A new savings account, designed for people who have not traditionally put money by for a rainy day, has been welcomed by local MP, Gordon Prentice.

The Saving Gateway Accounts Bill, which has its second reading in the Commons today, will promote saving for working age people on low incomes - with Government giving 50p for every £1 saved over a two year period.

Speaking from Westminster, the MP said: "This is an excellent initiative where people can save up to £600 and then get an additional £300 top up – and all tax free."

"This is one way of keeping people away from loan sharks who charge exorbitant rates of interest, bleeding people dry."

The Government estimates that around 8 million people on benefits and tax credits are eligible for this incentive to save. Around a third of those will be in full-time work, and nearly half will be doing at least some work. The new Savings Accounts start in 2010 and run for two years after which savers can transfer their money to other kinds of accounts.

The Saving Gateway Accounts will be run through the Post Office, credit unions, banks and building societies.

Saving Gateway Accounts will be automatically available to people on a range of benefits and tax credits. They will be notified of their eligibility by the Revenue.

Savers can save up to £25 per month - securing a matching Government contribution of up to £12:50 a month.

The Child Trust Fund is also meant to encourage the savings habit. It provides every child with £250 at birth (£500 for children in lower-income families) and again at age of 7. Over 4 million children now have Child Trust Funds.