A GOVERNMENT savings scheme championed by former Prime Minister David Cameron has finally launched, with the aim being to help the 29 per cent of UK adults who have not been able to save in the past year build up a savings pot.

Aimed at the 3.5 million people currently claiming working tax, child tax or universal credits, the Help to Save scheme gives savers a 50 per cent bonus on every pound deposited over a four-year period. The maximum amount an individual can save is £2,400, meaning the maximum government bonus available s £1,200. Around 250,000 Scots qualify for the scheme, which has seen 70,000 people across the UK sign up so far.

The need for some means of encouraging people to save cash is clear, with recent research from Bank of Scotland show a growing number of Scots – 30 per cent, compared to 28% last year - could not survive on their current savings beyond a month if they lost their job.

However, the Government’s own projections show that Help to Save may only reach one in seven eligible savers, with Step Change, the debt charity that campaigned for the scheme to be established, noting that the Government must “make a real effort to promote the scheme to drive these numbers up”.

Even if it does, the scheme alone will not be enough to improve people’s financial health, with few people receiving the qualifying credits able to afford the £50 a month that would be required to receive the maximum government bonus.

Grace Brownfield, senior public policy advocate at Step Change, said: “Even the best possible scheme will fail if people simply don’t have enough money spare each month to save. We know that for many of our clients, living on incredibly tight budgets, this is the reality they face.”

Other campaigners have argued that Help to Save is just the latest of many policies that have confused the financial picture for lower earners, particularly those claiming benefits. The Low Incomes Tax Reform Group, for example, said that Help to Save can actually work against savers claiming universal credit and housing benefit because the savings will be assessed as capital. Therefore, if two partners took out a Help to Save account and saved the maximum over four years they would end up with a balance of £7,200, which exceeds the £6,000 capital threshold level and would reduce their benefits entitlement.

This is exactly the kind of issue highlighted by LexisNexis tax expert Kelly Sizer in a damning 25,000-word thesis on government-sponsored savings incentives. “At best, the complexity undoubtedly leads to some individuals investing in schemes which are not appropriate for their circumstances,” she said. “At worst, some may not save at all for fear of making the wrong choice.”

Despite this, the Treasury insisted at the launch of Help to Save that it is “easy to use, flexible and secure”, will help those on low incomes to build up essential funds and will encourage a savings habit.

Anyone in doubt over whether the scheme would benefit them should seek advice from their local authority’s welfare rights adviser or from charity Turn 2 Us, whose website provides details of specialised advisers.

Meanwhile in the private sector, shoe repairs business Timpson has become the first employer to road-test a new government initiative dubbed sidecar savings. Devised by the National Employment Savings Trust (NEST) – a multi-employer defined contribution pension scheme established by the government - the initiative divides employees’ auto-enrolled pension contributions between a workplace pension and an easy-access savings account, deducting payments at source.

Once the savings balance reaches an acceptable level, all contributions, which are set high than the auto-enrolment minimum, go straight into the pension as normal. Should savers need to raid the sidecar, the contributions will be split again between the two pots until the savings have been rebuilt.

The scheme also promises to pay savers competitive interest on the savings side, though the exact rate has not been revealed. The administrators running the Timpson scheme – Salary Finance – currently work with Yorkshire Building Society, which pays between 0.75 per cent and 1.35 per cent on comparable accounts.

Timpson, which provides a range of services from shoe repairs to key-cutting, is known for progressive policies, such as recruiting ex-offenders and offering free dry-cleaning to the unemployed. Employees will be enrolled into the sidecar scheme in early 2019, with NEST planning to run similar trials with other employers until 2021.