4) The Warm Home Discount funding should be reconsidered
The government is planning to expand the Warm Home Discount to more people on low incomes and increase payments to £150. However, if there’s no change to the way this is funded, it will mean increasing energy bills for everyone else. Someone who missed out on the means tested assistance by £1 would have several pounds more added to their energy bill to pay for it. If the Treasury was to foot the bill, it could be expanded to all those who need it, at a meaningful level, and be paid for through a more progressive tax.
5) We need a revolution in insulation
Schemes operating through energy providers can provide energy-saving measures for people on specific benefits, but the scale of energy price rises isn’t just pushing those on the very lowest incomes into difficulties, it’s leaving those who don’t receive benefits with some impossible choices too.
The Green Homes Grant vouchers were meant to expand government support to a wider group, but problems with delivery meant fewer than 45,000 homes have benefited from energy efficiency measures through the scheme, and a third of these have insulated the loft. We need an effective replacement that actually enables millions of people to use less energy, simultaneously cutting their bills and helping the government move closer to net zero at the same time.
6) The government has the power to cut the cost of petrol by 85.19 pence per litre
We’re not expecting anything beyond a freezing of fuel duty, but it’s important to be aware that fuel duty and VAT make up 52% of the cost of petrol, and that considering a cut in either would make a significant difference to the cost of filling up at the pumps.
Consultations HL wants to see
Helen Morrissey, senior pensions analyst, Hargreaves Lansdown:
“There may be far more pressing problems in the world right now, but progress on key personal finance issues is well overdue, and making changes now will improve life for people in the future. So there are a number of consultations we want to see announced in the Spring Statement.
The Lifetime ISA: revisit the LISA limits and consult on the LISA penalty
The annual allowance has been held at £4,000 for almost five years, during which time the number of people maxing out their allowance has rocketed. Meanwhile, the limit on the price of a property you can buy using a LISA has stuck resolutely at £450,000, while house prices have risen 25%. Setting a fixed limit and then walking away to leave buyers to wrestle with rising prices isn’t good enough. Overall limits need to be linked to house price inflation, so buyers know they won’t be getting into a scheme they could be forced out of by a hot property market.
We also want to see consultation on the LISA penalty. If you take cash out of the LISA before the age of 60 – for any reason other than to buy your first property – you face a penalty of 25%. While it may look like you are just giving up the government bonus, it also takes a chunk of the money you have invested (£6.25 of every £100). The government temporarily reduced the LISA penalty to 20% in response to the pandemic, and it should consult on cutting it permanently.
The Money Purchase Annual Allowance (MPAA): replace with anti- recycling rules
The allowance is meant to stop ‘recycling’, where people access their pension and then re-invest contributions for another round of tax relief, but they add needless complexity and actively prevent people topping up their pension if they’ve been forced to dip into it. It could be replaced with anti-recycling rules, which only kick in when someone has accessed their pension with the express intent to recycle the cash. If there’s no intent to recycle, people can rebuild their pension savings and therefore their financial resilience.”
