Reckless Optimism Leaves Brits On The High Wire

New MORI research published today - Tuesday 3 April - shows that most Britons are walking a financial high wire without a safety net, believing the State should look after them if things go wrong.

The High Wire Britain research¹ carried out for leading life insurance specialist Scottish Provident paints a fascinating view of what is seen as a 'reasonable standard of living' in modern Britain but also demonstrates astonishing complacency in the face of potential threats to that standard of living.

Even with economic dark clouds on the horizon, nearly nine in ten (86 per cent) of the British public expect their standard of living to stay the same or improve over the next ten years. This mood of optimism follows past experience, with 84 per cent saying that the standard of living for the average British family has either risen or stayed the same compared with 25 years ago.

More than three in five (62 per cent) accept that taking on substantial debt is a natural part of getting on the housing ladder - reflected in a 50 per cent growth in mortgage lending since 1997².

The 'nanny state' lives on

Three quarters of the population (76 per cent) believe that the State welfare system in Britain should provide an adequate safety net for modern standards of living. There was, however, some awareness of the erosion of Government provision as only one quarter (24 per cent) actually thought that the state welfare system did provide an adequate safety net.

While Britons may long for a 'nanny state', their recognition that it probably no longer exists has not led to greater personal responsibility. A majority of people (55 per cent) admits that their standard of living would fall dramatically if they were unable to work for six months or more due to serious illness - although most underestimate the risk of this happening³. Furthermore, four out of five (82 per cent) agree that nowadays you have to make your own arrangements to ensure your standard of living is maintained if something threatens it - such as serious illness.

Yet incredibly, only two in five (41 per cent) said that they or their family have taken steps to ensure that their standard of living would not be reduced if they were affected by serious illness. Only one in five (21 per cent) say that they or their family have a large amount of savings to fall back on if things go wrong.

This low reliance on savings is also reflected in a significant decline in the percentage of income saved in recent years. Last year, the average family saved only 3 per cent of its income - down from 12 per cent in 1992⁴.

MORI chairman, Professor Sir Robert Worcester commented:

"Britain seems to want to enjoy the standards of living the market economy has provided without being willing to take on the individual financial responsibilities it now places on them. People have to face up to the fact that they can't have it both ways. It is time for a wake up call to the market economy generation."

Scottish Provident head of marketing and business development, David Robinson added:

"People appear to recognise the need to do something to maintain their high standards of living if they suffer a serious illness but not enough of them have yet turned that into action. Too many are kidding themselves that either it won't happen to them or that someone else will look after them. When you see the costs of the items and services that people think are important for a reasonable standard of living today, there is an enormous 'protection gap' between the action people have taken and what is required to maintain it. A lot more needs done to warn them of the risks and we hope this report will help that process."

Is a mortgage really a debt?

The research confirms Britain's obsession with home ownership - four in five people (79 per cent) believe that owning your own home is either critical or important to a reasonable standard of living these days. However, it throws up a contradiction in the public's view of debt. Almost two thirds of Britons (62 per cent) agree that taking on substantial debt is a natural part of getting on the housing ladder. Yet, perversely, the same proportion (62 per cent) feel you do not have to take on debt to enjoy a good lifestyle these days.

Reasonable Standards of Living

Britons have some very clear ideas about what constitutes a reasonable standard of living:

• four in five (79 per cent) said owning your own home is either critical or important

  - marked regional differences include only 64 per cent of Scots sharing this sentiment against a massive 86 per cent of Londoners

• half of the population (51 per cent) believe that having a home computer is either critical or important
• almost half the population (45 per cent) agree that having a mobile phone is either critical or important
• having cable or satellite television in the household was felt to be important by 17 per cent of the general public, with Scots being the biggest couch potatoes (28 per cent)
• owning a car was felt to be critical or important by three quarters of the population (74 per cent) although the Scots (64 per cent) considered it less important
• the ability to afford school fees for one's children showed significant regional differences. While 48 per cent of Londoners thought that the ability to afford to pay school fees was critical or important, the figure in Scotland was just 21 per cent and the national average was 35 per cent. Within England, there was evidence of a north (32 per cent) south (42 per cent) divide in opinion.
• Londoners put more emphasis on going out to enjoy themselves with 36 per cent placing importance on eating out at least twice a month. The national average was 26 per cent.
• Londoners, feel that they deserve an annual holiday abroad - 52 per cent consider taking a foreign holiday at least once a year to be either critical or important for a reasonable standard of living. The national average was 37 per cent.
• only 23 per cent of Londoners consider owning a pet to be either critical or important to their standard of living against a national average of 37 per cent

What if things go pear shaped?

A possible downturn in the economic cycle could be bad news for tour operators. When people were given a list of lifestyle aspects to choose from and asked which they would be most prepared to give up to save money if their income was significantly reduced, people were most likely to say that they would be prepared to give up taking a foreign holiday at least once a year (52 per cent of people nominated this).

Next to go would be owning a second car (41 per cent) and going out on a Friday or Saturday night (40 per cent)

Offering a fascinating insight into the priorities of British people today, being able to pay college fees (6 per cent) and school fees (9 per cent) for the children were the things people were least willing to give up - alongside owning one's own home (3 per cent).

Confirming the Brits reputation as being a nation of animal lovers, cable/satellite TV in the household (36 per cent), having a mobile phone (31 per cent), having a home computer (18 per cent) and owning a car (17 per cent) would get the chop before owning a pet (11 per cent)

1. MORI Financial Services interviewed a nationally representative quota sample of 1914 adults aged 16 or over, between 1st and 6th March 2001. Interviews were conducted face-to-face (in home) across 190 sampling points in Great Britain.
2. Source: Bank of England Gross UK Consumer Lending from all providers 1997-2000
3. Chance of a working age man suffering a serious breakdown in health lasting more than six months rather than dying before age 65 are over 16 to 1(Source: Annual Abstract of Statistics, 1996)
4. Office for National Statistics

Scottish Provident is a leading specialist in health and life insurance and employs over one thousand six hundred people in the UK. Its business success has been recognised in a number of key industry awards including being voted top protection provider by readers of Money Marketing and Financial Adviser as well as winning the Business to Business category of the Marketing Society Awards. Its flagship Self Assurance product was the only life insurance product to be awarded Millennium Product Status by the Design Council.