Draft Individual Savings Account (Amendment No.2) Regulations 2017

Peter Dowd Excerpts

Wednesday 15th March 2017 General Committees

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to work under your stewardship, as ever, Mr Evans. First and foremost, I have a complaint to make. It is a real shame that consideration of the regulations has been scheduled for today, when the Chancellor is making a strategic withdrawal in relation to national insurance contributions. I cannot let that go without comment. Given that those proposals have been withdrawn, I am glad that some self-employed people may have a little extra money to put into ISAs.

We had a fair old debate on this matter on the Savings (Government Contributions) Bill Committee last year. We received evidence from many people about the efficacy of not just this product but others. The Opposition welcome any scheme that encourages people to save, as long as the burden on the taxpayer is not too much. Does the Minister believe that the benefit to the taxpayer is commensurate with that resulting from the scheme?

We are also concerned about whether putting another product in an already crowded market is appropriate. We accept that the lifetime ISA is a simple product, but nevertheless there is a crowded market out there. The Minister may want to share her view on that and comment on the possibility of a future review following the scheme’s roll-out.

We must also repeat our concern that the scheme will discourage people from taking up pensions. We are genuinely concerned that it will lead to people not taking the conventional pension route and that they might duck out of auto-enrolment and put their eggs in a different basket that is not tried and tested.

Will the Minister comment on another concern of ours? We wanted a mechanism whereby there would be an absolute requirement for independent advice before any money could be withdrawn, but that is not included in the draft regulations. Has the Minister had second thoughts about independent advice on a matter of such importance, especially given that for some people it involves buying a house?

Many MPs have a genuine concern that is not directly related to the draft regulations, but it is worth expressing it in this Committee. Companies such as Bellway are selling on freeholds, which is costing people an arm and a leg. People enter the housing market and find that when they want to buy the freehold of their property after a year or two, they have to pay a huge amount to do so. On top of that, they experience almost exponential increases in ground rent. The freehold issue must be addressed. We have expressed concerns that it crowds the market, potentially puts people off buying and, through that latest scam, adds to the dissonance in the housing market.

[Jake Berry (Rossendale and Darwen) (Con)]

As a north-west MP, the hon. Gentleman will be aware that that is particularly prevalent in the north-west of England. The Government announced in their recent White Paper on housing that they will look at it. Will he join me in welcoming the Government’s proposal to look at ways in which we can modernise how people can buy the freehold of their property under the Leasehold Reform Act 1967, which has historically been called the leasehold enfranchisement Act?

[Peter Dowd]

I am pleased that the hon. Gentleman has mentioned that. Of course I welcome anything that the Government do to stop such scams gaining ground. We are more than happy to participate in a bipartisan way in anything to stop that happening.

I raised that issue because it is a matter of concern, and one that we have expressed before in connection with the housing market. The last thing we want in this country is for people to stop buying houses and entering the housing market because they are frightened to death that something in the small print will be produced later. I have taken this opportunity to mention that.

As I have said, we welcome the fact that the Government are helping people to save. We still have concerns about whether the draft regulations are necessarily the right way forward, so although we will not oppose them, neither will we slap the Government on the back for this particular product, given all the concerns that we have expressed in the past.