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Call for Government matched savings scheme for the poor

The five and a half million people claiming benefits or the Working Tax Credit should have their savings matched by the Treasury with 50p for every pound they save, a think tank has suggested. The Institute for Public Policy Research (ippr) says that a Government matched saving scheme is the only way to support the very poorest in putting something away for a rainy day.

The Government is currently piloting a savings scheme in East London, Manchester and Cambridge. The ‘Saving Gateway’ pilot has been running for the last four years with eight out of ten people who took part describing themselves as saving regularly at the end, compared to less than one in five at the start. ippr says the evaluations of the pilots are so positive that the Chancellor should announce a national roll-out of the scheme in his Pre-Budget Report, expected later this month.

Ian Kearns, ippr Deputy Director, said: “When your income is less than £150 a week, every penny counts. The Government currently spends £1.75 billion on saving incentives but these go disproportionately to those who are better off because they are related to the amount of tax that people pay. Higher rate taxpayers get the best incentives and people whose incomes are too low for them to pay any tax don’t receive any incentive at all. “We know that these schemes can kick-start a long-term savings habit and help the poorest in society to look after themselves and their families. People on low incomes often don’t trust banks or building societies and end up saving into unregulated schemes like FarePak [which recently collapsed]. It would be better to have a national scheme guaranteed by the Government but delivered locally by trusted community groups.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .