Low income families 'need government help' saving

Wednesday, 14 October 2009 09:02

The government must help low income families to save, claims research from a leading thinktank.

As Conservative shadow chancellor George Osborne pledged to ditch child trust funds, the Institute for Public Policy Research (ippr) is calling for added support for low and modest income savers.

Research looked at low income families in London, Nottingham and Glasgow and found a strong desire to save, but the recession and the effects of energy price hikes last year have hit their ability to save.

A study reveals a large proportion of families said they were able to save more a year ago - with socialising now being cut back so events such as Christmas can be saved for.

One participant, a mother of two from Newcastle, said: "I've noticed that things have got worse because I always had £10-£20 in the bank before when I was really skint which is why mum did not have to send us anything. But now, I have never ever got anything in that savings account, never.

"I think it's got £1 or something in it. I don't think anything has gone in for months, simply because I cannot afford to leave it there.'"

The ippr finds child trust funds are "a success story" in encouraging saving - and that parents saving did pass on the habit to their childre.

Carey Oppenheim, ippr co-director, said: "Our research shows that parents want to save for their children's future. The Child Trust Fund offers a way for parents to know that their children have some savings - and it may be the only way to ensure all children have a stake in society when they enter adulthood."

The Tory plans for child trust funds would see only the poorest third of families and disabled children would receive a child trust fund.

However, this means families with an annual income of £18,000 would not qualify.

Ms Oppenheim said the plans for child turst funds were "inconsistent with George Osborne saying that at every stage the Conservatives will support a culture of savings."

She added: "Our research shows that families on low and modest incomes consider saving for their children very important but really struggle to do so."

• Tags:
• child trust fund
,
• news