Lifetime ISA clears Commons

Updated: 

Plans to make it easier for people to save money and to reward them for doing so have cleared the Commons.

The Savings (Government Contributions) Bill includes a new product called the Lifetime ISA, (LISA), which will give people saving for their first home or retirement a 25% bonus on up to £4,000 a year.

The Bill, which received an unopposed third reading, also includes a new Help to Save scheme which incentivises low earners to save by topping up their money with a bonus of up to £1,200.

Treasury minister Jane Ellison described the Lisa as a "positive move" for savers which would help complement their pensions.

She said: "We want to make it easier for everyone to build up savings, to meet their ambitions and to feel secure in their personal finances and indeed we have already set to work to make this the case.

"We have put an end, for example, to 17 million people having to pay tax on the interest they received on their savings and we announced the biggest ever increase in the ISA allowance to £20,000 from April next year.

"This Bill, legislating as it does for the introduction of the Lifetime ISA and the Help to Save account, carries on this hugely important work."

But shadow treasury minister Peter Dowd expressed concerns at the measures contained within the Bill.

He said: "Nobody has any objection to helping people to save - it's a question as to how you actually manage to do that.

"We are not convinced that this will do that. We don't think there is sufficient evidence to back up what the minister said, we don't think it sorts the problem out in relation to the shortage of housing."

He added: "We think it complicates the market and introduces, potentially, a Trojan horse and not everybody is convinced about it."

Meanwhile, SNP pensions spokesman Ian Blackford criticised the plans.

He said: "It's not so much about what they call a Lisa, it's what we on this side of the House would call the Rupert: The really useful perks for extremely rich Tories."

The Lifetime ISA is due to be available from April next year and would be open to people aged between 18 and 40.

The Savings (Government Contributions) Bill will now head to the House of Lords for further scrutiny.