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Help to Save: consultation on implementation

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Response to the HM Treasury – July 2016

We welcome the Help to Save (HTS) scheme. If every household in Great Britain had at least £1,000 saved it would reduce the number in problem debt by 500,000.

A survey we commissioned specifically for this consultation response demonstrates the potential importance of HTS. Over three-quarters (78%) of respondents to the survey said they need to pay an unexpected cost at least once per year, with this cost on average between £201 and £300.

However, we have some concerns regarding the two year time period over which the accounts will operate, on aspects of the eligibility criteria and on how HTS scheme savings would be treated during insolvency or enforcement action by creditors.

  • We believe the proposed two year time period over which a HTS account will run may disincentivise applicants. We therefore recommend the Government think very carefully also about the way the scheme is advertised in order to minimise this potential problem caused by the perception of a rigid two-year account length.
  • We recommend HM Treasury amends the eligibility criteria so that those aged under 25 who work at least 30 hours a week can apply for a HTS account.
  • HM Treasury needs to look closely at the debt collection and insolvency implications of the scheme. Government should protect money in HTS accounts from third party debt orders or insolvency proceedings. At the very least any bonus accrued should be protected.

We have additional comments on how the government bonus will be calculated, and whether HTS should permit people to save above the monthly limit as these issues will have the greatest impact on take-up.

  • Given the aim of the HTS policy is to boost savings among low-income working families, HM Treasury must structure the bonus to ensure as big a take-up as possible. Therefore we believe the best option would be a bonus that is based on the highest balance achieved, and crystallises at least every six months.
  • We believe HTS should allow ‘top-up’ monthly payments above £50. Again, the aim is to not disincentivise saving, as many people in the target group will have fluctuating income. According to our survey respondents, 34% would prefer to be able to pay in an average maximum of £50 per month.

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© StepChange Debt Charity 2016