signatory of the Mansion House Compact and, as a successful British fintech, we are proud to be supporting the country’s technology sector, helping home-grown start-ups and scale-ups to flourish and thrive.”
Scottish Widows, CEO, Chirantan Barua said: ““The industry needs to modernise the investment options available to customers.
“With the right consumer protections in place, the proposals announced today could make a huge difference to our customers and the wider UK economy. I’m proud that Scottish Widows is a founding signatory of the Mansion House Compact.”
Phil Parkinson, Investments and Retirement Leader, Mercer said:“Mercer supports proposals that lead to improved pension scheme member outcomes.
“As a global investment solutions provider, we see first-hand the value that illiquid asset allocations can bring to investors’ portfolios from a risk and a return perspective and are in favour of initiatives designed to unlock this asset class for DC members.”
Edward Braham, Chair, M&G said:“Patient capital put to work in companies or projects over multiple decades is essential to support economic growth and importantly, capture value for people’s pensions as they save for their retirement.
“M&G’s heritage is in investing in private markets, whether it is through infrastructure, real estate or innovative companies with purpose. We are democratising access to private markets through the Prudential With Profits Fund, and are supportive of DC pension reforms that encourage more investment of this kind that has potential to result in positive outcomes for savers.”
Mike Eakins, Chief Investment Officer, Phoenix Group said:““We are proud to sign the Compact, which is an important step to allow UK long-term savers to invest in a more diversified portfolio, giving them access to the potential returns of a broader range of assets, in line with their international counterparts.
“Currently, only 9% of UK pension funds are invested in alternative assets as compared to 23% in other major pensions markets. With the right regulatory environment, Phoenix Group could invest up to £40 billion in sustainable and/or productive assets to support economic growth, levelling up and the climate change agenda whilst also keeping policyholder protection at its core.”
Dobbies, the UK’s leading garden centre, is giving customers a helping hand with value restaurant offers in its Edinburgh store.
Customers in Edinburgh can recharge and relax in Dobbies’ restaurant. Whether catching up with friends or spending time with the family, the Dobbies’ team will be on hand, serving hearty breakfasts, lunches and delicious sweet treats throughout the day. Dobbies’ restaurant also offers a dog-friendly area.
Hearty breakfasts for under £5
Kick start the morning and enjoy the most important meal of the day at Dobbies. Customers can order a three-item breakfast roll for just £4.25 and a five-item breakfast for £4.50. Quality produce is at the heart of Dobbies’ breakfasts with succulent pork sausages, thick cut back bacon and free-range eggs. There’s also a vegetarian choice for an alternative breakfast option.
Effortless lunches
Choose from a wide selection of lunch options, including light seasonal dishes such as hearty soups, jacket potatoes and handmade sandwiches or toasties from £4.95, served from 11:30am until 3pm.
Main courses can also be enjoyed daily from 12noon until 3pm. Popular dishes include Dobbies’ sustainable haddock dipped in a gluten-free batter served with chips, peas and tartare sauce, classic lasagne or chicken Caesar salad.
Customers over 60 can tuck into a main meal and a cake for just £9.95, Monday-Friday from 12noon.
Delicious sweet treats
Indulge in a sweet treat at Dobbies and take advantage of this delicious deal. Customers can treat themselves to a traditional or vegetarian Afternoon Tea for two experience for £20 and enjoy a selection of finger sandwiches, mini cakes and slices, freshly made plain and fruit scones with jam and clotted cream, plus a pot of tea or coffee is included.
Afternoon Tea should be booked online, in advance, at dobbies.com.
If you’re looking for a light afternoon bite, Dobbies’ two for one offer on scones is priced at £3.75 and is available from 2pm.
Kids Eat Free
Dobbies’ Kids Eat Free offer runs through the day, allowing children under the age of 16 to enjoy their food for free with every traditional adult breakfast and main course meal at lunch. This includes kids’ breakfasts, lunch menu or a pick ‘n’ mix meal, plus a drink.
Adam Veysey, Dobbies Development Chef, said: “We’re committed to offering great tasting and great value meals in our Edinburgh restaurant.
“We’re very aware that people will be controlling their spend this January, so we’ve ensured we’re offering our customers the chance to enjoy eating out for less. With seasonal produce and customer favourites, we have something for all the family.”
Tens of thousands of teenagers in the UK who have not yet claimed their matured Child Trust Funds savings could have thousands of pounds waiting for them, reminds HM Revenue and Customs (HMRC).
Child Trust Funds are long-term savings accounts set up for every child born between 1 September 2002 and 2 January 2011. To encourage future saving and start the account, the government provided an initial deposit of at least £250.
The savings accounts mature when the child turns 18 years old. Eligible teenagers, who are aged 18 or over and have yet to access their Child Trust Fund account, could have savings waiting for them worth an average of £2,100.
If teenagers or their parents and guardians already know who their Child Trust Fund provider is, they can contact them directly. This might be a bank, building society or other savings provider.
Many eligible teenagers who have yet to claim their savings might be starting university, apprenticeships or their first job. The lump-sum amount could offer a financial boost at a time when they need it most.
Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, said:“Teenagers could have a pot of money waiting for them worth thousands of pounds and not even realise it.
“We want to help you access your savings and the money you’re entitled to. To find out more search ‘Child Trust Fund’ on GOV.UK.”
An estimated 6.3 million Child Trust Fund accounts were set up throughout the duration of the scheme, containing about £9 billion. If a parent or guardian was not able to set up an account for their child, HMRC opened a savings account on the child’s behalf.
Teenagers aged 16 or over can take control of their own Child Trust Fund if they wish, although the funds can only be withdrawn once they turn 18 years old.
Where children have a Child Trust Fund, families can still pay in up to £9,000 a year tax-free. The account matures once the child turns 18 years old and no further money can be deposited. They can either withdraw the funds from the matured Child Trust Fund account or reinvest it into another savings account.
Until the child withdraws or transfers the money, it stays in an account that no-one else has access to.
The average working household has £2,400 in savings – the equivalent of less than a month’s worth of basic expenses
Over half of all savers say they will fall back on their rainy-day funds to meet rising living costs
Working families estimate they need £12,100 in the bank to feel financially secure but less than a third of households have this set aside
It would take the average household three years to put aside the desired financial safety net
One in four working households with savings (28%) have started dipping into them to meet rising living costs, according to a report from Legal & General. A further 30% anticipate they will need to do so in the next year.
With consumer prices 10.1% higher in July 2022 than a year before2, and with annual household energy costs set to rise to an average £2,500 in October 20223, many households will likely have to rely even more on the money they have tucked away. This could see household savings built up during the pandemic lost.
The average working household currently has £2,400 in savings. However, this equates to less than a month of basic expenditure for the average family, if they lost their income and were pushed to rely on their savings.
Financial security under threat
To feel financially secure, households estimate they need £12,100, or nearly five months worth of basic household expenses, set aside. However, only three in 10 working households (30%) have this set aside, and pressure to dip into savings will likely see this number fall.
Based on current savings patterns, with the average working household saving just over £300 a month, it would take three years to reach the desired financial safety net, and nine years to put aside a year’s worth of essential spending. However two-thirds (64%) of all households that currently save have either already decreased or stopped their savings habit altogether (31%), or expect to have to do so (34%), due to increased living costs.
No safety net for some
There is also a growing number of people who cannot put aside any money; nearly 1.9 million households have no money left at the end of the month, an increase of 330,000 since 2020.
This is likely why 16% of households have no savings at all in case of emergency.
“With the cost of basic essentials on the rise many households will find themselves having to make difficult choices and dipping into savings is likely to become more common. This is a far cry from the five-month financial safety net that people hope for”, said Bernie Hickman, CEO, Legal & General Retail.
“It can be concerning for people to feel like they have nothing to fall back on in times of difficulty. While dipping into savings is inevitable for some, there are also steps people can take to try to control their costs as much as possible by checking their regular outgoings and subscriptions, shopping around for discounts and deals and by making sure they are taking up free financial guidance services like MoneyHelper.
“To help people better understand their money and make informed decisions, we have put together a financial safety net content hub to help people find free tools and resources.”
The latest Deadline to Breadline report from Legal & General has found UK households’ financial resilience has shrunk by 21% since 2020 (from 24 days to 19 days)
People overestimate (by nearly six weeks – actually 41 days) how long they could fund basic living costs (such as housing costs, loans/ credit card repayments, utility bills and food) if they lost their income
Cutting back has become the norm but the 5 million poorest workers in the UK have no financial safety net in the event they lose their salary
On average, working households are only 19 days from the breadline, according to a report from Legal & General. The new research has shown that households have seen the amount of time they can fund basic expenses decrease by 21%, five days less than in April 2020.
Households have average savings of £2,431 and debts of £610. Accounting for average daily expenses of £93, this would see the average household run out of money in less than three weeks if they were to lose their income.
The research found that most people underestimate how long their money would last, assuming they would have 60 days of breathing room were they to lose their job.
With household costs increasing significantly, and more businesses under pressure, this has raised concerns that many people across the country could be especially vulnerable to financial shocks should the worst happen.
Household energy bills, for instance increased by 54% in April 2022, a record increase, and are likely to rise substantially again in October and the New Year. 2
Cutting back ‘the new norm’
While a quarter of households are yet to notice an impact from the increased cost of living, cutting back – on both essentials (69%) and luxuries (81%) – is the new norm. Even the majority of those with no debt and a higher income (over £50k annually) are being more cautious. 61% of those with a household income of over £50k are cutting back on essentials.
Nearly 2 million adults have no money left each month, a rise of 330,000 in the last 2 years. Concerns are particularly high for the UK’s poorest workers. Those earning under £20,000 a year – 5 million people in the UK – are living paypacket-to-paypacket and the average household in this group has no safety net should the worst happen.
Legal & General’s recent Rebuilding Britain Index also found that the cost of living crisis is increasing inequalities between different parts of the country, disproportionately affecting households in areas where there is a greater need for levelling-up initiatives.
Older workers most at risk of overconfidence
Older workers in the UK (55 to 65 years old) tend to have higher levels of financial reserves they can draw on, meeting their expenses for an average of 99 days in the event they lose their income. However, these households are also the most likely to overestimate their safety net, assuming they can manage for at least 180 days.
This raises concerns as older households have less time to build their savings back up before retirement and typically find it harder to find new roles following redundancy.
Bernie Hickman, CEO, Legal & General Retail, said:“Our latest research presents a challenging picture for working households across the UK. We often talk about managing money month-to-month but, as our findings indicate, for some it’s a case of day-by-day.
“The cost-of-living crisis is squeezing the purses of people all over the country, leaving households of every shape and size with money worries. The fact is there is only so much people can do to manage their budgets in these difficult times but there are resources available that can help.
“Half of all people in the UK (52%) haven’t taken advantage of financial guidance available, including free services like MoneyHelper, to help make the most of what they have.
“It may feel overwhelming but we encourage people to do what they can now so they are best prepared for a further squeeze on finances coming this autumn.”
Legal & General’s Deadline to Breadline report, published later this year, will explore the financial resilience, security and engagement of working households across the UK.
To help people better understand their money and make informed decisions, the insurance and retirement provider has put together a financial safety net content hub signposting tools and resources.
Financial expert explains the money-saving trend taking TikTok by storm
‘Cash stuffing’ is a money-saving technique currently blowing up on social media.
With the cost of living crisis impacting the majority of the UK, Gen-Z and Millenials are looking for new ways to save. Within the past year, Google searches for the term ‘cash stuffing’ have increased by 274% (Source: Google Trends/Glimpse) and the TikTok hashtag has generated over 498 MILLION views to date.
Dan Whittaker, Personal Finance Expert at CashLady.com, has released comments explaining the trending method of saving at home, how it works, along with the downsides:
What is ‘cash stuffing’?
“Cash stuffing is a method of saving money by physically withdrawing money from your bank account and organising it in a folder system.”
“Using a personalised folder containing several labelled envelopes, savvy savers divide their monthly outgoings into categories, label each envelope with a category, then select a budget for each category and put the allocated amount of cash into the envelope.
“For example, if your monthly take home pay was £1,000, you would make your essential payments as normal, such as rent, mortgage and bills. Then, you split the remaining money into several categories within your folder.
This could be for things like ‘the weekly shop,’ ‘birthday funds,’ ‘socialising,’ ‘holiday savings’ or ‘pocket money for kids.’ Each category and its envelope would contain the exact amount allocated in your budget.”
“The technique is also sometimes referred to as the ‘cash envelope system’.”
“At the end of the month, you can see clearly how much money you have spent in each area and track it on a spreadsheet. You can then readjust your budgets for the next month to stay on track. If you’re lucky enough to have funds left over, these should be moved into a separate folder which acts as bonus savings for whatever your ultimate saving goal is.”
Why does it work for some people?
“This method of saving can be a great way to keep you motivated to achieve your savings goals. Breaking down larger savings goals into smaller monthly targets makes the task of saving less overwhelming, and being able to literally see the money saved each month can lead to a greater sense of achievement.”
“Also, seeing your money physically dwindle can make you more aware of the current state of your finances. Using Apple Pay, Paypal or even online banking can sometimes feel as though you aren’t actually spending money as there is no physical cash exchanged. With cash stuffing, you have a visual representation of your earnings and outgoings which can lead to a greater sense of awareness of your finances; when you see what you’re spending, you think more about what you’re spending.”
“This is perhaps why the method is particularly popular amongst young people, who have been brought up using online banking and are seeking a new way to view and manage their money.”
“Another bonus with this method is that you’re avoiding the risks that can come with credit cards or overdraft fees. Avoiding credit cards altogether stops those prone to overspending from racking up debts, as once your monthly budget is gone, it’s gone.”
What are the downsides? “Security is the biggest downside. When your money is locked away in your bank it is protected by the banks security systems and protected by schemes such as the Financial Services Compensation Scheme.”
“However, with your money living outside of your bank in cash form, it may be more vulnerable to theft, loss or damage (for instance from fire). If this were to happen then you would essentially have no recourse to recover that money. If you are interested in this technique, investing in a safe or something similar would be advisable.”
“You also aren’t earning any interest on your money while it is not deposited in a bank, building society or other savings scheme.”
How can I do it?
“If you want to give Cash Stuffing a try then firstly, you need to think about what you typically spend money on. Dividing your usual spending into categories will help you to start your envelope system. Spends such as shopping, dining out, entertainment, petrol, gifts and groceries might be the most consistent monthly costs to begin with.”
“Then, think of your longer-term savings goals. Assign an envelope for this, where you can start to deposit any spare change at the end of each month. This could be for a car deposit or saving for a renovation or holiday for example, but having a specific goal is a great way to keep you motivated. Having these additional folders means you’re always allocating some money to long-term goals.”
“Next, you need to work out how much money to assign to each category. If you know you spend too much on socialising, then lower your budget in that category, and so on. After you’ve budgeted, it’s worth creating a spreadsheet to track your spending, simply writing down how much you allocated and then spent that month. This creates an awareness of your spending habits and helps see where you went right and where you could cut back. Any leftovers can be added to your long-term envelopes to encourage you to keep going.”
“The important thing is to only spend what is in that envelope. Restrict your spending to only using the allocated amount on each category and you should have savings in no time.”
A report by leading UK data scientists has revealed that the over-50s are being hit hardest by the current financial crisis and could face a lifetime of financial insecurity.
That’s according to new research from the University of Edinburgh’s Smart Data Foundry, supported and funded by abrdn Financial Fairness Trust.
According to the report, economic inactivity rates have risen a third amongst the over 50s since 2019, and people aged 50-54 face double the financial vulnerability risk than those aged 70-74.
Findings reveal that people in their 50s and 60s are facing the ‘perfect storm’ of circumstances including redundancy, ill health or caring commitments combined with a lack of savings and pension provisions.
To offset this loss of income, many people are being forced to withdraw lump sums from their pension pots to deal with pre-retirement income shocks.
And with the majority of pension pots worth under £30,000, this is causing knock-on issues with income tax and entitlement to benefits. Worryingly, the research also identified that those people who do cash in their pension pots early are 1.75 times more at risk of financial vulnerability in the future.
To tackle this, Smart Data Foundry is calling on the Department of Work and Pensions to act now to reduce the risk of pension assets being spent before retirement. It recommends an increase to the current capital limit of £16,000 for means tested benefits and, for those on Universal Credit, the reform of the Support for Mortgage Relief (SMI) loan facility by removing the zero earnings rule.
Chair of Smart Data Foundry,Dame Julia Unwin, explains: “We are seeing a pattern of people in their early to mid-fifties going from being in positions of comfortable, middle-aged breadwinners eyeing their future retirement over the horizon, to a generation suddenly finding themselves facing long-term financial hardship.
“A combination of being unable to secure viable work, confused messaging over pensions, little by way of state aid, and the savage cost-of-living rises resulting in many making decisions that could have long-term negative consequences.
“With this report and our key recommendations, we are calling for UK Government to intervene to protect and support the most vulnerable before it is too late. If they don’t act now, we will undoubtedly see even bigger problems in the years ahead. Data doesn’t lie; the evidence is there – older workers are at very real risk of financial vulnerability, but it is not yet too late to act.”
The research study also uncovered a widespread lack of understanding about the benefits system, confusion about claims processes, and hardship arising from payment frequency. To improve the transition to retirement, the report calls for increased government investment in the Pension Wise guidance service and expansion to include the state pension.
According to the findings, older workers are encountering barriers to returning to work, including lack of digital skills, unavailability of flexible working, lack of specific government initiatives, ageism, psychological barriers, and retraining needs.
The longer the unemployed worker remains out of work, the harder it is for them to find a suitable position and the greater their risk of falling into forced retirement.
The report calls for a government-funded employment programme targeted at those who need support in changing careers, starting from the first day of unemployment for the over 55s.
Lead researcher Dr Lynne Robertson-Rose from the University of Edinburgh added: “We set out to understand the financial vulnerability amongst those in their 50s and 60s and have been surprised by the bleak picture that the data paints.
“Any disruption in earning capability in the decade before the state pension is forcing older workers to draw down on savings earmarked for retirement with little ability to top up the pot, leading to the risk of financial vulnerability becoming lifelong.
“We have access to rich data supplied to Smart Data Foundry by UK financial institutions and these insights have furnished us with the information that enabled us to make policy recommendations. It also flags opportunities for the financial services and fintech sector to innovate in order to help individuals better manage their finances.”
Karen Barker, Head of Policy and Research at abrdn Financial Fairness Trust, added:“Making decisions about your pension is tricky to navigate, and for those on lower incomes, advice is too expensive.
“The Government needs to improve access to advice on pensions planning for those on lower incomes to avoid a living standards catastrophe.”
‘Citroën and You’ friends and family programme extended further to include NHS employees, Teachers and Emergency Services personnel.
Programme enables eligible customers to save up to an additional £1,200* on a brand-new Citroën car.
‘Citroën and You‘ programme is available exclusively online through the Citroën Store.
Citroën UK is showing its appreciation for the incredible work of the NHS, Teachers and Emergency Services across the UK in recent years by extending its ‘Citroën and You’ programme.
The programme, previously reserved for friends and family of Citroën employees, welcomes NHS, Teachers and Emergency Services personnel into the Citroën family and allows users to save up to an additional £1,200* on a brand-new Citroën car.
‘Citroën and You’ is available to NHS employees, Teachers and Emergency Services personnel as a fully online experience via the Citroën store. Eligible users wishing to take advantage of the ‘Citroën and You’ programme can review current offers online, configure and personalise their car, place it in their shopping basket prior to checkout and access a discount with a personalised promotional code before completing the order.
The initiative launches this week with dedicated pages already live on the Citroën UK website. The offers extend across the Citroën passenger car range†, including C4 and ë-C4 Electric, New C5 Aircross and C3 Aircross SUV.
Last month, Citroën UK celebrated Sign Language Week (14 to 22 March) by extending the ‘Citroën and You’ programme to welcome British Sign Language (BSL) users. Citroën has pledged to become more accessible to the UK’s more than 150,000 strong deaf community. Last year, Citroën partnered with SignLive to become the first car manufacturer to introduce its online video interpreting service for deaf and hard of hearing customers across its entire UK retailer network.
Eurig Druce, Citroën’s UK Managing Director, said: “Over the past two years we have seen the remarkable work the NHS, Teachers and Emergency Services have provided across the UK in the face of a global pandemic.
“To show our appreciation for the work they have done and continue to do for us all, I am proud to extend ‘Citroën and You’ to all NHS employees, Teachers and Emergency Services personnel so they can save on a great new Citroën vehicle.”
‘Citroën and You’ friends and family programme is exclusively available via the online Citroën Store, which allows customers to configure their vehicle, select the finance package that best suits their needs and order their new vehicle from the comfort of their own home.
*Current offer available at time of announcement. Subject to change in the future.
More than half of all cash savers (52%) don’t know what impact inflation will have on the real value of their cash savings over time, while 13% believe inflation will leave them better off
New research from Legal & General1 has found that despite inflation reaching record levels many people in the UK are not aware of its impact on their finances.The findings reveal:
More than half of all cash savers (52%) don’t know what impact inflation will have on the real value of their cash savings over time:
One in 10 (13%) incorrectly believe inflation will leave them better off
13% think the real value of their savings would stay the same
More than a quarter (26%) say they don’t know what impact inflation could have on their cash
Millions of savers (64%, the equivalent of 10.3 million) have taken no action on their savings, despite cash earning next to nothing in interest and inflation rising steeply. In fact, half of all savers (54%) currently keep their money in cash over the long-term.
The total cost of “saver inaction” in such an environment (6% inflation) could amount to £18 billion if this trend continues over the next five years2.
Savers currently have £136 billion sitting in cash ISA accounts on average interest rates of 0.26% per year3.
Legal & General analysis shows the impact of inflation for every £1,000 stashed away:
Inflation rate
Average £ lost overfive years
Time for savingsto halve
National cost of saver inaction overfive years
6%
£243
13 years
£18 bn
7%
£278
11 years
£21 bn
8%
£311
Under 10 years
£23 bn
Source: Legal & General, 2022
Emma Byron, Managing Director, Legal & General Retirement Solutions, said:“Inflation is at its highest rate for three decades and it’s worrying that savers don’t realise its eating away at millions of pounds sitting in low-interest paying accounts.
“Understanding the impact of inflation is crucial to understand how much money you have in real terms. Whilst it is essential to keep some cash in the bank for an emergency fund, savers might want to consider other options to make their money work harder.”
Three ways of protecting your savings from inflation
Tip 1: Work out how much to put aside as an easy-access emergency fund
The Money Helper4 service suggests that you should save for emergencies. As a rule of thumb, you’ll need enough to cover your essential expenses for three months.
You should be ready cover bills like energy, your mortgage, travel and food costs, so should the unexpected happen, you’ll be prepared.
And you’ll know exactly how much money you need to keep in cash (which can be hit by inflation), so you can start saving any extra income in more inflation-proof ways.
Tip 2: Get best the interest rate you can on your savings
Make sure that any cash savings you have are getting the highest interest rate possible.
These days you can switch savings accounts and ISAs relatively easily. But if you do find a higher rate, remember that they can quickly go down.
For example, it’s common for Cash ISAs to offer high rates for the first year. Those rates can drop dramatically after the first year. So always set a reminder to keep an eye on any new savings rates you find. You can find more information on most bank websites and compare interest rates on comparison websites.
Tip 3: Think about investing your money or topping up your pension to beat inflation
It’s important that consumers are aware of the long-term impact of their pension contributions, alongside the compound effects of investing.
So if you can stash your savings away for the long term, think about topping up your pension, or investing in a stocks and shares ISA.
People will understandably be feeling unsure about the future at this moment in time, but the key thing to remember is that investing is for the long term.
With time on your side, you can balance out the ups and downs of market volatility. And if you have an emergency fund, you might well be able to ride out any storms and leave your investments untouched. That’ll give them a chance to go back up in value again.
