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Help to Save scheme 'should go further'

Money Advice Trust comments on design of ‘welcome’ new saving scheme.

The government’s new Help to Save scheme for people on low incomes ‘should go further’, according to the Money Advice Trust, the charity that runs National Debtline
The charity says that Help to Save, first announced in January, is ‘welcome’ as a means of helping those on low incomes to save, but could be made even more effective by changes to eligibility rules and bonus payments.
Around 3.5 million workers who receive Working Tax Credit or Universal Credit will be eligible for Help to Save accounts from April 2018.  The accounts will see deposits of up to £50 a month matched with a ‘government bonus’ of 50 percent, up to a maximum of £600 after two years.  Savers can then continue to use the scheme for a further two years and earn up to another £600.
In its response to a Treasury consultation that closes today, the Money Advice Trust called for a commitment to review eligibility rules in the future to consider covering those who are unable to work the required 16 hours a week due to sickness, disability or caring responsibilities.
The charity has also expressed concern over the planned two-year savings period before Help to Save bonuses are paid, claiming it is unlikely that many people on low incomes plan their finances over such a long time frame.
Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline said:
“We welcome this new Help to Save scheme and the potential it has to help people on low incomes to build up a savings buffer.  Having even a small level of savings tucked away to cover unexpected costs could prevent some of the problems that we see at National Debtline every day.
“It is right that Help to Save is being targeted at people on low incomes, but we would like to see the government go even further by opening it up to those not able to work 16 hours a week due to sickness, disability or caring responsibilities.  These groups are often the most in need of a savings buffer.
“We also think the scheme could be made even more effective.  The proposed 50 percent bonus is a generous one, but two years is too long a period to wait to really incentivise people to stick with the scheme.  Two years can feel a lifetime away when you are struggling to pay the bills in front of you.
“We hope the government will consider the changes we have proposed to ensure Help to Save can have the maximum impact in improving people’s life chances.”
In addition to changes to eligibility rules and bonus payments, the Money Advice Trust has also proposed;
  • Provision of accounts through National Savings & Investments as a single provider, as the most consumer-friendly and cost-effective arrangement
  • A central online portal and ‘visible reward’ to show savers how much government bonus they have accrued, together with face-to-face access through the Post Office network
  • Consumer protection measures, in conjunction with Google and other search engine providers, to minimise the risk of scams and fraud
Read the Money Advice Trust’s response to HM Treasury’s consultation on Help to Save.
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