Rainy day savings accounts urged for low-paid and benefits claimants

PA

Benefits claimants should have money automatically hived off into a savings account to help get them out of poverty, according to a report.

Rainy day accounts should also be trialled with large companies to help low-paid workers save cash, a policy unit created by the coalition to nudge people into making better decisions recommended.

It also calls on the Government to make it easier for people to access services by reducing unnecessary burdens, such as complicated form filling.

Welfare claimants who "churn in and out" of Jobcentres become immune to "interventions", the Behavioural Insights Team (Bit) found.

It urged ministers to carry out trials removing demands that claimants must attend meetings to receive benefits to find out if that gives them more "headspace".

Bit, which is now a social purpose company owned by the Government, innovation charity Nesta and its employees, said people who are "just managing" - the group Prime Minister Theresa May promised to help on taking office - are often short on time, money and mental energy.

Its wide-ranging report called on ministers to carry out research into whether small improvements to bad housing, such as improving noise insulation and planting trees, can help parents make better decisions about how they look after their children.

Forms for university and technical college applications should already contain the name and personal details of the student to encourage them to fill out the rest, it also recommended.

Kizzy Gandy, lead author of the report and senior adviser at Bit, said: "Government policies should help people to have less on their mind, not more. We are optimistic that behavioural science can help government departments to better design policies to help those who are 'just managing' in order to prevent and overcome poverty.

"We find that in many cases, simple tweaks to service design can yield disproportionate gains in improving decision-making. For example, simply pre-filling application forms for university can increase the number of low-income students continuing to higher education."