Two weeks before the budget, Worcester’s MP, Robin Walker, hosted a roundtable discussion on how credit unions and alternative lenders could support savings for lower income families and organised a joint cross party letter from the All Party Groups for Credit Unions, Debt and Personal Finance and Financial Services to urge the Chancellor to consider supporting such an initiative. The gathering was inspired by the Prime Minister’s Life Chances speech earlier in the year in which he had called for more support to help people build up savings and the groups discussed how to empower lower income families to save and the transformative power of savings in helping people to avoid problem debt.
Just days after the joint letter signed by Robin, Labour MP Yvonne Fovargue and Conservative peer Lord Hunt of the Wirral was sent to the Treasury, the Prime Minister has announced a new initiative – Help to Save aimed at achieving precisely this. The cross party letter had raised the idea of some form of matching fund that would support those with lower incomes by topping up their savings in the same way as the help to buy ISA helps people saving for a first home. This is precisely what has now been announced. It also suggested linking such a scheme to reforms in the delivery of Universal Credit and the announcement from the Prime Minister mentions Universal Credit as one of the qualifying factors for the scheme.
Up to 3.5 million people will be eligible for a government-backed bonus on their savings as part of a drive to improve the life chances of the disadvantaged – Prime Minister David Cameron announced yesterday. In January, as part of his all-out assault on poverty, the Prime Minister set out the government’s plan to transform life chances across the country. This includes the creation of a new savings scheme for people on low incomes – with research showing that almost half of UK adults have less than £500 set aside for emergencies.
The Prime Minister delivered on this commitment yesterday with a new Help to Save scheme, in which anyone in work and in receipt of Universal Credit or Working Tax Credits will be able to save up to £50 a month and receive a 50% bonus after 2 years – worth up to £600. Account holders can then choose to continue saving under the scheme for a further 2 years and receive another £600 bonus. This will see them earn a savings pot worth up to £3,600 after the full 4 years of the scheme – with £1,200 coming from the government.
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 hard-working 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.”
Chancellor George Osborne said:
“This government is determined to improve the life chances of the poorest in our society and our new Help to Save scheme will mean millions of low income savers across the country could now receive a government bonus of up to £1,200 to help them build up their savings.”
“Alongside our new National Living Wage, we’re also boosting pay for young workers with increases in the National Minimum Wage – the next step for the next generation as we move to a higher wage society.”
Commenting, Robin Walker, Chairman of the All Party Group on Credit Unions said
“The new Help to Save scheme is great news and an early victory for another cross party campaign on financial inclusion. I was delighted to host a special breakfast with credit unions and debt advice organisations such as the Money Advice Service and Step Change in order to discuss boosting savings for lower income families and I am thrilled to see that our advice from that event has been taken up and acted on so quickly.”
“The one thing that we don’t yet know is which financial institutions will be delivering this scheme and I am keen to engage with the government to make sure credit unions can have a part to play. Whether it is capping payday lenders, growing the reach and sustainability of the credit union sector, supporting the debt advice sector through a levy or now helping to support savers, this Government has a strong track record of promoting financial inclusion and I have been pleased to work with Colleagues across the House on supporting this agenda. I will be following up with Ministers and the Chancellor to make sure that credit unions get a chance to support this wonderful initiative.”
Notes to editors:
For more information on the announcement of Help to Save see:
For the PM’s speech on life chances see:
For further information on ABCUL:
For Robin’s previous releases on credit unions and support for debt advice: