Final evaluation of saving gateway 2 pilot

• Description of the programme
• The study
• What are the outcomes?
• Key findings
• Points to consider

Description of the programme

The Saving Gateway is a UK government programme to promote saving among lower income households by providing match and bonus payments for savings made through special Saving Gateway accounts. An initial version of the scheme (SG1) was first piloted in 2002. The early findings were promising – showing, among other things, success in achieving savings among people who had not saved before.

This evaluation reports on a second, larger pilot, of the scheme that ran for 18 months from 2004 (SG2). SG2 ran in six areas - Cambridge, Cumbria, East London, Manchester, East Yorkshire, South Yorkshire - and involved nearly 22,000 people. In order to be eligible to take part in SG2, participants needed to live in one of the pilot areas, be aged 16-65, and have a low income (below £25,000 individual earnings and below £50,000 household income) or be receiving out of work benefit payments.

The study

This evaluation considers both the effectiveness of the SG2 scheme as well as factors that may have influenced its effectiveness. It is based on quantitative and qualitative data, including responses collected from a control group of people who did not take part in the scheme.

Quantitative data was collected from:

• Telephone surveys: 11,118 telephone surveys were conducted. Those surveyed included people who took part in SG2 (4079), people who were offered the chance to take part but who declined (3359), and a control group (3050). Surveys included questions about income, debt, savings, attitudes to savings, and personal and household characteristics.
• Transaction records: Information on the amount, timing, method, and location of all payments into and withdrawals from SG2 accounts was collected.

Qualitative data was collected from:

• Interviews: Interviews were conducted over two phases. The first involved 91 face-to-face with people who took part in SG2 (58), financial education learning providers (9), staff at the banks who provided the accounts (12), and a control group (12). These interviews focused on better understanding participants’ views and situation going into the scheme and how the scheme worked in practice. The second involved face-to-face interviews with 70 SG2 participants only and explored the impact of the scheme.

What are the outcomes?

Financially capable behaviours: Managing money well day to day.

Key findings

Effect on saving: Controlling for other factors, and compared to those who did not have an SG2 account, those who opened an SG2 account:

• were 10.6% more likely to have formal savings 16 months into the scheme than those who did not;
• were 34.2% more likely to have increased their savings over the last two months than those who did not;
• were equally likely to have increased their net worth as those who did not;
• had similar levels of net worth as those who did not.

These results suggest that while the SG2 scheme succeeded in raising savings in accounts among participants, this came at the expense of other kinds of saving, such that they did not translate into increases in net worth.

Effect on spending: Controlling for other factors, and compared to those who did not have an SG2 account, those with an SG2 account:

• spent a similar amount on durable goods, clothing, or food inside the home;
• spent less on food outside the home (on average £9.97 less, and 21.8% less likely to spend more than £25 on food outside the home per month).

This suggests that some of the increase in savings may have come from reductions in spending on non-essential items.

Sub-group effects: The scheme had a greater positive effect on the savings behaviour of people on a lower income, those who were on benefits, and those who did not own their homes (in a sense, those who were worse off). There was no difference in the effectiveness of the scheme for people who were in work versus those who were not.

Take-up of the scheme: Overall, 17.1% of people who were offered the opportunity chose to take part in SG2. Compared to those who declined, and all other things being equal, SG2 account holders were on average more highly educated, had higher income, better numeracy skills, higher levels of existing savings, and were more likely to be in work and own a home. They were less likely to have a long-term health condition.

Savings account use: Overall, SG2 accounts were widely used by those who opened them. 92% of those who opened an account continued to make payments beyond the first month and 71% made payments in at least 16 of the 18 months. The median payment made each month across areas was equal to the maximum contribution eligible for matching. Roughly two-thirds of account holders achieved the maximum government match, of whom the majority continued to make contributions beyond this point. Withdrawals were relatively rare. In a majority of cases, the money put into SG2 seemed to represent genuine new savings, rather than money transferred from another saving source. Most account holders reported that they planned to keep at least some of the savings they achieved.

Attitudes towards the programme:

• Most participants found the accounts easy to set up and use, although there was some confusion around withdrawals and repayments, and contribution limits.
• Some participants offered constructive suggestions for how the scheme could be improved – for instance, by offering people advice on what to do with their savings and how to keep up momentum when their Savings Gateway accounts close.
• Few participants took up the offer of financial education, although they reported that they thought it was a good thing to offer. The main reasons participants reported for not taking part were that they did not feel they needed it or were worried about the time and energy required.

Points to consider

• Methodological limitations: This evaluation used several sources of data and robust methods of analysis to look at the SG2 programme from different perspectives and to account for a range of influences on the findings. The authors openly acknowledge limitations and have tried to account for these in the ways they have interpreted their findings.

• Relevance: This report provides useful background reading ahead of the launch of the Help to Save scheme in 2018 – a similar programme to the Saving Gateway.

• Generalisability/transferability: The participants in the pilot were all on lower income or in receipt of benefit payments and were based in a limited range of areas. The findings from this evaluation may not represent the affects you would observe if you were able to get more eligible people to agree to take part, or if you offered a similar scheme to people on higher income levels.

• Applicability: The analysis of how the scheme’s effectiveness and its take-up differed according to individual and scheme characteristics point to opportunities to improve the way programmes are designed so that they are more appealing and to target those who are most likely to benefit.