Budget: 8million to benefit from new savings plan

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People on low incomes will be encouraged to save more through the national launch of a Government savings scheme, it was announced in the Budget.

An estimated eight million people will be eligible for the Saving Gateway, under which the Government will make a contribution for every pound people save.

The accounts, which will be available from 2010 through banks and building societies, and will run for two years, at the end of this period the Government will add its contribution.

The Chancellor stopped short of saying what this contribution would be, but it is likely to be capped at £25 of the amount saved per month.

Two pilot schemes have already taken place in which the Government matched every pound saved with 20p, 50p and £1.

It said today that the pilot schemes had shown that pound for pound match funding was not necessary in order to encourage people to save.

Around 22,000 people took part in the pilot schemes, collectively saving £15 million.

Other organisations such as credit unions, social housing providers and Citizens Advice Bureaux are likely to play a part in the scheme by providing information and support for savers.

The accounts will be available to people receiving certain benefits and tax credits, such as Working Tax Credits, Income Support, Jobseeker's Allowance and Incapacity Benefit.

A consultation on the scheme has been launched.