More than 90,000 people have signed up for the scheme, depositing just over £13 million in Help to Save accounts and receiving a combined bonus of around £6.5 million. This is still some way short of the Government’s initial targets of 3.5 million people benefiting from the reform.

Average deposits have been £44 a month, just below the £50 limit.

Help to Save was designed to help those on lower incomes build up a ‘rainy day’ fund, and form a long-term savings habit. How much is saved, and when, is up to the account holder, and they don’t need to pay in every month to get a bonus.

Help to Save is available to working people on Tax Credits, or Universal Credit claimants. Account holders can save between £1 and £50 every calendar month. Accounts last for 4 years from the date they are opened. After 2 years, savers get a 50% tax-free bonus on the highest balance they’ve achieved. If they continue saving, they could receive another 50% tax-free bonus after a further 2 years.

‘Damp squib’

Tom Selby, senior analyst at AJ Bell, said: “Given the hype around the Help to Save initiative ahead of the 2016 Budget, it is hard to escape the conclusion the programme has been something of a damp squib.

“While it is clearly positive that people have benefited from a 50% top-up on money saved through the scheme, that is a small fraction of the 3.5 million who could have claimed. Given the scheme is aimed directly at those on the lowest incomes, it is perhaps little surprise take-up has been so low. If you are on benefits and struggling to make ends meet, even a significant savings carrot will make little difference to your spending decisions.”

Jane Goodland, corporate affairs director at Quilter, added: “Help to Save makes all the right noises – encouraging people who are on lower incomes to put money away for future and offering a substantial incentive to save. There is nothing else that comes close to giving savers a risk free 50% return, and we urge anyone that is eligible to take a look at this scheme.

Improving financial literacy

“Although uptake is relatively low right now, with only a little over 90,000 accounts open and over a quarter with no money in them, policymakers deserve some credit for bringing it to life and it should be given time to develop. HMRC’s research shows that there are many barriers to saving that need to be addressed and it is not enough to assume that an incentive to save is enough in itself, no matter how generous the ‘bonus’. The research shows people still face many barriers, including challenges in their home life and budgeting concerns, as well as low levels of financial literacy and confidence with money.”

Goodland said more can be done to give people the confidence and basic financial know-how and the scheme needs to be combined with a sustained effort to improve financial awareness and education: “Saving is not part of our DNA right now, and is under threat from the a consumer culture that makes it easy to spend at a tap, or take a loan in minutes.”