Prime Minister David Cameron said the new help to save policy in Wednesday’s Budget was part of his ‘all out assault on poverty’
David Cameron today unveiled plans to hand up to 3.5 million of Britain’s lowest paid workers up to £1,200 extra in their savings accounts.
In return for showing they have saved £50 every month for up to four years, the extra cash will be available to anyone in work and on universal credit or working tax credit.
The plan is intended to encourage a savings pot of £3,600 after four years, including the Government bonus.
But Labour today claimed they announced an identical policy to the new ‘Help to Save’ scheme in 2010, only to be told by George Osborne it was unaffordable.
Shadow work and pensions secretary Owen Smith said the policy raid was like ‘stealing someone’s car and offering them a lift to the bus stop’.
Speaking ahead of Wednesday’s Budget, Mr Cameron said the new policy was part of the ‘all out assault on poverty’ he promised in January.
The PM said: ‘I’ve made it the mission of this government to transform life chances across the country.
‘That means giving hard-working people the extra support they need to fulfil their potential.
‘And that’s what these new measures will achieve – helping someone start a savings fund to get them through difficult times, giving people on low incomes a pay rise and making sure teenagers have the experience and networks to succeed.’
Mr Osborne added: ‘This government is determined to improve the life chances of the poorest in our society and our new Help to Save scheme will mean millions of low income savers across the country could now receive a Government bonus of up to £1,200 to help them build up their savings.
‘Alongside our new National Living Wage, we’re also boosting pay for young workers with increases in the National Minimum Wage – the next step for the next generation as we move to a higher wage society.’
But Mr Smith said the policy would do little to help those losing through cuts to universal credit.
He said: ‘It is right that there should be incentives to save, that’s why a Labour government introduced the almost identical ‘Saving Gateway’ that the Tories scrapped.
‘Universal Credit cuts will take £1,600 a year from over 2 million low and middle paid working families. While new analysis shows that 2.3 million of the 3.1 million families on tax credits will see their in-work support fall as they are moved to Universal Credit. With some families up to £3,000 a year worse off.
‘These cuts will mean families are going to struggle to have enough money to make it to the end of the week, let alone save for the future.
‘If the Tories were serious about supporting low and middle paid workers in the Budget they would listen to Labour’s calls to fully reverse the Universal Credit cuts.’
The new savers bonus will be available to people who can put away £50 a month for up to two years, Mr Cameron announced today
The proposed help to save accounts will be available until April 2018.
The money saved can be used for any purpose and the bonus will not be lost if an individual has to withdraw money to pay for urgent costs.
Under the plans, bonuses would be paid in two stages – £600 after two years of regular saving and another £600 two years later.
The scheme will be available to households with minimum earnings equivalent to 16 hours a week at the minimum wage – £6,365 in the 2017/18 tax year.
A consultation on the scheme will be launched shortly after Wednesday’s Budget.
The Budget is set to see the disability benefits bill is to be slashed by a further £1.2billion.
The cuts to Personal Independence Payments (PIP) will be implemented from the start of next year in an attempt to help George Osborne balance the nation’s books.
Those affected by cuts to PIP include 640,000 people who need help dressing or undressing or using the bathroom.
The prospect of PIP cuts has already caused angry protests at Westminster and follows the bitter row over the ‘bedroom tax’. But Whitehall sources insist the changes are ‘fair and sensible’ and there has been extensive consultation with disability groups. They will save £1.2billion a year by 2020/21.