Manchester, New Hampshire, like Manchester, England was a mill town.  It was also home to the United States’s first credit union. The St Mary’s Bank Credit Union was founded in 1908 to improve the economic stability and independence of the town’s French-speaking mill workers by giving them “a safe and welcoming place to save and borrow money.”  Now a wonderful small museum, a group of us were privileged to visit during the BSA’s latest US study tour in July.  

Among the displays was a memory of one of the founders’ four year old daughter – of children who worked at the mills coming to the house to deposit five or ten cents a week in the tin box her mother kept locked in a special drawer.  Just over a century ago, child labourers learning the same lessons that Birmingham industrial workers learnt in a pub in 1775 about the importance of saving even small amounts of money to build their own financial resilience and security.

And that is still a lesson that every generation needs to learn.  We may be moving on from tin boxes, piggy banks and pass books to virtual wallets and accounts, but the principle remains that good savings habits established early are known to last a lifetime.  Repeated research has shown, even a modest level of financial resilience (a nest egg, a rainy day fund, that savings pot for the new car, holiday or wedding) contributes positively to broader well-being.  Money worries are a huge source of stress for so many – leading to sleepless nights, inability to focus on other things, poor performance at work, absenteeism.

So much of this was behind our thinking in starting UK Savings Week in 2022, and remains our focus for the third UK Savings Week in September 2024.  Two simple messages:

1. If you do not have any savings, then now would be a great time to start.  As our credit union members often say, even £1 a week can build into a useful sum quite quickly.

2. If you do have savings, are there opportunities to manage them better, especially now that interest rates have risen to a more meaningful level?

UK Savings Week has always struck me as a natural initiative for building societies and credit unions, playing on our collective founding purpose of improving the lot of our members.  But it is arguably far more than that too.  It is a matter of real public interest – about improving the lot of all members of society, reducing dependence on the state, ultimately contributing to UK economic growth through that greater productivity that comes with improved personal wellbeing.

As our new Government starts out on its avowed journey of a decade of change for the UK, with both economic growth and financial inclusion high on its lists of priorities, this year’s UK Savings Week seems to me to have added impetus and importance.  Personally, I am still haunted by the estimates published by various bodies during the Covid pandemic that around a quarter of households entered lockdown with less than £100 in savings.  Tackling this issue alone could make such a huge positive difference across the length and breadth of the UK.  If we could also address some of the root causes of broader financial exclusion, we really could be building a societal legacy for future generations.

At this point, it would be customary in business strategy to produce a three-point proposal for debate.  To be radical, I only have two points.  Neither are new (before you accuse me of being a stuck record), but both I think are worth restating in this new political environment.  So here goes:

• Something I have been banging on about for quite a few years now.  The Government should introduce a requirement for all employers (starting with those with over 250 employees) to implement workplace savings on an auto-enrolment basis.  
  
  The idea of a sidecar to auto-enrolment pensions makes complete sense, but with two caveats. Firstly, because we are talking about household financial resilience, these workplace savings should be held in instant access cash accounts.  Savers should be able to choose where their cash is held (all deposit takers should be eligible to receive workplace savings).  A platform should handle the allocation.  Secondly, there should be no tax incentive for workplace savings – a quid pro quo for employees having instant access to their money, without penalty.

• A more recent theme.  We need to have a serious industry wide debate (including government and regulators) about how to guarantee access to the range of essential financial products for everyone, particularly those on the margins.
  
  Anti-money laundering requirements and conduct regulation both exist for very good reasons, but it feels to me that enforcement of both have, sadly, resulted in too many people struggling to open bank accounts, purchase appropriate insurance products, take out affordable loans and get access to financial advice – not because they have done anything wrong, but because firms’ conduct risk appetites have reduced.  Each well-targeted fine or enforcement action has unfortunate unintended consequences, and too often for the very people the action is seeking to protect.

Both of these proposals also feel to me to be deeply mutual themes.  As we have stated so often, the very origins of the building society sector came about from ordinary working people setting out on a financial journey of self-help.  Saving money to buy land to build homes.  Much of the rest of the financial mutual sector has similar roots, whether it be to pay for medical care, support periods of unemployment, or pay for proper funerals.  Our founding purpose as a broad financial mutual sector was about individual and household financial resilience and inclusion.

Today’s workers, in Birmingham, England or Manchester, New Hampshire may no longer work in mills and factories.  They may benefit from at least the minimum wage or the benefits system.  They may have access to health care.  Indeed, they may be in well-paid jobs (the lack of household savings runs across all income categories).  Or they may be new arrivals in the UK, self-employed or gig workers, stuck in the informal economy. 

Where do we draw the line on financial inclusion?  Are we comfortable that we are clear about who we want to exclude (fraudsters, money launderers, drugs dealers, terrorists etc)?  And are we satisfied that our current legal and regulatory frameworks achieve those ends, and don’t rather end up allowing the criminals to flourish and the innocent to suffer exclusion?  Reactions on a (virtual) postcard please.