Holidays, PCs and DIY: savers rush to spend their share

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The Independent Online
Savers are spending again. Thousands of people are treating themselves by blowing building-society windfall handouts on holidays, computers and doing up the home.

And the tourist industry has been quick to make their bid to benefit from the extra cash with two holiday firms launching their summer 1998 brochures tomorrow - before most people have even taken this year's break.

Nearly 15 million people are set to receive free shares from building societies changing into banks and which could be translated into cash payments averaging pounds 1,000. If everyone eligible sold all their shares this year, there would be an extra pounds 20bn floating around the economy - equivalent to increased spending power of a 10p cut in the rate of income tax.

It is estimated that three in 10 people who received windfalls from the Alliance & Leicester windfalls, which has just floated on the stock market, have already sold their shares. The Halifax, the Woolwich and Northern Rock are all due to become banks as well over the next few months.

A report from the Henley Centre has found that while 50 per cent of those who received their windfalls saved them, only 42 per cent of those anticipating payouts would do so, with more people treating themselves to luxuries.

The independent market research company GFK said consumer confidence was up eight points on the same time last year, the first time it had shown a positive reading since 1988. People reported that they were now more likely to buy a car, buy a house and set about home improvements.

The upsurge in consumer confidence GFK put down to households benefiting from the windfall cash as well as falling unemployment, and tax cuts. "It doesn't look like people are going to spend large amounts of cash," said Dave Walker, associate director of GFK. "They are more likely to buy washing machines or televisions or consumer durables. People are still a little bit nervous about their own situation and the general economic situation, particularly with the election."

Maeve Geraghty, associate director of the financial-services practice at the Henley Centre, said: "What is interesting is that those who had received their windfalls, a lot had saved them but those who anticipated getting them, the percentage of those intending to save had dropped. Holidays and home improvements have particularly done well ... the majority of people were anticipating treating themselves."

One in eight say they are going to spend their money on holidays, a fact both Airtours and First Choice were quick to take advantage of. Last year the companies set a record by launching the following year's brochures in July; this year it is two months earlier.

"We have found that there is extremely strong demand from those who want to take advantage of the very large savings on offer," said Philippa Harris, marketing director of First Choice. "The success of the early brochure launch is borne out by the growth of bookings that First Choice has seen for summer '97 up 21 per cent year on year." A likely area of growth which had not been picked up on was home computers, added Ms Geraghty, as many of their prices fell into the windfall range.

But Jason Whittaker, of the magazine PC Advisor, warned against buying a computer because the money was burning a hole in their pocket. "If you're buying a computer to use up pounds 1,000 that is the worst reason to buy," he said. "If you don't know what you are going to be using it for then you can end up spending far more on the software and the support."

Major charities had considered targeting fundraising at windfalls but decided against it. Michael Dangerfield, the trust's major gifts manager for the Cancer Research Campaign said: "We did talk about it but we thought that would be going over the line." A spokeswoman for the National Trust added that "it would be a really good idea if one had the time and resources to pursue it". All the major charities said they had no evidence of an increase in giving due to windfalls. But Ms Geraghty said that despite good intentions and tempting offers, human nature would prevail.

"The money may be frittered away on nothing in particular despite what people might like to do with it."