£1,200 bonus offer for Help to Save accounts
Low-paid workers who put money away in a new savings scheme will be rewarded with a bonus of up to £1,200, Prime Minister David Cameron has announced.
The Help to Save accounts will be open to millions of employees who receive in-work benefits, such as tax credits, within two years.
Nearly 500,000 young workers are being given a pay hike of around £450 on average under changes to the national minimum wage as part of measures to boost the life chances of the poorest.
Around 25,000 struggling teenagers will also be helped through a national mentoring campaign.
Mr Cameron said: "I've made it the mission of this government to transform life chances across the country.
"That means giving hard-working people the extra support they need to fulfil their potential.
"And that's what these new measures will achieve - helping someone start a savings fund to get them through difficult times, giving people on low incomes a pay rise and making sure teenagers have the experience and networks to succeed."
Officials said nearly half of Britain's adults ha ve less than £500 set aside for emergencies.
Under Help to Save, around 3.5 million workers on universal credit or working tax credits will be able to save up to £50 a month and receive a bonus of 50% - a maximum of £600 - after two years. Savers can continue to use the scheme for a further two years and earn up to another £600.
Chancellor George Osborne said: "This Government is determined to improve the life chances of the poorest in our society and our new Help to Save scheme will mean millions of low income savers across the country could now receive a Government bonus of up to £1,200 to help them build up their savings."
The Government is increasing the minimum wage by 25p an hour for 21- to 24-year-olds, taking the rate to £6.95, and by the same amount for 18- to 20-year-olds, putting their pay at £5.55 an hour. The rate will increase from £3.87 to £ 4.00 an hour for under-18s and ap prentices will be given a 10p hourly rise taking them to £3.40.
Mr Cameron's reforms will see high-achieving professionals mentoring struggling teenagers at risk of dropping out of education before they sit their GCSEs.
Mike Hughes, executive director of charity TwentyTwenty, which supports disadvantaged and troubled young people, said: "For many disengaged young people, a volunteer mentor is the first and only beneficial adult role model they have consistent access to over a long period of time.
"As such, the mentoring relationship can be literally life-changing, empowering them to overcome many personal challenges and achieve positive goals against the greatest of odds."
Sir Dan Moynihan, CEO of the Harris Federation, an education charity, said: "In schools like ours, where social mobility is everything, the encouragement and outside perspective of a good mentor can make a huge difference to a young person's life.
"We have had hundreds of successful and inspirational adults volunteering to mentor our students and I welcome this scheme, which will open up mentoring to many more deserving young people."
Shadow work and pensions secretary Owen Smith dismissed the savings scheme, claiming that benefits cuts will mean families struggling to make ends meet rather than having money to put aside.
He said: "This is like stealing someone's car and offering them a lift to the bus stop.
"It is right that there should be incentives to save, that's why a Labour government introduced the almost identical saving gateway that the Tories scrapped.
"Universal Credit cuts will take £1,600 a year from over two million low and middle-paid working families. While new analysis shows that 2.3 million of the 3.1 million families on tax credits will see their in-work support fall as they are moved to Universal Credit. With some families up to £3,000 a year worse off.
"These cuts will mean families are going to struggle to have enough money to make it to the end of the week, let alone save for the future. If the Tories were serious about supporting low and middle-paid workers in the Budget, they would listen to Labour's calls to fully reverse the Universal Credit cuts."