People on low incomes are offered a bonus to save

Families in Need (FIND) Maureen Reynel

Families in Need (FIND) Maureen Reynel - Credit: Gregg Brown

People on low incomes are being given a financial incentive to help them save money.

Almost 300,000 people on low incomes in the East of England are set to benefit from a new Government savings account that offers a 50% bonus. Help to Save will reward savers with an extra 50p for every £1 saved, meaning over 4 years a maximum saving of £2,400 would result in an overall bonus of £1,200.

The launch of the new account follows an eight-month trial, with over 45,000 customers who deposited over £3 million. Help to Save is intended to help those on low incomes build up a ‘rainy day’ fund, and encourage savings behaviours and habits. How much is saved and when is up to the account holder, and they don’t need to pay in every month to get a bonus.

But Maureen Reynal who runs FIND (Families in Need), an Ipswich charity that helps people deprived of the minimum standard of living, warns that although the new scheme sounds good in theory, “in practise things will be different.”

“I would be concerned that people might then be penalised in some way because they have savings,” she said. “I have lots of questions about the criteria.”


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Ms Reynal claims that most people on a low income would struggle to save anything to put into the account in the first place.

“When something goes wrong - the cooker stops working, for example - their savings are wiped out. They are living day to day, not even week to week. I’ve got referrals coming in for families who are struggling to survive on universal credit, so how can they be expected to find money for savings?”

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One of FIND’s recipients is Pamela, a mum of two eight year old twins who manages on £180 in benefits from the government, half of which goes on rent.

Pamela was recently accepted onto a teacher training programme, but couldn’t take the place as she could not afford to pay for childcare.

But the mum from Ipswich, who also relies on food donations from her local Food Bank, says she would like to sign up for a Help to Save account. “I try to save at the moment, but any time the kids need something, I have to use that money so it just doesn’t work. Most of my money goes on food, electric and gas, and if we don’t take the bus anywhere for two days, then I can then afford to buy my sons a meal each at McDonalds as a special treat. The only way that I could save money would be to not use the bus anymore.”

Sylvia Simpson is a 53 year-old part time civil servant living in East Ipswich who is on a low income. At the moment, Ms Simpson says she is unable to save and has no ‘emergency fund’ she can draw on. “It’s scary - my eldest son cleared out what savings I had in setting up costs for him start university, and my car needs work done but I can’t afford to take it in.”

Ms Simpson says she thinks she could be persuaded to put money away in the new ‘Help to Save’ account. “If I am going to put money away for a rainy day, then it needs to work hard for me and with such low interest savings rates available at the moment, there’s no incentive to try to save. But if I could save £1 and get 50p back, that sounds great and I think it would make me more inclined to put money away.

“There’s definitely a need for something to encourage people to save.”

However, Mark Squirrel, a 53 year old fireman from Hadleigh, was more sceptical about the initiative. “Someone on a low income has to put money away for it to work, and I don’t think they would. This is just a gimmick to make the headlines - I think a lot of families will say the same.”

How does it work?

Help to Save is available to working people on Tax Credits and Universal Credit.

Account holders can save between £1 and £50 every calendar month and accounts last for four years from the date the account is opened. After two years, savers get a 50% tax-free bonus on savings. If saving continues there is another 50% tax-free bonus after four years.

On maximum savings of £2,400 over 4 years, the overall bonus would be £1,200.

To apply, savers can visit www.gov.uk/helptosave or use the HMRC app.

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