Saving’s a great idea – but only if you’ve got the dosh

The government’s latest savings scheme has a worthy aim, says Simon English, but what if you’re struggling already?

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For the list of well-meaning schemes that may not succeed, we have another contender. The government has launched a new drive to encourage workers to build up emergency savings through payroll schemes, arguing that millions of Britons remain financially vulnerable to unexpected costs.

On the face of it, the idea is difficult to oppose. The newly announced National Coalition for Workplace Savings brings together employers including Coop, Next and other major businesses in an effort to make saving as routine as pension contributions. Ministers hope that allowing workers to put money aside directly from their pay packet will help create a culture of regular saving and improve financial resilience.

The challenge it seeks to address is real. Around one in 10 working-age adults have no savings at all, while a further one in five have less than £1,000 available for emergencies. For households facing an unexpected boiler repair, car breakdown or period of unemployment, that leaves little margin for error.

The logic behind workplace saving is straightforward. Automatic pension enrolment has dramatically increased retirement saving by making contributions effortless. Advocates hope the same behavioural nudges could encourage people to build emergency funds without having to actively transfer money into savings accounts each month.