The Personal Finance Research Centre at the University of Bristol has welcomed the announcement in yesterday’s Budget that the Saving Gateway scheme will be rolled out nationally, with the first accounts available to savers in 2010.
The Saving Gateway, a cash saving account, will provide lower-income earners with an incentive to save by offering to match savings with additional contributions paid by the Government. It is hoped that the scheme will encourage a saving habit and promote engagement with mainstream financial service providers.
Professor Elaine Kempson, director of the Personal Finance Research Centre, said: “I’m delighted that the Government has decided to consult on how best to make the Saving Gateway available nationally. It was clear from our evaluation that the scheme has the potential to make a significant difference to the lives of people on low incomes who currently do not benefit from any of the tax incentives to save.”
The rollout of the scheme follows two successful pilots. The evaluation of the first Saving Gateway pilot was conducted by the University’s Personal Finance Research Centre in 2005. The second pilot evaluation was carried out by the Institute for Fiscal Studies and Ipsos MORI. The findings of the second evaluation were outlined in a speech made by the then Economic Secretary to the Treasury, Ed Balls, at the University in May 2007.
Key findings from the first pilot of the Saving Gateway scheme
The first pilot of the Saving Gateway showed that:
· Nearly 6 in 10 participants had had no savings previously.
· Most people saved the maximum amount allowed or came very close to it.
· Very few people withdrew any money before the end of the scheme.
· The Saving Gateway encouraged more people to save regularly and to put informal savings into an account.
· Compared with a reference group, Saving Gateway participants had increased their level of saving while the reference group appeared to be running down their savings.
· Three or more months after maturity of the account 9 in 10 participants still had a savings account, and 4 in 10 were still saving regularly.