Every pound of disposable income is either spent or saved

Disposable income is income after taxes, and people can do only two things with it: consume it or save it. Consumption plus saving must equal disposable income, so whatever is not spent is saved, whether it sits in a bank account, goes into a pension or pays off a loan. At a given income, choosing to save more is the same choice as spending less. Saving is a flow over a period; savings are the stock it builds up.

Households save to spread spending over time and to guard against bad times

Most workers save for retirement, because their income today is greater than their needs, while the opposite will be true once they stop working. The ONS calls this moving of consumption across time the intertemporal motive. The second is the precautionary motive: keeping a buffer of savings against an uncertain future, so that losing a job or facing a large repair bill does not force a sudden cut in spending. When unemployment rises, more households fear for their jobs and add to that buffer.