Pledge on national savings scheme

The government has pledged to add 50 pence to every £1 saved in a national scheme aimed at encouraging the poorest to save.

Chancellor Alistair Darling revealed the level of government top-up on savings held by up to eight million people on benefits and tax credits.

He had already announced that the project would be launched in 2010.

The government will add a maximum of £300 after the account-holder has been saving for two years.

To encourage saving habits, this contribution would only be paid for months when no withdrawal was made.

Incentive

The "Saving Gateway" scheme was first proposed in 2001 as an incentive for those on lower incomes to save.

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Some 22,000 people took part in the pilot programmes, saving a total of £15m.

People entitled to sign up will be those receiving working tax credits, child tax credits paid at the maximum rate, income support, jobseeker's allowance, incapacity benefit, employment and support allowance and severe disablement allowance.

Calls for the scheme to be implemented became louder after the collapse of the unregulated Farepak Christmas hamper scheme.

Final details of the scheme will be published later in the year.

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