The Poor: Blunkett outlines new plans to help families save

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The Work and Pensions Secretary said he would pour £36m into credit unions and non-profit lenders to help fund loans for needy families. Another £210m will be ploughed into the Government's social fund to encourage small-scale saving and borrowing.

Mr Blunkett also indicated that he would double the amount that people can save without losing benefits from £3,000 to £6,000. People who pay off loans will also be encouraged to build up savings. He will outline the proposals today in his speech to the Labour Party conference.

Mr Blunkett said he aimed to "get those at the very bottom to save a little so they are not reliant on the sharks and the people who would loan them money which end up with them being in a bigger mess, in greater poverty than when they started".

He told ITV's Jonathan Dimbleby programme yesterday: "We are talking about a very large proportion at the very bottom of our income levels who have no bank balance, who are often desperately in debt, who we need to help."

He added: "Our task is to get people into a position - even those who have had to take out social fund loans - to be able to get an account, to be able to build up a tiny nest egg. We are not talking about lots of money. We are talking about enough to be able to buy a new cooker or a bed."

Mark Lyonette, chief executive of the credit union trade association ABCUL, said: "This is just the first step. We look forward to working with the Government in the coming months to ensure that this money is used to achieve the maximum impact on the ground.

"We are particularly pleased that David Blunkett has made the link between people having access to affordable credit and easy ways to build savings. Credit unions have shown over the years what a difference it makes to people's lives if they can build up a small amount of savings and take control of their finances."