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LibDems’ Cable denounces property Sipps as ‘wicked’

The LibDems have intensified their attack on the A-Day changes allowing residential property in a Sipp, with Sha- dow Chancellor Vince Cable branding the plan “wicked”.

Speaking at a fringe conference event in Blackpool org- anised by the IMA, Cable said the move will encourage more people to invest in property at a time when many are already overexposed.

The LibDems have campaigned for a reversal to what they see as a loophole in next April’s simplification and believe that the Treasury’s decision to hold a consultation on the changes is a step in the right direction.

They claim that the move to allow residential property in a Sipp will cost the Treasury at least 500m a year, benefiting wealthy individuals at the expense of first-time buyers, rural communities and the general taxpayer.

Cable said: “The decision to allow residential property in Sipps is wicked, as many people already overexposed to property will be encouraged to invest more in this asset.”

He attacked the Government for “chickening out” of a review of endowment mortgages because of the costs.

Cable also questioned the “fashionable view” among the Government and industry that there is a savings crisis and people should be encouraged to save more.

He used the example of the 1980s, and the economic situation in Germany and Japan, as evidence of the problems created when people save too much and capital is not used productively.

In contrast, Cable said that the US, which is seen as the most innovative and successful economy in the world, has virtually no savings.

He pointed out that saving needs to be seen in relation to historically high levels of household debt, which is an issue that has to take priority.

He said: “Do we actually have a savings problem? I disagree with the fashionable view that there is a crisis and people should be encouraged to save more.”

He also said that the LibDems do not support the constant lobbying for tax breaks on new financial products as tax breaks have the effect of switching savings around rather than increas- ing the total.

Cable reiterated the LibDems’ commitment to the citizen’s pension, accompanied by soft compulsion and a slow, voluntary move to later retirement.

LibDem pension spokesman Lord Oakeshott, speaking at a Scottish Widows’ fringe event at the annual party conference, said: “The Treasury is burying its head on the issue. How much more evidence do they need that this is going to be a tax break bonanza for the rich, opening up the floodgates for high-earners to cash in?”


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