“Help to save accounts”- crumbs for the poor.


Lord snooty

The Government is planning (according to the BBC) to spend £70m of tax-payers money incentivising those who are not in work (but trying to get a job) to build up an emergency kitty.

These savings will be held in “help to save” accounts.

This unambitious plan will be consulted on between now and April 2018 and is expected to allow those who have little or no money to save (what they haven’t got) to a maximum of £50 per month over two years, after which they will qualify for a savers bonus of up to £300 (half of the amount saved).

No doubt the credit unions  and other not for profit organisations that work in this area, will have plenty to say. If this initiative can build on their work and strengthen them, then it is a small boon , but if it merely disrupts the work being done in this area, it will do more harm than good.

Paul Lewis has already pointed out that a similar proposal (with similar consultation) was announced in a previous budget. He expects “help to save” to go the way of the “savings gateway”.

Paul also makes the good point (via twitter) that were this scheme to succeed, it would simply provide fuel to the fire for those who claim that benefits are too big.

The birth or death of a lifetime ISA?

This could be read as the first step towards the bog-off scheme proposed initially by Ros Altmann and developed by Michael Johnson, commonly known as the lifetime ISA, an incentivise ISA that might be used as a long (rather than 2 year) savings scheme for all. It’s popularity being governed by Government Incentives rather than tax-relief.

Depending on which way round you have your telescope, this can either be seen as the Government dipping its toe in the water (for the pension isa) or a cynical way of kicking the idea into touch. Three things it isn’t are  “bold, imaginative or immediate”.


Changes to the Personal Independence Payment

Meanwhile, the sticks are being kicked away from those on crutches as the Government changes the formula used  to calculate the daily living component of Personal Independence Payment (PIP) for disabled people will change in January.

The government said 640,000 people could be affected by this by 2020.It said it would save £1.2bn  (apparently to make for a fairer PIP)

Further budgetary pain from public spending cuts of £4bn

Just to be clear, the good news story is that jobless people will get around £70m and the bad news story is that the most vulnerable will lose £1,200,000. That doesn’t sound very fair to me.

Rabbits in the hutch

Meanwhile, higher rate pension tax-relief is to be protected so that the richest in society can carry on building up private wealth beyond the wildest imagination of those outside of work (for whatever reason).

I’m pleased to see Lord Turner laying into this headline grabbing rabbiteering of Osborne. You can read his scathing comments in the FT  If the paywall blocks the link, here’s a flavour!

Chancellors love the wonderful, beautiful drama of rabbit-pops-out-of-the-Budget-box, but it is not necessarily the best way for us create pension policies, which need to last

Those who heard George Osborne blame “global uncertainty” for a planned reduction of 50p for every £100 of public spending would do well to ponder Osborne’s casual aside that this was “not a huge amount in the scheme of things”.

This further round of cuts amounts to around £4,000,000,000 , about 3.5 times more than is being taken back from those with disabilities and about 600 times more than the cost of “Help to Save”.

Why am I being protected – and the most wretched being punished?

I am a higher rate tax-payer and I get both income tax and national insurance incentives to save large amounts of disposable income into my pension. I see a net £21bn pa in income being lost to the Exchequer , the bulk of which goes to people like me . I see a further £14bn a year lost in national insurance payments so I can defer my pay a few years.

I do not think that this is fair, I don’t get why the poorest should be fobbed off with a £70m crumb and whacked over the head with a £1.2bn cut in personal independence payments. I don’t see why the public spending budget has to be cut by £4bh and savings incentives for those with pension wealth are ring-fenced.

I am not a communist, I’m not even a socialist, but I believe in a fair society where I pay a high amount back to society for the many privileges I, as an affluent person enjoy.

If all this inequality results from “global uncertainty” , then why do poor people, who have the least opportunity to influence the factors that make for global uncertainty, have to pick up so much of the tab?

What bit of the global uncertainty was the fault of the person claiming personal independence payments and how can he or she come to terms with me continuing to get up to 45p in the pound tax relief on my pensions and a further saving of 10% + in national insurance?


Let us hope for better in this budget

The poorest should be most protected by global uncertainty , they should not be footing the bill to protect the rich. Now is the time to protect those who are most vulnerable, not offer them savings bonus’ of pitiful proportions in five years time.

The messages coming from #11 Downing Street are so very wrong and I sincerely hope that whatever rabbit George Osborne pulls out of his Budgetary Hat, is a message of fairness, not more of this ugly stuff.



About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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3 Responses to “Help to save accounts”- crumbs for the poor.

  1. Mike Otsuka says:

    I agree with you that we higher rate taxpayers shouldn’t be protected. But I think the higher rates themselves should be raised, while preserving full pensions contribution tax relief at those higher rates. I say more in this public Facebook post: https://www.facebook.com/mike.otsuka.9/posts/476468395886758

  2. Gerry Flynn says:

    The BBC report says it will apply to people who are receiving “in work” benefits,not the unemployed.

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