Earlier this week the government announced it was rolling out its Help to Save scheme more widely across the UK, after having tested it with a cohort of 45,000 people.
Under the scheme, working people on tax credits and people on universal credit who are also earning at least £6,514 per annum, will be able to get 50p back from the government for every £1 they pay in.
The scheme allows them to save up to £50 a month over four years, with a maximum saving of £2,400. With the government's contribution, this would create an overall bonus of £1,200.
The scheme is designed to help more people start saving, building up a rainy day account and helping them to get into a habit of putting money away each month.
What sort of options will be made available to these people at the end of this savings period?The aim is laudable, and the government bonus is of course helpful, but the cynic in me cannot help but wonder if this is another way in which the government aims to wean working people on the 'margins' off state support altogether.
What happens after the four years are up? Will the potential 4m people at whom Help to Save is aimed then be means-tested on their accumulated savings, only to see their tax credits or universal credit payments diminish because they have been diligent enough to save?
What sort of options will be made available to these people at the end of this savings period?
Will they be signposted to guidance on Isas or savings accounts, or will they merely be sent a brochure for National Savings & Investments?
Getting people to save is a great start, but unless they are given the information, education and encouragement needed to keep on putting money aside beyond the four-year Help to Save scheme, then it will only be a flash in the pan.
Moreover, without any guarantees from government that it won't come knocking at the doors of those who have been diligent enough to put money aside, informing them their new-found savings habit now means they will see their benefits reduce, I can understand why some people might see this as a scheme that only serves one interest: that of the state.
Call me cynical, but ...
simoney.kyriakou@ft.com
