Speeches by Reynolds.

“We also have help to save, don’t forget. There are other savings products that are targeted at those on low incomes. We can talk about this as well. In the autumn Budget, we announced an extension of help to save to all universal credit claimants. To be fair to the people who designed this product, it is quite difficul…”

“Yes, but there are others for the self-employed. Certainly when I was Pensions Minister, I was very concerned about the low level of savings of the self-employed. The LISA is a vehicle that self-employed people could use. There are also SIPPs and other vehicles that self-employed people can use. It is true to say that …”

“That has been a very quiet but fantastic revolution in terms of the additional 11 million people now saving for a pension who previously were not. They are employed so they are saving for their pension through their payslips. That quiet revolution has not applied to those who are self-employed. That is a cause for conc…”

“According to the first HMRC study, people said that they found it straightforward to open the LISA and to use the LISA to fund the purchase of their home.”

“As I say, there were mixed views. There is some confusion about the withdrawal penalty. There is a 25% bonus, but when you withdraw you do not just lose the bonus; you lose 25% of the whole. I can see how that could be confusing to people. It is the provider’s responsibility, rather than the Government’s responsibility…”

“The truth is that I do not know because we have only the qualitative research so far. The providers have a responsibility to explain to those who are subscribing to the LISA what the rules are, what the terms and conditions are, and what will happen if they withdraw when they should not be withdrawing. Those rules shou…”

“The design of the policy should be as optimal as possible. Ultimately, the providers are responsible for ensuring that they are providing the right information to their consumers. They have a broader obligation now under the consumer duty to ensure that the consumer gets the best outcome. I admit that some of it is a l…”

“As I say, I did not design the product. This is a savings product with a dual purpose: its intended purpose is to help people save to buy a home and to help people save for retirement. If a withdrawal is made that does not comply with that intended purpose, it is quite normal that there should be a penalty, as is the c…”

“Yes. It is also because they are getting quite a healthy bonus from the Government. There has to be some quid pro quo. That is the deal, is it not? You get 25% on top of your investment. We cannot have a product that gives you 25% when there is no penalty for withdrawing from it if you are not complying with the intend…”

“I have read some of the evidence to your Committee and I have correspondence about the charge, but we have to have some rules. Inevitably, there will be some hard edges. Laura, I do not know whether you want to say anything more about that.”

“You could not design a policy with so many get-out clauses. You could not say, “You will not have a withdrawal charge if your car or your washing machine breaks down”. You could not have that. You have to have some rules around withdrawals that are not in line with the intended purpose. You cannot have a savings produc…”

“I will just say that it is a voluntary savings product. People do not have to save into the LISA. They could be saving into a cash ISA and not have a penalty for withdrawing, but then they would not get the bonus. The bonus is the thing that attracts people into the LISA from the evidence that we have seen.”

“The pandemic brought some very difficult financial circumstances for people. We were not in government, but I can absolutely appreciate why the Government at the time chose to reduce the penalty charge. Going back to the beginning, Mr Grady said, “If you reform this product, it will cost the Government money, and there…”

“I will go back to something that my colleague said. There are other saving products out there for a rainy day. This product was not designed for rainy day savings. If you need to be able to get hold of some cash for a rainy day, you could look at a cash ISA or something similar. That is what I would say in this case.”

“Yes, indeed. If they could save a little bit more, they might want to put it into the LISA. As a Minister, I am not going to give people financial advice. I am just saying that the intended purpose of this savings product is not to be the financial buffer that other cash savings could provide for people.”

“What I will say is that the house price cap is relatively high. If you look at the difference between the house price caps in the LISA and the help to buy ISA, it is a 200 grand uplift from the help to buy ISA. From February this year, the average first-time buyer house price was £240,000.”

“That would be very difficult to police. I go back to the point—I am sorry to sound like a Treasury Minister on repeat—that, if we were to reform that, it would cost money. Is that money you would want to spend in this case? You would have to take money from elsewhere. It goes to Dr Sandher’s point. Do you want to targe…”

“We are considering everything in the round, but it would cost us money. We would have to find the money from elsewhere.”

“Not doing that would cost the Government money and it is a strong incentive not to withdraw. If you were going to reduce it to 20% or less, you would have to look at what impact that would have and whether that is really the desired outcome.”

“Indeed, yes.”