Lifetime Isa Reform is Too Slow, MPs Say Ahead of Budget
The Treasury Committee has warned that the government's reform of Lifetime Isas (LISAs) is moving too slowly, with some MPs questioning whether the product is a good use of taxpayer money.
In June, the committee found that LISAs were being mis-sold and did not suit everyone. The government responded to the report by taking some steps towards improving the product, but MPs say more needs to be done. "The Lifetime ISA is a confused product that requires reform," said Dame Meg Hillier, who chairs the committee.
LISAs were launched in 2017 under the then-Conservative government as a way for people aged under 40 to save for retirement or buy their first home. The government contributes 25% of the savings, up to £4,000 per year. However, only 6% of eligible adults have opened one, with about 1.3 million accounts still open.
The committee's report found that LISAs were forecast to cost the government £3 billion over five years. MPs are now calling for more significant reforms ahead of the November Budget. "I do not believe the government has gone far enough in reforming the Lifetime ISA," said Dame Hillier.
Some MPs have questioned whether LISAs are a good use of taxpayer money, given their relatively low take-up and high cost to the government. However, others argue that the product still has potential and should be reformed rather than scrapped.
The Treasury Committee's concerns about the slow pace of reform come as the government is under pressure to address the rising cost of living and support struggling households. The November Budget will provide an opportunity for ministers to respond to these concerns and outline their plans for LISAs.
In a statement, a Treasury spokesperson said: "We are committed to making sure that Lifetime Isas work for everyone, and we are taking steps to improve the product and make it more accessible." However, MPs say more needs to be done to address the product's shortcomings.
The debate over LISAs highlights the ongoing challenge of balancing competing priorities in government policy. As the November Budget approaches, ministers will need to weigh up the costs and benefits of different policies and make difficult decisions about how to allocate resources.
Ultimately, the future of LISAs will depend on the government's willingness to reform the product and address the concerns of MPs and other stakeholders. With the November Budget just around the corner, it remains to be seen whether ministers will take decisive action to overhaul the Lifetime ISA.
*Reporting by Bbc.*
