Following Peter Dowd's work on the Bill at committee stages (see earlier post) the Bill was discussed in the Commons Chamber on 12th December 2016.
The Bill which will introduce the new Lifetime ISA and the Help to Save scheme. We need to help people save for the future, but I am not convinced that this Bill will help.
The Lifetime ISA would be available to people aged between 18 and 40 from April 2017. Individuals would be able to save up to £4,000 each year and receive a Government bonus of 25%. The money could be used to buy a first home or withdrawn after the age of 60. Funds withdrawn for other purposes would attract a 25% charge.
While I support the idea of incentivising people to save for the future, especially for retirement income, I am concerned that the Lifetime ISA scheme could create a diversion from saving in traditional pensions. On Monday, I voted for an amendment that would have placed a duty on HMRC to review the impact of Lifetime ISAs on automatic enrolment pensions, and was disappointed that the Government opposed and defeated it.
The new Help to Save accounts would be for people in receipt of Universal Credit with minimum weekly household earnings equivalent to 16 hours at the National Living Wage, or those in receipt of Working Tax Credit. They would work by providing a bonus on up to £50 of monthly savings. However, I am concerned that the majority of people on low incomes are already struggling to make it through the week and have seen the Government drastically cut their in-work benefits. They are far from being in a position to save.
I voted for an amendment that would have allowed credit unions to offer Help to Save, to help get more people signed up. Disappointingly, the Government opposed and defeated this amendment.
Here is Peter's contribution