HM TREASURY News
Release (59/07) issued by The Government News Network on 25 May 2007
Ed Balls, Economic
Secretary to the Treasury, speaking today at the opening of the
new Bristol Institute of Public Affairs, launched the evaluation
report of the second Saving Gateway pilot and outlined the
Government's next steps on this key initiative.
The results of the second Saving Gateway pilot build on the
positive results of the first pilot, and show overwhelmingly that
the principle of matching savers' contributions helps those
on lower incomes to save, to learn the savings habit, and use
mainstream financial institutions.
Ed Balls said:
"Saving Gateway is a simple and straight forward way to help
people to save. The pilots have been overwhelmingly positive about
the effect of matching as a targeted incentive to help people on
lower incomes to save and teach them the habit and benefit of saving."
"I want to discuss with stakeholders and the financial
services industry how we can build on the success of these two
pilots and we plan to make further announcements on the next steps
for the roll out of the Saving Gateway in the Pre-Budget Report."
Saving Gateway is a savings account designed for lower income
groups to encourage them to save and engage with mainstream
Key findings of the report are:
* participants are overwhelmingly positive about the effect of
matching, and find it a simple and easily understandable incentive
* there is no need to offer match rates as high as
pound-for-pound in order to incentivise people to save;
* the account provides a structure for regular savings - monthly
limits of £25 were affordable for those on lower incomes;
* a time-limited account (18 months in the pilots) kick-started a
saving habit among those new to saving, and most participants
believed that they would continue to save after the Saving Gateway
* there are financial inclusion benefits from the scheme,
participants became more familiar with financial products and
information, some also came into contact with a bank for the first
time in their lives.
NOTES TO EDITORS
1. Saving Gateway is a savings account designed for lower income
groups, which aims to promote engagement with mainstream financial
services and a saving habit. The first Saving Gateway pilots were
announced in Pre Budget Report 2001 and ran from August 2002 to
November 2004. The pilots took place in five areas - Cambridge,
East London, East Yorkshire, Cumbria and Manchester.
2. The first pilot involved around 1,500 participants, with
individuals' accounts open for an 18-month period. Where
individuals could save up to a limit of £25 per month for 15
months, enabling them to save a maximum of £375, for which they
received a £1 to £1 match.
3. The evaluation of the first pilot was conducted by the
University of Bristol, Personal Finance Research Centre and was
published in March 2005 - 'Incentives to save: Encouraging
saving among low-income households' - and found that:
* The scheme generated both new savers and new saving. For
example, among participants, the number of people saving regularly
quadrupled and the amount they saved doubled.
* There was evidence that the scheme led to behavioural changes:
41% of participants were still saving three or more months after
the pilot finished and 32% of participants said that they were
more likely to plan for retirement.
4. A second pilot was announced at the 2004 PBR and started in
March 2005 and finished in March 2007. It operated in the same
five locations as the first pilot, as well as an additional area
in South Yorkshire. Around 22,000 accounts were opened by July 2005.
5. The second pilot tested alternative match rates (£1 Government
contribution per every £1, £2 or £5 saved), different monthly
contribution limits (£25, £50, £125), the effect of an initial
endowment (£50). The second pilot was also tested with a far
wider income group: individuals were eligible for the Saving
Gateway account if they earned less than £25,000 per annum and had
household earnings of less than £50,000, or were out of work and
6. The evaluation of the second pilot was carried out by Ipsos
MORI and the Institute for Fiscal Studies. An interim evaluation
was published in July 2006 and the final evaluation has been
published today. Both reports are available at the following link:
7. Non-media enquiries should be addressed to the Treasury
Correspondence and Enquiry Unit on 020 7270 4558, or by e-mail to email@example.com
8. This press release and other Treasury publications and
information are available on the Treasury website at http://www.hm-treasury.gov.uk.
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