Sinn Féin call for 'Saving Gateway' accounts for people on low incomes
Sinn Féin Fermanagh South Tyrone MP Michelle Gildernew has called for the introduction of a special savings scheme for people on low incomes after new research from the Institute for Public Policy Research recommended that up to five million people on low income should have their savings matched by the British Treasury with 50p for every pound they save.
Ms Gildernew said:
"This research from the Institute for Public Policy Research (ippr) recommends that the five and a half million people claiming benefits or the Working Tax Credit could benefit from having their savings matched by the British Treasury with 50p for every pound they save.
"The report also says that a matched saving scheme is the only way to support the very poorest in putting something away for a rainy day.
"A scheme called the 'Saving Gateway' has already been piloted the in East London and Manchester over the last four years and results show that eight out of ten people who took part in the pilot schemes described themselves as saving regularly, compared to less than one in five at the start.
"This report also highlights the fact that people living on a low income often don't trust banks and building societies. There would be clear benefits in accounts being delivered by local community organisations and credit unions, which command greater levels of trust among this group. National Savings and Investments should also supply accounts through the Post Office to ensure as wide coverage by the scheme as possible.
"The accounts could also be publicised in the workplace in partnership with employers and trade unions. ENDS
Note to Editor
The report recommends
* For every £1 invested in a Saving Gateway account, the Government should match it with 50p at the end of two years. The maximum that would be eligible to be matched by the Government should be £25 per month, with savers investing no more than £500 over two years. The maximum match from the Government would be £250.
* At the end of two years, savings should roll into an ISA or other savings account. People should only be eligible for one, two-year-long, Savings Gateway account in their lifetime.
* The Government should write to all of those who are eligible, informing them of their eligibility, to eliminate the need for an income test.
* Accounts should be supplied by credit unions, building societies and banks. National Savings and Investments should also supply accounts through the Post Office to ensure national coverage by a trusted provider.
* In each local authority area, local organisations such as housing associations, Citizens Advice Bureaux and credit unions should be contracted to deliver accounts. They would be responsible for recruitment, assistance with account opening and possibly delivery of integrated financial education and advice.
*The accounts should also be publicised in the workplace in partnership with employers and trade unions.
* The accounts should allow savers to designate different proportions of their saving under different headings: 'pots-within-a-pot'. When their fund matures, savers would not be obliged to spend each pot on a particular use, rather, the aim of the scheme would be to empower individuals to save towards their own desired ends.