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Redwood’s group to propose flexible lifetime savings vehicle

John Redwood’s Economic Competitiveness report will include proposals for a flexible lifetime savings account where funds can be accessed to buy a first home or pay for education.

A similar long-term savings vehicle was proposed by the Tories before the 2005 election and has been championed in the past by former Shadow Work and Pensions Secretary David Willetts and former Shadow Chief Secretary to the Treasury Howard Flight.

The proposals would offer savers full income tax relief on contributions into the account.

Individuals would be allowed to access the savings to contribute towards important financial decisions such as contributing to their first home or paying for education or training courses as long as the money is returned to the fund over an agreed period.

The idea is that by offering access to the funds, for certain reasons, more young people will be incentivised to save.

The Economic Competitiveness Group will also call for an end to compulsory annuitisation, a move Shadow Chancellor George Osborne has already indicated that he supports.

The group will present its report on Friday. Osborne and leader David Cameron have indicated that they support the main thrust of the proposals but will not necessarily agree with every detail.

Other proposals will include calls to repeal mortgage regulation, the scrapping of home information packs and passing legislation allowing the UK Government to opt-out of EU regulation if it thinks it is in the national interest.

Tisa, which in its previous guise of Pima has long supported the idea of flexible long-term saving, has welcomed the move.

Tisa director general Tony Vine-Lott says: “While more detail is needed to fully understand this proposal, we have always felt that a lifetime savings account would be advantageous to individuals because it more closely matches the lives they lead. While we have made great strides on simplifying the ISA and making it more customer-friendly, savers could still benefit from the structure and simplicity of a lifetime savings account for longer-term savings.”

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