There is much to be welcomed in the Chancellor’s budget, in particular the new Lifetime ISA. We will, as always after a Budget, now work with officials on all the details.
- We are very interested in the Lifetime ISA which provides substantial Government contributions to incentivise savers. It is imperative that consumers understand exactly what they are signing up to as this is a long term commitment. Early withdrawal for purposes other than for the purchase of a first home or post 60 for retirement, could mean a potentially substantial reduction in the savings pot. We look forward to working with officials on the full details of this new product, part of a growing suite of ISAs.
- The raising of the total ISA limit from £15,240 to £20,000 from next April is excellent news.
- We have already welcomed Help to Save as an important first step in encouraging a broader savings culture in the UK.
- We are disappointed that our concerns about the savings market distortion relating to the one year planning horizon for National Savings & Investments has been ignored, with a substantial net financing target of £6 billion set for 2016/17. We believe that a rolling five year horizon is a fairer way to plan, a development change that would be in line with the Debt Management Office which publishes its projected gilt issuance on this basis.
- We are supportive of the use of funds raised from the Stamp Duty Land Tax to support investment in Community Land Trusts, a movement which started life in the USA. A number of building societies have been working with these small but innovative organisations and we hope that the pilot in the South West will be a success.
- We welcome the launch of the Starter Homes Land Fund prospectus which will invite Local Authorities to apply to access £1.2 billion of funding to remediate brownfield land to be used for starter homes in particular. However, the current proposal that buyers of these starter homes will, after just five years, be able to sell these homes at full market value is, however, a mistake that will cost the next generation.
- It is critical that we build more homes in the UK, the right homes in the right places. In principle we welcome the proposals to speed up planning permission and improve the availability of brownfield land. Early certainty and a reduction in the hoops that developers, particularly smaller developers, must go through is helpful, but can only ever be part of the equation.
- Consumer affordability is stretched irrespective of tenure. A healthy housing market must include a good mix of tenures and it is important that any changes to housing policy reflect this absolute need.
- We look forward to the publication by Government of a call for evidence on how to improve the home buying process and will engage.
- Much of the regulation and legislation that governs the capital that must be held by building societies and banks now comes from Europe. We were encouraged to see a specific commitment from the Government today to pursue more proportionate capital requirements for small banks and building societies in the EU.
Financial Services Compensation Scheme:
- We welcome the firm expectation from Government that the burden relating to Bradford & Bingley PLC in particular is expected to disappear before the end of the 2017/18 financial year. Since 2009, banks and building societies have been paying £400 million a year in interest payments to the Financial Services Compensation Scheme.
Head of External Affairs
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