The fee for accessing money in Lisas early is preventing households from cushioning the blow of rising bills, according to Michael Johnson, who suggested creating them in a paper for the Centre for Policy Studies in 2014.
Around £1.5bn is held in Lisas, with savers' money topped up by a government bonus of 25pc up to £1,000. The funds can be used to buy a first house worth up to £450,000, or accessed when the account holder turns 60 to help with retirement.
Savers are free to take out their funds for another reason, but must give up 25pc of the cash if they do so.
This penalty was temporarily lowered to 20pc in March 2020 to help savers during the pandemic, but this was reversed in April last year when lockdown restrictions began to lift.
Mr Johnson, whose idea for Lisas was taken up by then-Chancellor George Osborne in 2016, said the Treasury should lower the penalty again ahead of October when the energy price cap will rise to a predicted £3,600 a year.
He said: “The initial idea of the Lisa was a savings product to genuinely last a lifetime – with availability from birth and no upper age restrictions.
“It is vital to get people in the habit of saving from childhood and, with a capped withdrawal charge for those needing to access savings, it would provide a lifeline for those who may need to dip into savings for any reason.
“Unfortunately, the product in its current form doesn’t offer this and, given the current cost of living crisis, requires a rethink to ensure it is delivering what it was intended to deliver.”
According to research by Cushon, a pension provider, roughly a quarter of people are going to have to rely on their savings to survive financially this year.
The report found 67pc of people feel anxious about their finances and nearly eight in 10 (77pc) are planning to reduce outgoings to get through the current crisis.
Steve Watson, of Cushon, urged the Government to make accessing savings a “top priority” in light of soaring energy bills.
He said: “As a result of the cost of living crisis, millions of people across the UK have been forced to either cut back, rely on credit or dip into their savings to help them get by.
“We strongly urge the Government to consider another temporary reduction in the Lisa penalty so people can access their own money without charge, and reduce the risk of people turning to credit.”