On Wednesday the government will launch its new help-to-save scheme, giving low-paid workers 50p for every £1 they save.
The new scheme is similar to the savings gateway scheme, launched by Labour and scrapped by the then chancellor, George Osborne, in 2010 who said it was “not affordable”.
For some, putting away even a tenner each month can be a tough habit to get into. Whether you’re saving up to take the family on a much-needed holiday, or to take the next step in life, help to save is designed to make saving possible for every hardworking person in this country,” said John Glen, economic secretary to the Treasury.
The scheme means that those who save the maximum amount of £2,400 over the next four years will be able to receive a bonus of £1,200.
The scheme will cost the Treasury £255 million by 2022-23.
Phil Andrew, the chief executive of the debt charity StepChange welcomed the launch of the scheme and said: “We campaigned for help to save and it is a good scheme. Ninety-eight per cent of our clients have no savings at all at the point they turn to us, and only one percent have £1,000 or more.”
“Yet we know that having £1,000 in rainy day savings virtually halves the risk of falling into problem debt, so helping lower income working households to build savings should be an important policy goal. We campaigned for help to save and it is a good scheme. Ninety-eight percent of our clients have no savings at all at the point they turn to us, and only one percent have £1,000 or more. Yet we know that having £1,000 in rainy day savings virtually halves the risk of falling into problem debt, so helping lower income working households to build savings should be an important policy goal.”
Whilst Labour has welcomed the launch, the party has criticized the Tories for offering such incentives whilst continuing to make cuts to welfare.