Help to Save Scheme

Lord Sharkey Excerpts

Thursday 17th March 2016 Lords Chamber

[Lord Ashton of Hyde]

My noble friend is correct. This is designed specifically for those on low incomes. In fact, we think that 95% of the eligible population from households will have total incomes of less than £30,000. The idea is that people will be able to withdraw at any time without penalty to cover urgent costs. The Government will consult shortly on how exactly the bonus should work. We want to avoid disincentivising people from making withdrawals when they need to. The whole point is to get households saving a bit so that they can cope with unexpected shocks.

[Lord Sharkey (LD)]

My Lords, Martin Lewis of MoneySavingExpert.com said that,

“there is a risk ‘Help to Save’ could substantially mis-prioritize people’s finances. Already, many people make the mistake of trying to save when they are in debt, and yet the cost of debt for most usually vastly outweighs the gain of saving”.

Can the Minister say what percentage of those eligible are in debt and what guidance in this area will accompany the scheme?

[Lord Ashton of Hyde]

To take the last bit of the noble Lord’s question first, there will be a consultation as I said, and these details will have to be gone into, not least with the providers of these accounts. This is to help prevent people getting into debt in the first place. I take the point the noble Lord raised. There are potential dangers, but at the same time I return the quote. The chief executive of StepChange Debt Charity said:

“We welcome Government recognition of the need for a savings scheme aimed at those on low incomes. Our research shows that if every household in the UK had £1,000 in rainy day savings, 500,000 would be protected from falling into problem debt”.