Low earners get Help to Save
The Prime Minister David Cameron has announced that up to 3.5 million people on low incomes will be eligible for a government-backed bonus on their savings with the new ‘Help to Save’ scheme - part of the government’s assault on poverty.
The ‘Help to Save’ initiative will be open to all adults in receipt of Universal Credit with minimum household earnings equivalent to 16 hours at the National Living Wage – roughly £6,365 in 2017 to 2018) or those in receipt of Working Tax Credit.
Workers with money to save can add £50 a month to the accounts. After two years, the amount of money in them will be topped-up by 50 per cent to a maximum of £600.
The scheme can then be used for another two years, with the same maximum bonus applying again after a total of four years.
The new accounts will sit alongside ISAs, which provide all earners with a limited amount of tax free savings.
‘Giving people on low incomes a pay rise’
Speaking ahead of the Budget on Wednesday, Prime Minister, David Cameron, said: “I’ve made it the mission of this government to transform life chances across the country.
“That means giving hardworking people the extra support they need to fulfil their potential.
“And that’s what these new measures will achieve - helping someone start a savings fund to get them through difficult times, giving people on low incomes a pay rise and making sure teenagers have the experience and networks to succeed.
Research cited by the Government suggests that around half of UK adults have less than £500 set aside for emergencies.
Campaigners have warned that using the new account could be risky for people on low income because people who have savings of more than £6,000 begin to reduce their entitlement for various benefits. Anyone who manages to save over £16,000 has their entitlement to most benefits stopped completely – even if their income is still very low.
‘Cuts mean families are going to struggle’
Shadow Work and Pensions Secretary, Owen Smith, said that Universal Credit cuts will take £1,600 a year from more than two million low and middle income working families. Some could lose £3,000 a year.
He said: “It is right that there should be incentives to save, that's why a Labour government introduced the almost identical ‘Saving Gateway’ that the Tories scrapped.
“These cuts will mean families are going to struggle to have enough money to make it to the end of the week, let alone save for the future.
“If the Tories were serious about supporting low and middle paid workers in the Budget, they would listen to Labour's calls to fully reverse the Universal Credit cuts.”
The ‘In work - on a low income' section of our website has information on benefits, grants and other financial support that may be available to you.
You may also find our information on Universal Credit helpful.
If you are struggling financially, you can use our Benefits Calculator to check your entitlement to benefits and our Grants Search to see if you are eligible for help from a charitable fund, based on your personal circumstances and needs.