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Demos - British Families ‘Exposed’ in Times of Economic Shocks

A new research paper from leading cross-party think tank Demos published last week finds that British families are not prepared to weather financial shocks.

Building on Demos’ significant existing body of research in this area, Next Steps for Financial Resilience sets out how Government and business can better work together to ensure that Britons’ personal finances are flexible and resilient enough to protect them from economic shocks.

Supported by Legal & General, the paper brings together expert views from politics, business, academia and the charity sector, arguing that too many families are currently inadequately equipped to respond to unexpected changes in earnings, such as sudden job loss or illness, nor to transition between major life stages carrying new financial demands, like parenthood or retirement.

As Britain moves into a period of considerable economic uncertainty, the ability to adapt to sudden changes will be crucial to protect families’ long-term financial and emotional health. A financially resilient population also provides enormous benefit to public purse, relieving the pressure for the welfare state is to provide emergency protection to those experiencing sudden financial difficulty.

Experts on Demos’ research panel concluded that the UK is not currently properly prepared for financial shocks. Savings are at a record low of just 3.8 per cent, and the numbers in part-time or self-employed work is increasing, which for many it has a real and negative impact on their financial security and their ability to cope financially with illness or bereavement.

Demos’ paper proposes a series of interventions Government could take, in collaboration with business, to improve financial resilience. These include:

  • Enabling older people to access the capital tied up in their family home, worth around £250,000 to the ‘typical’ pensioner. A ‘revolution in planning’ to increase the building of purpose-built retirement housing, granting it similar privileges to affordable housing is needed to give older people greater financial flexibility. This could also make them less reliant on the universal benefits that currently cost the taxpayer almost £4 billion a year, as well as freeing up housing stock for younger people.
  • Improving resilience of those still working by building on the success of the auto-enrolment in workplace pensions. By convening a commission of experts to explore other financial products that could be promoted through workplace solutions, the government could act to improve financial resilience without significant additional spending.
  • Encouraging greater honesty from Government about the risks people are likely to face, and the level of support they can expect from the state. Political considerations will always motivate government to overplay the long term security of welfare spending, so Demos’ panel recommends handing this function to the Office of Budget Responsibility (OBR), to allow people to better plan for the future.

Notes to Editors:

Demos is Britain’s leading cross-party think-tank: an independent, educational charity, which produces original and innovative research. Visit:

Legal & General is one of the world’s largest insurance and investment management companies.

The report is available to read here.

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