110. The Government is expected to make further announcements
on the next steps for the roll out of the Saving Gateway in the
2007 Pre-Budget Report.
The Minister noted that any decision on a national Saving Gateway
had to take account of the public expenditure implications.
However, the pilot projects for the Saving Gateway have provided
strong evidence to suggest that a national Saving Gateway could
achieve some of the Government's aims of promoting saving among
low-income groups. The Government has noted that the pilot projects
indicate that the Saving Gateway "can encourage genuinely
new savers and new saving".
It can bring some individuals into contact with mainstream financial
institutions for the first time.
It can kick start a savings habit which continues even when the
incentive of Government matching is no longer available.
It can have a positive impact on participants' attitude to saving,
particularly amongst those with little or no prior experience
of saving. It
can allow individuals to save without dictating what they save
for. It can give
individuals a sense of security and a sense of worth.
111. The Institute of Public Policy Research has
provided some estimates of the first-year costs of a national
Saving Gateway scheme, assuming eligibility criteria based on
eligibility for Working Tax Credit and the qualifying benefits
for those out of work,
and individual contributions averaging £16 per month. On
this basis, it is estimated that the first-year costs of a national
scheme taken up by 50% of the eligible population with matching
at 50 pence for every pound invested and pound-for-pound matching
for the first two months would be £249 million.
For purposes of comparison, the Government estimates that ISA
and Personal Equity Plan savings are supported by £2.1 billion
in tax relief each year,
and employee tax reliefs for pension contributions were valued
at around £5.3 billion in 2005-06.
112. We recommended earlier that the Government's
approach to saving and financial inclusion ought to be based on
the aim of increasing the level of saving among low income individuals
The introduction of a national Saving Gateway would be the
most important single step towards achieving the aim of increasing
the level of saving among low-income individuals and households.
Although a national scheme would involve a substantial public
expenditure commitment, this seems likely to amount to little
more than one tenth of the annual subsidy for Individual Savings
Accounts and Personal Equity Plans and little more than one twentieth
of the annual subsidy for employee pension savings, both of which
categories of subsidy are less likely to be utilised by those
low-income households for whom shorter term saving is most important
and beneficial. We recommend that the Government launch the Saving
Gateway on a national basis at the earliest practical opportunity.