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Budget 2014: Senior Tories heap praise on radical savings reform

Treasury select committee chairman Andrew Tyrie has heaped praise on the radical reform to pensions and savings unveiled in the Budget today.

Speaking in the House of Commons after the Budget, Tyrie said the reforms will boost savings in the long-term.

The reforms included increasing the annual Isa allowance from £11,520 to £15,000, which will combine cash and stocks and shares allowances.

The Chancellor has also announced that from April 2015 anyone over the age of 55 will be able to take their entire pension pot as cash.

Discussing the reforms, Tyrie said: “They are extremely interesting and long-term reforms. The Isa reform is very resonant of going back to Peps, it is a tremendous idea that the cash and equity Isa have been merged and we have raised the cap.

“Speaking in a personal capacity, there is a very interesting proposal to get rid of defined contribution rules that get rid of annuities. That is a tremendous achievement, a very far reaching announcement. I know the last Labour government was looking at it for a while but could not find a way to do it. This Chancellor has found a way to do it and we should commend him for it.”

Former Treasury financial secretary Mark Hoban praised “radical reforms” but said the Treasury must go further.

He said: “This should be seen as the first stage in a series of reforms. As the Chancellor said in his statement today, the OBR predict this saving ratio will continue to fall. 

“We have to make sure there is more advice and guidance available before they retire. A key part of the next stage of reform will be to take that right to advice and see how we can find better advice in the run up to retirement.”

Labour leader Ed Miliband focused his Budget response on falling living standards claiming the Government is leaving people worse off.

Miliband said people are £1,600 worse off because of wages rising slower than inflation. He claimed the Treasury is considering a further cut to the top rate of income tax from 45p to 40p.

Miliband said: “The working people of Britain are worse off under the Tories. Living standards down month after month, year after year. In 2011 living standards were down; 2012 living standards down; 2013 living standards down. Since the election working people’s living standards have fallen.”

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