New figures show that just 4% of low-income earners eligible for Help to Save accounts have taken up the scheme in the first year
A flagship government scheme designed to help people on low incomes save is failing to meet expectations.
Take-up for the Help to Save scheme has been lower than expected, according to new figures from HM Revenue and Customs.
When the scheme was launched last year the government said up to 3.5 million people could benefit from it.
However, only 132,000 accounts have been opened so far, some 3.77% of those the government says are eligible. Of these, 32,000 accounts are still yet to have a deposit paid in.
This means millions of people on low incomes could be missing out on a bonus of £1,200 by not taking out a government saving account.
The number of people opening accounts has also dropped in the last six months. Only 41,000 accounts were opened between February and July this year, compared to 91,000 in the previous six months.
More people are also withdrawing cash compared to the first six months of the scheme. In total, £1.9 million was withdrawn between February and August compared to £1.1 million from August to January.
The government launched Help to Save in 2018 to help people on low incomes build a small nest egg by boosting their savings by 50%.
Laura Suter, personal finance analyst at investment platform AJ Bell, comments: “The Help to Save scheme was championed by the government as a way to help low-paid people to put money away, but it’s suffered from a lack of publicity and government backing.
“Then Chancellor George Osborne hailed it as a way to improve the lives of the poorest in society, but subsequent delays to its launch and changing governments mean it has been forgotten.”
“It’s good that 100,000 people have now made use of the scheme, meaning they will be eligible for the 50% bonus, but it’s a small fraction of the 3.5 million that should be eligible for the scheme.”
How it works
Anyone who is in receipt of working tax credit or universal credit can open a Help to Save account.
Account holders can save up to £50 a month for up to four years. For every £1 they put away government will reward them with 50p extra.
If account holders put in the maximum £2,400 over four years their cash could be boosted by £1,200, bringing their total savings up to £3,600.
The government will add the first bonus to the account at the two-year anniversary of opening it and then again at the end of the four years.
By saving the full amount account holders will receive a £600 bonus after two years, and a further £600 at the end of the scheme.
The economic secretary to the Treasury, John Glen MP, says: "Saving shouldn’t be seen as a luxury but as an essential part of planning for the future.
"That’s why I launched the Help to Save scheme last year, and it’s been great to see so many people using it to put money aside for themselves and their loved ones.
"Around 3.5 million people could benefit from the scheme, so if you’re eligible but haven’t yet opened an account, you should take a look. Saving comes with a 50% government bonus, and even a small amount could help you to be more prepared for the future."
Find out more about the Help to Save scheme on the government website.
Do single pensioners qualify
Being a single pensioner on old lower state pension with some additional state pension takes me over GPC level, I would like to find out if I would qualify, would help cover funeral expenses if left in account. Wish they would state income limit to qualify.
Not good enough
Problem is everyone over 40 is barred from using this from day one so people who could benefit from it and who are more likely to can't apply