British workers on low incomes who are in receipt of Universal Credit or Working Tax Credits will be supported by the government’s new Help to Save, the Prime Minister David Cameron announced on Monday.
The new scheme will enable those on lower incomes to save up to GBP50 each month and receive a 50% bonus after two years, which will reportedly be worth up to GBP600. Savings account holders can then opt to carry on saving under the scheme for another two years and receive a further bonus of GBP600.
After the full four years of the scheme, a savings pot worth up to GBP3,600 could be earned, with GBP1,200 coming from the government.
Help to Save will be open to all adults in receipt of Universal Credit with minimum household earnings equivalent to 16 hours at the National Living Wage, approximately GBP6,365 in 2017 to 2018, or those in receipt of Working Tax Credits. Savers will be able to make withdrawals while they have money in the account to cover urgent costs and there will be no restrictions over how Help to Save funds can be used.
Speaking ahead of this week’s Budget, Chancellor of the Exchequer George Osborne stated:
“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 GBP1,200 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.”
Nearly half a million young people are expected to benefit from an increase to the National Minimum Wage, with the minimum wage for 16- to 17-year-olds rising by 3.4% to GBP4.00 per hour and apprentices’ wages rising by 3% to GBP3.40 per hour, while 18- to 20-year-olds will see their minimum wage rise by 4.7% to GBP5.55 per hour and wages for 21- to 24-year-olds will rise by 3.7% to GBP6.95 per hour. The increases will take effect in October this year.
For workers over 25, the government had previously announced that the National Minimum Wage will be GBP7.20 per hour from April, which equates to a pay rise of at least GBP900 a year.
In addition, the Prime Minister announced a new national mentoring campaign designed to provide vital guidance to young people who are at risk of under achieving or dropping out from education. Cameron stated that the government will provide GBP12m over the course of this Parliament for a new investment fund to build capacity in the system, which will be managed by The Careers & Enterprise Company. The mentoring scheme is expected to help 25,000 young people each year and the money will be used to scale up proven mentoring programmes to reduce disengagement among young people in the years before they sit their GCSEs. Young people stuck in ‘cold spots’ across the country who do not currently have access to mentors will be given priority.
Business people and professionals will be asked to volunteer to act as mentors to provide crucial support and guidance to help young people fulfil their potential, by the Careers & Enterprise Company. This work will be supported by a GBP2m advertising campaign.