Aggregate net financial wealth for all private households in Great Britain increased by £208 billion (19%) to £1,299 billion in current prices between 2008/10 and 2010/12.
In 2010/12, a quarter (25%) of households had negative net financial wealth.
Median household net financial wealth decreased by £500 (8%) to £5,900 between 2008/10 and 2010/12.
Households in London saw the largest percentage rise in median net financial wealth of 26% between 2006/08 and 2010/12, rising from £4,700 to £5,900.
This chapter looks at estimates of household financial wealth from the Wealth and Assets Survey (WAS). Financial Wealth comprises: formal financial assets (such as bank accounts, savings accounts, stocks and shares); informal financial assets (such as money saved at home); assets held by children in the household; and liabilities (such as formal borrowing, overdrafts and arrears on household bills). The gross value of financial assets is considered first, followed by the value of liabilities. These are then combined to produce estimates of net financial wealth (gross assets minus liabilities). The measure of financial wealth is based on the personal, private wealth of households. This means that it does not include business assets owned by household members.
Much of the analysis in this chapter is presented at the household level. This means that all assets held by individuals living within households have been added together to produce household totals. In some cases the household totals represent only one account or holding, whereas in others they represent multiple accounts held by one or more than one individual.
Some individual-level analyses are presented towards the end of the chapter, considering the distribution of individuals by age, education level, economic activity and socio-economic classification across the net financial wealth bands of the household they live in.
Financial assets are classified as either ‘formal financial assets’: recognised products designed for individuals to hold, save or invest their monies; or ‘informal financial assets’: money saved in cash at home, money lent to others or money paid into a savings and loan club.
For most formal financial asset products, having the product would imply a positive financial asset. However, there are some products which, although ‘open’ allow an individual to have little or no money in them, or indeed in the case of current accounts in debit (overdrafts) the product would actually be a financial liability rather than a financial asset.
Table 5.1 shows the percentage of households with different types of formal financial asset products across the three waves of the survey. In 2010/12, an estimated 98% of households had some type of formal financial asset product, unchanged from 2006/08 and 2008/10. Where all current accounts are excluded, three-quarters – or 75% of all households report ownership of a formal financial asset. This percentage has dropped 5 percentage points compared with 2008/10, but it is the same as the percentage in 2006/08.
The most common formal financial asset held by households was a current account; 96% of households held one or more in 2010/12. A current account is an account used for day-to-day transactions. There is immediate access to the money – usually by a card for cash machine withdrawal and/or a cheque book. Current accounts also provide other benefits to the holder including a direct debit facility – the preferred payment method for utilities in particular.
Savings are money which is set aside, away from regular spending, with the intention that it will be available at a later date. The percentage of households possessing one or more savings or deposit accounts (excluding ISAs) fell between 2008/10 and 2010/12 from 68% to 58%. Nevertheless, savings accounts remain the most common formal financial asset that households use to save money. The money deposited can always be returned in full to the saver, usually with interest, although account holders may be required to give notice to withdraw their savings (unlike for current accounts).
Nearly half of all households (48%) had an Individual Savings Account (ISA) in 2010/12; a fall of 1 percentage point from 2008/10. The percentage of households with an ISA in 2008/10 and 2010/12 is higher than in 2006/08. This is partly the result of Personal Equity Plans1 being reported under ISAs for 2008/10 and 2010/12, whereas they were reported separately in 2006/08. Income from ISAs is tax-free and there are annual ceilings on the amount that can be invested.
The percentage of households owning National Savings certificates and bonds (including premium bonds) also fell from 28% in 2008/10 to 22% in 2010/12. Premium bonds are unique financial assets – instead of earning interest, the bonds go into a monthly draw for tax-free prizes.
|All current accounts1||95||96||96|
|Current accounts in credit||85||90||90|
|National Savings certificates and bonds3||24||28||22|
|Fixed term bonds||8||12||11|
|Employee shares and share options||7||8||6|
|Any formal financial asset including current accounts in credit5,6||98||98||98|
|Any formal financial asset excluding all current accounts||75||80||75|
In 2009 the Bank of England lowered its base rate to 0.5% – a record low. Lower interest rates result in a poorer return on savings and are likely to reduce the popularity in opening or keeping an existing savings account. Table 5.1 illustrates a fall of 6 percentage points in the number of households with money held in National Savings Certificates and Bonds between 2008/10 and 2010/12. In the case of premium bonds, lower interest rates reduce the prize fund and the chances of success. The graph below tracks the Bank of England base rate and the premium bond interest rate during only the period covered by the three waves of WAS i.e. 2006 through 2012. The base rate peaked during wave one at 5.75%, but shortly after the start of wave two fell sharply, and has remained at a record low of 0.5% ever since. The interest rate used for premium bonds mimics this pattern, falling from a peak of 4.0% during wave one to a low of 1.0% in wave two. Although this interest rate fall happened relatively early in wave two, it might well go some way towards explaining the reduction in households holding premium bonds.
|All current accounts2||800||900||1,000|
|Current accounts in credit||1,000||1,000||1,200|
|National Savings certificates and bonds4||300||300||600|
|Fixed term bonds||17,000||20,000||20,000|
|Employee shares and share options||4,000||3,000||3,600|
|Any formal financial asset including current accounts in credit6,7||7,000||7,900||8,000|
|Any formal financial asset excluding all current accounts||10,200||10,300||12,000|
The median value of monies held in savings accounts (excluding ISAs) and ISAs increased between 2008/10 and 2010/12. With these direct cross-sectional comparisons, a possible inference might be that people have increased their savings. However, the longitudinal nature of the survey allows us to consider the ways in which individual savings change over time. The figure below compares median values for those who had savings (in either a savings account or ISA) in both 2008/10 and 2010/12, against those with only savings in either of these account types in 2008/10.
The median value held in ISAs for those with monies saved in this account type in both 2008/10 and 2010/12 was £6,000. This is exactly double the median value of £3,000 for those who had ISA savings in 2008/10 but no longer had money saved in this account type in 2010/12. The median value held in savings accounts was also notably lower for those with a value only in 2008/10 (£600), compared with those who had money saved in this type of account in both 2008/10 and 2010/12 (£2,500).
These findings indicate that the amount saved in an account is an important determinant in whether the account will continue to be used two years later. The findings also indicate that the increase in median values seen in the cross-sectional tables are not simply because of an increase in the amount individuals were saving, but in part the result of individuals with lower savings account values withdrawing their savings.
Informal saving comprises money saved in cash at home, money given to someone to look after or money paid into a savings and loan club. The percentage of households who held informal financial assets of some kind remained stable across the three waves of the survey; 10% of households reported informal financial assets of £250 or more in 2010/12 (Table 5.3).
The survey asked only about informal saving and lending for amounts in excess of £250. This £250 minimum amount adopted by the survey means that it might have underestimated the true percentages of households with informal saving and lending in Great Britain. Previous research2 has shown that small amounts of informal savings are common in low-income households, and is often the only type of saving that such households engage in.
|Amounts saved informally||6||6||6|
|Amounts lent to others informally||4||5||4|
|Households with any informal financial assets||10||10||10|
|Amounts saved informally||500||400||400|
|Amounts lent to others informally||1,800||1,900||2,500|
|Households with any formal financial assets||700||700||800|
The survey also enquired about children’s assets, including the Child Trust Fund (CTF). A Child Trust Fund (CTF) is a long-term tax-free savings and investment account for children in the United Kingdom. New accounts cannot be created but money can still be deposited into existing accounts. On 1 November 2011, Junior Individual Savings Accounts (Junior ISAs) were introduced as a replacement.
In general, all children born between 1 September 2002 and 2 January 2011 were eligible for a CTF if their parent or guardian received Child Benefit and they lived in the UK. The Child Benefit claimant (usually the parent) received a voucher with which to open an account; a voucher worth £250 for children eligible before 1 August 2010, or a voucher worth £50 for those children eligible after 1 August 2010. There was an additional sum for children born into low-income families eligible for full Child Tax Credit; £250 for children eligible before 1 August 2010 or £50 for those eligible after. If the CTF account was not opened by the time the voucher expired (normally 12 months), HM Revenue and Customs would open an account for the child. Once opened, family and friends can deposit up to £1,200 a year into the CTF on behalf of the child.
In 2010/12, 15% of all households reported having one or more Child Trust Funds, which has increased from 10% in 2006/08 and 13% in 2008/10 (Table 5.5). However, further increases in the percentage of households with Child Trust Funds cannot be expected as they were discontinued in 2011. Table 5.5 also shows the household value of Child Trust Funds. In 2010/12, the median household value of Child Trust Funds was unchanged at £500 from 2008/10.
|Percentage with Child Trust Funds (%)||10||13||15|
|Percentage with other children's assets (%)||16||17||16|
|Percentage with endowments (%)||7||5||4|
Gross financial wealth is the sum of: formal financial assets (not including current accounts in overdraft), plus informal financial assets held by adults, plus financial assets held by children, plus endowments for the purpose of mortgage repayment. Half of all households had gross financial wealth of £8,400 or more in 2010/12 (Table 5.8).
|Median household gross financial wealth||8,000||8,500||8,400|
This section examines the financial liabilities of households, including non-mortgage borrowing, and arrears on these and/or on other household bills. Mortgage statistics are provided within the property wealth chapter of the current report.
Table 5.9 shows the percentage of households who had non-mortgage borrowing. In 2010/12, just under half of all households had some form of non-mortgage borrowing (48%). The most popular means of non-mortgage borrowing was a credit or charge card; a quarter of all households (25%) had outstanding balances on credit or charge cards in 2010/12.
The percentage of households with formal loans decreased from 20% in 2008/10 down to 18% in 2010/12. Despite this fall, the percentage of households with a formal loan remains higher in 2010/12 than the respective value in 2006/08 (15%). The percentage of households with liabilities attributed to a loan from the student loans company has also seen an increase between each of the waves, albeit small (up from 3% in 2006/08 to 4% in 2008/10 to 5% in 2010/12).
|Loans from the Student Loan Company||3||4||5|
|Credit and charge cards||26||25||25|
|Store cards and charge accounts||5||5||4|
|Any non-mortgage borrowing||50||50||49|
|Excluding loans from the Student Loans Company||49||49||48|
Table 5.10 shows the median values of borrowing for households with that particular liability. In order to obtain a value for non-mortgage borrowing, information is collected on the value of payments and how many payments are outstanding. The median value of non-mortgage borrowing was £3,600 in 2010/12.
It was noted at 2006/08 that some loans had been reported, but because no payments had yet been made, no value was calculated. At 2008/10 and 2010/12 additional questions were asked to establish the value of these new loans.
The percentage of households with formal loans fell by 2 percentage points between 2008/10 and 2010/12. However, the median amount outstanding on the loans rose by £400, from £4,800 in 2008/10 to £5,200 in 2010/12.
|Loans from the Student Loan Company||8,000||9,000||9,000|
|Credit and charge cards||1,500||1,600||1,900|
|Store cards and charge accounts||200||200||300|
|Any non-mortgage borrowing2||2,900||3,200||3,600|
|Excluding loans from the Student Loans Company||2,600||2,900||3,100|
In addition to the amounts outstanding on non-mortgage borrowing, some households will be in arrears in relation to these and/or other household bills. In 2010/12, 4% of households were in arrears in terms of their fixed-term non-mortgage borrowing (Table 5.11).
|Personal and cash loan arrears||4||5||5|
|Mail order arrears||4||4||3|
|Any fixed term non-mortgage borrowing arrears3||4||4||4|
|Personal and cash loan arrears||400||300||600|
|Mail order arrears||100||200||100|
|Any fixed-term non-mortgage borrowing arrears3||300||300||400|
Financial liabilities are the sum of arrears on consumer credit and household bills plus personal loans and other non-mortgage borrowing plus informal borrowing plus overdrafts on current accounts.
In 2010/12, half of all households (50%) had some form of financial liability (Table 5.13). The median value of financial liabilities was £2,800 in 2006/08, which increased to £3,200 in 2008/10, and again increased to £3,500 in 2010/12.
|Percentage with financial liabilities (%)||51||51||50|
Most analysis presented in this report is cross-sectional, with values relating to one specific time period. Collecting data at multiple waves from the same individuals allows us to consider how wealth, or in this instance debt burden, changes over time for specific individuals.
At each of the waves of the survey, individuals with financial liabilities were asked to what extent they considered repayments of these a burden. The figure below presents the frequency of individuals who considered these liabilities to be a heavy burden across the three waves, with the respective number who continued to consider their debts to be a heavy burden from 2006/08 onwards. The darker shaded bar in 2008/10 represents those who had financial liabilities in 2006/08 and 2008/10, and saw them as a heavy burden. The darker shaded bar in 2010/12 represents the number of those who had financial liabilities and saw them as a heavy burden in 2006/08, 2008/10 and 2010/12.
The group represented by the darker shaded bar in 2010/12, therefore, reflects those who saw their debts to be a burden continuously over a 6 year time period and were in persistent debt burden. This accounts for nearly half a million individuals (467,000).
Net financial wealth represents gross financial wealth minus financial liabilities. Median net financial wealth was £5,900 in 2010/12.
|Median household net financial wealth||5,700||6,400||5,900|
Table 5.16 shows the aggregate values for financial wealth for all households in Great Britain (i.e. the weighted sum of each component of financial wealth for every household). Total net financial wealth for the whole of Great Britain increased over all three waves, from £1,043 billion in 2006/08 to £1,091 billion in 2008/10 to £1,299 billion in 2010/12.
Between 2006/08 and 2010/12, the aggregate value for household gross financial wealth increased quicker than the aggregate value for household financial liabilities (24% compared to 18% respectively).
|Aggregate household gross financial wealth||1,131||1,186||1,402|
|Aggregate household financial liabilities||88||95||104|
|Aggregate household net financial wealth||1,043||1,091||1,299|
Figure 5.17 shows median household net financial wealth according to the location of the main residence of the household. It shows Scotland, Wales and the nine English regions (London has its own region; the figures for the South East exclude London). The region with the highest median net financial wealth in 2010/12 was the South East; half of all households within this particular region held net financial wealth of £12,300 or more. Households in the North East had the lowest median net financial wealth value of £2,400.
The regions with the highest and lowest net financial wealth were unchanged across the three waves of the survey. Households in the South East had the highest net financial wealth in each period (£12,300 in 2010/12, £12,700 in 2008/10 and £11,100 in 2006/08) and households in the North East the lowest (£2,400 in 2010/12, £2,900 in 2008/10 and £2,400 in 2006/08).
Figure 5.18 presents the change in median household net financial wealth between 2006/08 and 2010/12 for all households by region. London saw the largest percentage rise in median net financial wealth of 26% between 2006/08 and 2010/12, increasing from £4,700 to £5,900. Scotland saw the largest fall (25%) in the median value of net financial wealth (falling from £4,400 in 2006/08 to £3,300 in 2010/12).
Figure 5.19 shows the median values of household net financial wealth according to the ten categories of household type.
The median value of household net financial wealth was the highest for couple households who have no children, where one person was over and the other under the state pension age, at £35,300. As illustrated in the introduction and demographics chapter of the current report, 5% of households were categorised as this type of household, making it one of the least common of all the household types. Couple households with no children, where both persons were above the state pension age had the second highest median net financial wealth, at £32,000. The median value of household net financial wealth was the lowest for lone parent households with dependent children, at £100. Single person households where the householder was under the state pension age and lone parent households with non-dependent children also had low net median financial wealth values of £800 and £1,500 respectively.
This section looks at some key characteristics of individuals living in households by net financial wealth bands. It is important to remember that this analysis presents individual characteristics by the total net financial wealth of the household that the individual lives within. In certain instances it is possible that this wealth is more likely attributed to other individuals living within that household.
Table 5.20 shows the distribution of individuals by gender and marital status, across the bands of household net financial wealth. In 2010/12, 27% of all individuals lived in households with negative net financial wealth.
A higher percentage of cohabiting individuals lived in households in the lowest net financial wealth band in 2010/12 than any other marital status group (22% of both men and women lived in households with net financial wealth of less than -£5,000). Married individuals were most likely to live in households belonging to the highest net financial wealth band of £100,000 or more (17% for men and women). Compared with single and cohabitating individuals, married individuals are on average older1. Knowing also that the earnings of older workers are higher than those of younger workers2 and that older individuals will have had longer to accumulate financial wealth might go some way towards explaining these differences.
|Gender and Marital Status||Less than -£5,000||-£5,000 but < -£500||-£500 but < £0||£0 but < £500||£500 but < £5,000||£5,000 but < £12,500||£12,500 but < £25,000||£25,000 but < £50,000||£50,000 but < £100,000||£100,000 or more|
|Age||Less than -£5,000||-£5,000 but < -£500||-£500 but < £0||£0 but < £500||£500 but < £5,000||£5,000 but < £12,500||£12,500 but < £25,000||£25,000 but < £50,000||£50,000 but < £100,000||£100,000 or more|
Table 5.22 shows the percentage of individuals living in households with varying degrees of net financial wealth according to their education level.
The percentage of individuals educated at degree level or above living in households with net financial wealth of £100,000 or more (the highest net financial wealth band) was 23% – 16 percentage points higher than individuals reporting no qualifications.
Nearly three in ten individuals with other qualifications lived in households with negative net financial wealth (28%). This compares with 20% of individuals reporting no qualifications and 21% of individuals reporting degree level qualifications or above.
|Education Level||Less than -£5,000||-£5,000 but < -£500||-£500 but < £0||£0 but < £500||£500 but < £5,000||£5,000 but < £12,500||£12,500 but < £25,000||£25,000 but < £50,000||£50,000 but < £100,000||£100,000 or more|
|Degree level or above||14||6||1||2||11||10||9||12||13||23|
Table 5.23 shows the percentage of individuals living in households with varying degrees of net financial wealth according to their economic activity.
The percentage of individuals living in households in negative net financial wealth was highest for those who were economically inactive due to sickness or disability (42%), and those who were unemployed (43%). Fewer retired individuals lived in households with negative net financial wealth than any other economic activity group (6%). Retired and self-employed individuals were most likely to live in households with net financial wealth of £100,000 or more (21% and 17% respectively).
|Economic Activity||Less than -£5,000||-£5,000 but < -£500||-£500 but < £0||£0 but < £500||£500 but < £5,000||£5,000 but < £12,500||£12,500 but < £25,000||£25,000 but < £50,000||£50,000 but < £100,000||£100,000 or more|
|Looking after family/home||12||15||5||12||22||9||6||6||4||9|
|Sick / Disabled2||13||19||10||20||17||7||5||3||2||3|
|Socio-economic Classification||Less than -£5,000||-£5,000 but < -£500||-£500 but < £0||£0 but < £500||£500 but < £5,000||£5,000 but < £12,500||£12,500 but < £25,000||£25,000 but < £50,000||£50,000 but < £100,000||£100,000 or more|
|Large employers and higher managerial||10||5||1*||2||10||10||10||14||16||23|
|Lower managerial and professional||13||8||2||5||14||12||11||11||11||13|
|Small employers and own account workers||14||12||3||7||17||12||10||12||7||6|
|Lower supervisory and technical||12||12||5||11||18||12||8||9||7||7|
|Never worked/long term unemployed||7||8||3||10||17||11||10||10||9||15|
The following section compares estimates derived from the financial chapter of the Wealth in Great Britain 2010/12 report with other sources of financial wealth data.
|WAS 2010/12||HMRC (as of end of tax year 2010-11)||Difference|
|65 and over||10,500||14,000||-25%|
|65 and over||9,000||14,600||-38%|
|65 and over||10,000||14,300||-30%|
|All ISA holders||6,000||5,900||2%|
FRS estimated that 93% of households have a current account, compared with 96% of households estimated by WAS. However, when looking at the definitions of the different types of assets in WAS and FRS, it might not be suitable to compare those figures directly.
FRS estimates that 97% of households have any Direct Payment Account, which is any account that accepts electronic payment of benefits via the BACS system. This can include current accounts, basic bank accounts, post office card accounts and other types of savings and investment accounts. This figure is more comparable to the WAS figure since Current Account in WAS includes current accounts, basic bank accounts and post office card accounts. WAS estimates that 96% of households have a current account which is 1 percentage point lower than the FRS estimate.
FRS estimates that 21% and 3% of households had premium bonds and national savings bonds respectively. WAS estimates that 22% of households had National Savings bonds (certificates) and premium bonds.
FRS estimates that 40% of households have an ISA, compared with 48% estimated by WAS.
WAS estimates that 5% of households had a unit or investment trust, 1 percentage point higher than the FRS estimate that 4% of households had a unit trust.
|WAS 2010/12||FRS 2010/11|
|All current accounts||96||97||Direct Payment Account1|
|Savings accounts||58||5||NS&I Savings account|
|46||Other Bank/Building Society account|
|National Savings certificates and bonds2||22||21||Premium Bonds|
|3||National Savings Bonds|
|UK shares||12||17||Stocks and shares/member of a Share club|
|Employee shares and share options||6||3||Company Share Scheme/profit sharing|
|Unit/Investment trusts||5||4||Unit trusts|
|Other formal financial assets||1||1||Any other type of asset|
|Any formal financial asset||98||98||Any type of account (including POCA)|
|Value of assets held in accounts (£ millions)||3,542||4,122|
|Number of accounts held (thousands)||5,475||5,791|
Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: email@example.com
These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.