'You turn if you want to': Seven notable government policy U-turns

The financial services industry is no stranger to government backtracking on policy, particularly in the past year as political shake-up seems to be the order of the day as the fallout from Brexit continues.  

Amid the chaos, advisers could be forgiven for losing track of which policy was now on the chopping block.

We thought this summary of seven key policy U-turns might serve as a handy reminder…

Lifetime ISA

Last week, the Treasury Committee called on the government to abolish the Lifetime ISA (LISA) just 16 months after it was first made available.

In a report, the committee said it had received persistently negative feedback on the product, which was first announced by then Chancellor George Osborne in the 2016 Budget.

Unsurprisingly, industry commentators and advisers alike criticised the move as the product was "just finding its feet" but agreed it confused investors with its dual function of saving for a home and retirement.

Pensions dashboard

Earlier in July, reports said secretary of state for work and pensions Esther McVey was looking to end the government's involvement in the pensions dashboard project.

McVey was said to believe the project should be provided by the private sector. The dashboard was another project announced in Osborne's 2016 Budget.

Pensions and inclusion minister Guy Opperman tiptoed around the subject when recently asked about the future of the dashboard by the Work and Pensions Committee.

Social care

In the lead up to the 2017 general election - announced just two months before the vote was due to take place - Prime Minister Theresa May's Conservative Party backtracked on its manifesto's social care proposals.

The U-turn was announced just days after the Tories proposed raising the means-tested threshold for elderly care from £23,250 to £100,000, which would be taken from a person's estate when they die.

Triple lock

Scrapping the pensions triple lock in favour of a double lock was another manifesto proposal to be culled, this time as a result of the Tories deal with the Democratic Unionist Party (DUP) after the vote, to get a majority in parliament.

Probate fees

In the run up the election, the government also revoked its controversial probate fee legislation - labelled a ‘stealth tax' - stating there was not enough time for it to go through Parliament before the vote.

NIC rate hike

In March 2017, the government scrapped plans to raise National Insurance contributions (NICs) just one week after they were unveiled in the 2017 Spring Budget.

Chancellor Philip Hammond told parliament in his Budget speech that Class 4 NI contributions for the self-employed would rise from 9% to 10% in 2018 and then by a further percentage point to 11% in 2019.

He said the rate hike was intended to reduce the gap in rates paid by the self-employed and by employees.

Secondary annuity market

In October 2016, plans for a secondary annuity market were abandoned, as the government stated that "creating the conditions to allow a competitive market to emerge could not be balanced with sufficient consumer protections".

The move had a mixed reception from commentators with some acknowledging the barriers to competition and consumer protection. Others criticised the lack of consideration for industry input as well as the time and resource invested.

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• Topics
• Your profession
• ISAs
• Pensions
• Estate planning
• Income
• government u-turn
• Lisa
• pensions dashboard
• social care
• triple lock
• Probate fees
• national insurance contribution
• secondary annuity market