Savings Gateway

Maybe it was the end of a long day but I was pretty churlish about the Government’s pre Queens Speech on Radio 4 last night. In fact there is much in the announcements I like.

For example, while I understand the concerns of small businesses, the overwhelming employer view of the right to flexible working has been positive and I don’t see why this shouldn’t be the case with its extension.

I also hope consensual progress can be made on Lords reform and party funding.

But I particularly welcome the announcement on the savings gateway. This was a policy that was first advocated by the think tank IPPR when I was its Director. It is the sister policy to the Chid Trust Fund, both being aimed at tackling the growing inequality in asset ownership and the high proportion of people who have no saving at all.

By incentivising low income savers the policy encourages thrift and responsibility and so it can be seen as explicitly ‘pro-social’. When we were debating the idea several years ago some economists said it was wrong to encourage poor people to save as the ‘utility maximising’ thing for them to do was to spend all they had. But poorer people themselves tend to disagree.

Even if they only save a few pounds a month it gives people something to fall back on bad times and a nest egg for special occasions and life changes – the kind of thing many of us take for granted.