Low paid workers will be given a bonus of up to £1,200 if they pay into a Help to Save savings account.
The new scheme launched by the government aims to encourage people in low paying jobs to save money. Help to Save accounts will be launched later this year and will allow approximately 3.5 million people on working tax credits or universal credits to earn an extra 50% per month on anything they save. Savers will be allowed to save £50 per month into Help to Save accounts, earning a maximum of £600 extra over two years (with the option of continuing for a further two years).
Giving Encouragement
Prime Minister David Cameron claimed that the scheme will help people to start a savings fund “to get them through difficult times” and will give people on low incomes a “pay rise”. The Help to Save accounts will come into effect in April 2018, with the full details being explained in next week’s Budget. The scheme has already drawn criticism however, as those with low paying jobs may be unable to save, rather than lacking in encouragement. The government has estimated that the scheme will costs tax payers £70m over the first two years. This equates to just 600,000 people of the 3.5 million eligible paying in £10 per month out of the possible £50. The government's own estimates seem to indicate they don't expect Help to Save to be a complete success.
Pay Increase
National Living Wage rates were also announced which should be a relief to those in low paying jobs. These are as follows:
|
Age Group |
Old minimum rate of pay |
New minimum rate of pay |
|
16-17 year olds |
£3.87 |
£4 |
|
18-20 year olds |
£5.30 |
£5.55 |
|
21-24 year olds |
£6.70 |
£6.95 |
|
Over 25 year olds |
£6.70 |
£7.20 |
|
Apprentices |
£3.30 |
£3.40 |
More information on Help to Save and the National Living Wage are likely to be announced during next week's budget. We will have full summaries and analysis on the Charles James blog.
