A leading debt help charity has welcomed the launch of a government scheme designed to encourage people on low incomes to set money aside on a regular basis and protect themselves against serious financial difficulty.
The scheme will see low earners in receipt of tax credits or Universal Credit benefits offered access to cash top ups on their savings worth 50 per cent of whatever they manage to set aside.
Help to Save, as the scheme is being called, has been extensively trialled and should now allow thousands of people to get an extra 50 pence for every £1 they save up to a maximum of £2,400.
The debt help charity StepChange has welcomed the official rollout of Help to Save, noting that a huge majority of the people who approach its experts for advice on dealing with debts have no savings whatsoever.
StepChange has also released research in the past that suggested half a million people across the UK could avoid serious problems with debt if they had access to £1,000 or more.
However, the charity has said that efforts will need to be made by relevant parties to ensure that awareness of Help to Save is raised as much as possible among people who might be eligible to take advantage of it.
The scheme allows savers to set aside up to £50 each month in a designated account, with the highest balance they achieve during the following two-year period matched to the tune of 50 per cent, with subsequent bonuses also allocated at the end of four years.
Hopes are that the initiative will open up access to personal finance vehicles that can make a significant positive difference to the circumstances of many thousands of low income households.
“98 per cent of our clients have no savings at all at the point they turn to us, and only 1 per cent have £1,000 or more,” commented Phil Andrew, chief executive of StepChange.
“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.”
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