MILLIONS of low-paid workers who put aside savings could receive a top-up of up to £1,200 over four years, the government has announced.

Employees on in-work benefits who put aside £50 a month would get a bonus of 50 per cent after two years – worth up to £600.

That could then be continued for another two years with account holders receiving another £600.

But Labour said the scheme was like stealing someone’s car and offering them a lift to the bus stop.

Owen Smith, the shadow work and pensions secretary, said: “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.”

Chancellor George Osborne dropped the Labour scheme, which was designed for up to eight million people on benefits and tax credits, saying in 2010 that it was not affordable.

Mr Smith said that subsequent cuts to benefits would 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.

The government’s savings scheme, known as Help To Save, will be detailed in this week’s Budget, in which Mr Osborne has already warned of further spending cuts.

Mr Osborne said that the UK had to act now rather than pay later, adding that the country would see cuts equivalent to 50p in every £100 of public spending by 2020.

“This is not a huge amount in the scheme of things,” he said.

Labour shadow chancellor John McDonnell called for more long-term investment, specifically in skills, infrastructure and new technology, to enable the UK economy to withstand the global headwinds.

Forecasters at the EY Item Club said Mr Osborne should hold fire on further spending cuts or risk worsening an expected slowdown in the UK economy.

Meanwhile, in a planned boost for low-paid workers, the national minimum wage is set to increase from October 2016.