Building societies ready to work with the Government to support first-time buyers, savers and economic growth
Robin Fieth, Chief Executive of the Building Societies Association shares his thoughts on the Government’s announcements in the recent King’s Speech and discusses where some of the opportunities could lie.
With the recent King’s Speech and the announcement of the Government’s legislative priorities, such as delivering economic growth, there is much to interest building societies in the new Government’s agenda. Issues, such as getting Britain building more homes, improving the private rented sector, reforming audit and corporate governance and engaging with business through the Industrial Strategy Council, are all of interest to the sector and our members.
We count all 42 building societies within our membership. They are customer owned businesses (mutuals) and serve around 26 million members across the UK. The profits they make are reinvested for the benefit of their members and communities, not distributed to distant shareholders, and their ownership model allows them to take a long-term view. This translates in their share of the branch network – which has doubled over the last 10 years - and in how members view building societies – 87% of building society customers would recommend their provider to friends and family (compared with 75% bank customers).
The sector specialises in savings and mortgages, so it plays a key role in helping people buy a home of their own and build their financial resilience. Our members are helping 23 million people to save (over £385 billion in savings) and over 3.5 million families and individuals to buy a home (over £385 billion in mortgages). So it’s unsurprising that the planning and housing announcements were of interest to us.
It is good to see the Government’s plans to get Britain building again. We need a long-term coherent plan to build more homes across all tenures, and we need the whole range of builders to be involved to deliver such ambitious goals, importantly including self and custom builders (who collectively count as the fifth largest builder in the UK). Building great quality homes of all types and sizes, with the necessary infrastructure, in the right places, and to environmental standards that avoid the need for later retrofitting is all crucial.
It was encouraging to hear audit reform referred to at the start of the speech. We have been campaigning for the removal of unnecessary rules on smaller, simpler businesses that are currently defined as Public Interest Entities. Our recent report1 on the Building Society Audit Market found that audit fees for the building society sector have almost tripled over the past five years. We will be looking for greater proportionality in the future audit regime , retaining audit quality whilst removing unnecessary and costly burdens that are in danger of holding back business growth.
The announcement that the Government will establish the Industrial Strategy Council is very welcome as business has a key role to play if the Government is to deliver on its growth agenda. The Government has another opportunity here to involve mutuals and co-operatives in this group. By including these businesses, the Government will make a strong start to delivering on its commitment to double the co-operative and mutual economy2.
We would also like to see the Government go further on a couple of issues. Tackling the thorny issue of how to help people save is vital to building household financial resilience and tackling poor mental health. Recent research from UK Savings Week (established by the Building Societies Association) found that someone who saved regularly was 66% more likely to have high life satisfaction than a non-saver, regardless of income. It is those on the lowest incomes who are reaping the biggest benefits of putting a little aside, with 53% of savers in these groups saying they are satisfied with their life, compared to just 40% of low-income non-savers. Encouraging people to save is a key part of improving people’s wellbeing.
Other changes we would like to see to encourage people to save include increasing the Personal Savings Allowance up to £3,000 for basic rate taxpayers and introducing auto-enrolment into workplace saving schemes for organisations with over 250 employee. Additional savings changes, such as reducing the Lifetime ISA penalty and raising the LISA and Help to Buy ISA property price thresholds, would also help first time buyers.
But we are left with questions about how the Government intends people to make homes more energy efficient. We are all aware of the challenges in this, such as identifying what needs to be done, finding a trusted partner to do that work and funding it. Hopefully more clarity about the Government’s plans will emerge soon.
We are always ready and willing to work with all the parties to help tackle the pressing challenges facing the country and we look forward to playing our part over the next Parliament.
1. https://www.bsa.org.uk/information/publications/research-and-reports/the-building-society-audit-market
2. https://labour.org.uk/change/
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