Treasury's low-cost savings schemes 'won't help poor'

The Treasury launched a suite of low-cost products for people on lower incomes last Tuesday: a standard cash ISA, a medium-term investment product with a maximum equity exposure of 60% and a stakeholder pension. They have a 1% cap on fees and a simplified sales process.

The Child Trust Fund, announced in this year's Budget, will also be part of the scheme. Details will be announced in September.

However, charity Church Action on Poverty said the products would not help the poor. It called for more cash for credit union schemes, which allow people to borrow against their savings. Many of the schemes are run by housing associations.

Niall Cooper, national coordinator for the charity, said: "People are struggling with huge debt burdens and government has done nothing to address that so it's absurd to be talking about medium- to long-term savings.

"We are trying to encourage the Treasury to think in terms of financial products that have savings and credit elements, which is what credit unions do."