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‘Help to Save’ Scheme is launched

The government has now launched its much delayed ‘Help to Save’ scheme designed to assist an estimated 3.5 million people on working tax credits or universal credits build up savings by giving them 50p for every £1 they save.

The idea behind the scheme is that between £1 and £50 can be squirrelled away each month and after two years people will receive a 50% bonus on their savings, which could by then stand at £1,200. Funds will be held in the state-owned bank National Savings and Investments, and customers will be able to manage their money online and over the phone. After four years, another 50% tax-free bonus will become available, which will equate to half of the savings paid in above the highest balance saved in the first two years. In addition, withdrawals can be made at any time and do not forfeit the saver bonus pay-outs.

The scheme was delayed while the government ran an eight-month pilot scheme where 45,000 individuals saved a total of £3m during the trial period. One of pilot scheme participants was Paul Hughes, 45, who works for a letting agency in Torquay who said: “I wasn’t saving before, so it has helped me save and it was easy to use” and “it has enabled me to build up a savings pot and the bonus is very good value.”

John Glen, economic secretary to the Treasury, said: “Savings shouldn’t be a luxury, they are an essential part of planning for the future. For some, putting away even a tenner each month can be a tough habit to get into” and “Help to Save is designed to make saving possible for every hardworking person in this country.” But Labour, while welcoming incentives to save, has in the past strongly criticised starting this scheme in tandem with the government’s continued deep cuts to welfare. Shadow work and pensions secretary Owen Smith likened the approach to “stealing someone’s car and offering them a lift to the bus stop.”

My financial hero, Martin Lewis, founder of, commented when the scheme was first announced in 2016 that: “Encouraging people to save is a good thing, however there is a risk ‘Help to Save’ could substantially misprioritize people’s finances. My worry with ‘Help to Save’ – especially because of the long delay before people get the bonus – is that people may start to think that everyone should put aside money each month, when the truth is for many with expensive debts, especially payday loans, that’s a bad idea. So, ‘Help to Save’ must be accompanied by strong guidance of who should and shouldn’t do it – rather than a blanket encouragement.”

The debt charity ‘StepChange’ welcomed the launch of the scheme. Its chief executive, Phil Andrew said: “We campaigned for ‘Help to Save’ and it is a good scheme. Ninety-eight per cent of our clients have no savings at all at the point they turn to us, and only one per cent have £1,000 or more. 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.”

FEATURING: Chris Medway
Chris joined our Business Recovery department in 1998. Chris is CPI qualified and specialises in personal insolvency, dealing with bankruptcies and Individual Voluntary Arrangements (IVAs) and… read more
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