Martin Lewis has called on Jeremy Hunt to ‘fix’ four key policies in an open letter to the Chancellor in an incredible intervention from the finanial journalist.
The money saving expert urged Government action to change the rules for Child Benefit, the Lifetime ISA, above inflation broadband and mobile price increases, and the real terms cut to student living loans.
Mr Lewis said on X: “I hope he listens and we see change in the Budget. He can’t now say he wasn’t told. I will also be sending the letter to @RachelReevesMP.”
And in a two-pronged attack, Mr Lewis appeared on ITV‘s Good Morning Britain on Monday to slam the “unfair” Child Benefit system in particular.
He also told viewers that mid-contract mobile price hikes that are above inflation should be banned and slammed student maintenance loans as “too low”.
He decided to write the letter ahead of the March Budget after quizzing the Chancellor on Mr Lewis’ ITV show, to provide “key-information briefings on these subjects”.
He branded the mid-contract mobile and broadband price increases “inflationary and anti-competitive” and offered “simple solutions” to address the issue with the withdrawal penalty on Lifetime ISAs unfairly penalising first-time buyers.
These are the four policy changes that Mr Lewis called for in his letter:
Cancel the Lifetime ISA (LISA) withdrawal penalty
Mr Lewis said the LISA rules “haven’t kept up with the times” with many young people, especially in south-east England, hit by the withdrawal penalty when they buy their first home.
Funds from a LISA can only be used on a property worth up to £450,000, with this limit frozen since 2017, but house prices have increased by more than 30 percent since then.
Mr Lewis said: “The simple solutions are to index-link the £450,000 limit to house prices (backdated to 2018) and to reduce the withdrawal penalty for those buying a first-time property above the limit to 20 percent, which means they at least get back what they put in.”
Stop mid-contract, above-inflation broadband and mobile price hikes
The financial journalist warned that despite the Chancellor’s work to bring down inflation, these price hikes are “inflationary and anti-competitive”.
Many providers put as a term of their contracts an April price increase with inflation plus three or four percent, with BT, EE, TalkTalk, Three and Vodafone confirming rises of around eight percent for April 2024.
Mr Lewis said: “While Ofcom is consulting on proposals to only allow mid-contract rises laid out in pounds and pence in advance, that still allows above-inflation rises.
“Whereas best practice, if rises are to be allowed, is to have that system, but with an override saying it cannot be more than inflation.”
Reform the High Income Chid Benefit Charge
Mr Lewis recommended this would be “a very popular measure” if this issue was addressed in the March Budget.
The charge means a claimant household starts to pay back the Child Benefit once a parent or guardian’s income reaches £50,000 a year, with the benefit reduced to nothing once they reach £60,000.
Mr Lewis said: “There are many structural problems in the tax system, this one is exacerbated by the fact the £50,000 (and £60,000) thresholds have been frozen since 2013 – which fiscally drags 100,000s more families into this situation each year.”
He also called out the “unfairness” of the policy during an interview on ITV’s Good Morning Britain.
Reform English student loans
The financial journalist said the living loan for English students has been “sustantially cut in real terms”, causing a shortfall in funding which could increase drop-out rates.
He pointed to the “inconsistency” that maintenance loans went up just 2.8 percent last year while inflation was in double figures.
He said: “This causes a problem both in actual terms, as the uprating does not keep up with the cost of living, and due to the inconsistency itself, which denies students and parents a locked-in expectation of their funding over a three-year course.”
Other concerns – Buy Now, Pay Later and mortgage prisoners
Mr Lewis urged for regulation to be brought forward to tackle Buy Now, Pay Later schemes which can impose huge costs on shoppers.
He reiterated his concerns about mortgage prisoners. He said: “We are looking forward to hearing what solutions the Treasury will come up with soon, on the back of the LSE’s (London School of Economics) costed proposals we put forward.”
Mr Lewis previously spoke to the Chancellor in person on his ITV show. He then said that the freezing of tax thresholds showed the Government is “giving one hand and taking away with another” and that some would end up “thousands of pounds worse off” due to those thresholds not rising in line with inflation.
Mr Hunt insisted that “we would like to go further as and when it’s responsible to do so” but that spending by the Government in lockdown – when Rishi Sunak was Chancellor – had set the nation’s finances back considerably.
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