Bobby Dean MP Questions Martin Lewis on Effectiveness and Future of Lifetime ISAs
During a Treasury Committee meeting, Bobby Dean MP, Liberal Democrat MP for Carshalton and Wallington, questioned financial expert Martin Lewis on the effectiveness of Lifetime ISAs, raising concerns about their long-term value and fairness.
Speaking from personal experience, Bobby Dean revealed he had used a Lifetime ISA to buy his first home but now has “70p sitting in that account and it has been that way for a number of years.” He asked whether most savers left their LISAs empty after purchasing a home.
Martin Lewis suggested this was the norm and later conducted a poll confirming that only 7% of Lifetime ISA holders continued using them for both home buying and retirement savings.
A key issue discussed was the withdrawal penalty, which penalises savers who withdraw funds for reasons other than a first home or retirement. Martin Lewis was clear: “I would die on the cross of getting rid of the withdrawal penalty for anyone who is buying a first home.”
Bobby Dean then questioned the fairness of the £450,000 property cap, asking whether it should rise with inflation over time or be held down closer to the national average property price, with a possible regional level for the London and South East.
He asked, “Should it be possible to purchase any home whatsoever, no matter how expensive, or should we be thinking about the distributional impact of this?”
Martin Lewis replied that removing the cap entirely was politically unlikely, but failing to adjust it with rising house prices had created a “manifest unfairness” that erodes confidence in the scheme. “The fact that we have not increased it with average house prices year on year puts people off the product and gives people no transparency and no consistency,” he explained.
During the Treasury Committee meeting, Bobby Dean MP questioned whether Lifetime ISAs effectively prioritise support for first-time buyers or whether they are becoming a “free money” perk for wealthier individuals.