Is saving money a luxury for some? John Glen MP, the Treasury Minister, tells us why he introduced the Help to Save scheme last year.
This is a guest post by John Glen MP. All views expressed are John’s own and not necessarily shared by Which?.
Putting away savings is an important part of life, providing people with greater financial stability and helping them to better support themselves and their loved ones.
Yet as the Treasury Minister responsible for personal savings policy, I appreciate that for many on smaller incomes putting away even just a tenner each month can sometimes feel like a challenge.
That’s why I introduced the Help to Save scheme last year to make sure everyone has the chance to save for the future.
What is the Help to Save scheme?
Around 3.5 million people on working tax credits or Universal Credit are eligible for the scheme which gives savers a 50% bonus on every £1 they put away over a four-year period.
In comparison, high street banks offer a typical interest rate of 1-2 per cent on savings. To date, around 100,000 people have signed up to the scheme, depositing over £13 million into their accounts, and I want to spread the word further so more can benefit.
The scheme can be accessed via HMRC’s mobile app. Savers can deposit between £1 and £50 every month, with the bonuses paid after two years and at the end of the four years. So if you were to save the maximum £2,400 you would earn a £1,200 bonus.
One worry that some have voiced with me on savings accounts is being unable to easily access their money when they need it.
With this scheme, savers can make as many withdrawals as they need to. At the end of the two years, they get the first 50 per cent bonus – up to £600 tax free – paid into their bank account (not the Help to Save account).
They can then continue saving for another two years, again saving up to £50 every month, and get another bonus paid at the end of the four years, if they have paid in the maximum amount.
Stabilising your personal finances
Of course, anyone who has debts should prioritise paying those off before saving, as that’s always the best course of action to stabilise your personal finances.
The scheme is available to new customers up to September 2023, so there’s plenty of time left to take advantage of it. For many, the scheme is already providing future returns and benefits.
It’s my strong opinion that saving should never be seen as a luxury, but instead as an essential part of planning for the future.
Encouraging and supporting savings across all income groups is important and can help ensure people don’t need to turn to expensive, and sometimes exploitative, money lenders as a last resort.
So if you want to save for that family break, put money away for a rainy day, or even start saving for next Christmas, consider taking advantage of Help to Save.
This was a guest post by John Glen MP. Do you support the government’s Help to Save scheme? Is it a useful solution for those looking to better manage their finances? Let John know your thoughts in the comments.