Lifetime Isa Reform Urged by MPs Amid Budget Concerns
A group of MPs has expressed disappointment with the government's slow pace in reforming Lifetime Isas (LISAs), a savings product aimed at helping young adults buy their first home or save for retirement. The criticism comes ahead of the November Budget, with some lawmakers questioning whether LISAs are a good use of taxpayer money.
The Treasury Committee, which has been monitoring the scheme since its launch in 2017, has found that LISAs were being mis-sold and did not suit everyone. Despite this, only limited reforms have been implemented, leaving many MPs unconvinced about the product's effectiveness.
"The government has taken some steps towards improving the Lifetime ISA, but I do not believe they have gone far enough," said Dame Meg Hillier, chair of the Treasury Committee. "The Lifetime ISA is a confused product that requires reform."
LISAs allow individuals under 40 to save up to £4,000 per year, with the government topping it up by 25%. Since its introduction, around 6% of eligible adults have opened an account, with approximately 1.3 million accounts still active.
The committee's report in June highlighted concerns about the product's suitability for all users and warned that LISAs were being mis-sold to those who may not benefit from them. The government responded by introducing some reforms, but MPs argue more needs to be done.
Some lawmakers have questioned whether LISAs are a good use of taxpayer money, given forecasts suggesting they will cost the government £3 billion over five years. "The Lifetime ISA is a costly scheme that has failed to deliver on its promises," said one MP, who wished to remain anonymous.
In response to criticism, a Treasury spokesperson stated: "We are committed to making sure the Lifetime ISA works for everyone. We have taken steps to improve the product and will continue to monitor its performance."
The November Budget is expected to provide further clarity on the government's plans for LISA reform. With MPs urging more significant changes, it remains to be seen whether the government will take a more decisive approach.
Background: LISAs were introduced by the Conservative government in 2017 as part of efforts to help young adults save for their first home or retirement. The scheme has been criticized for being complex and difficult to understand, leading some MPs to call for its reform.
Additional perspectives:
A spokesperson for the Treasury said that the government is committed to making sure the Lifetime ISA works for everyone.
Some experts argue that LISAs are a valuable tool for helping young adults save for their future, but acknowledge that more needs to be done to improve the product's effectiveness.
Current status and next developments: The November Budget will provide further clarity on the government's plans for LISA reform. MPs are urging the government to take a more decisive approach in addressing concerns about the product's suitability and cost-effectiveness.
*Reporting by Bbc.*
