Budget 2016: New Lifetime ISA welcomed
Responding to the Chancellors Budget, Robin Fieth, Chief Executive of the Building Societies Association, said:
“There is much to be welcomed in the Chancellor’s budget, in particular the new Lifetime ISA.
"We are interested in the Lifetime ISA which provides substantial Government bonuses for long term saving. But it is vital that consumers understand exactly what they are signing up to as this is a long term commitment. Early withdrawal for any other reason than the purchase of a first home or for retirement after the age of 60 could mean a potentially substantial reduction in the savings pot.
"We are supportive of using the of 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 already and we look forward to the results of the trial in the South West.
"We welcome the launch of the Starter Homes Land Fund prospectus, helping Starter Homes to get off the ground. However, the current five year only discount is a mistake that will cost the next generation. 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.
"We are pleased that the Treasury has committed to pursuing more proportionate capital requirements for small banks and building societies in the EU.
"We welcome Government’s expectation that the burden relating to Bradford Bingley PLC in particular will 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.
"It’s disappointing 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."
