Why does this clueless Government continue to play cruel games with the country’s army of savers, causing widespread angst and fear? Is it because it despises the prudent middle-classes who diligently put money aside for retirement?
Certainly, Deputy Prime Minister Angela Rayner sits in this camp, judging by the memo she sent to Chancellor Rachel Reeves in March calling for more taxes to be imposed on savers (through the removal of the pension lifetime and annual dividend allowances).
Corbynista politics. Or is it political incompetence which Reeves carries around with her in a mighty carrier bag? A mix of the two, methinks.
We had a dose of such games last year when Rachel from Accounts took ages to quell rumours ahead of her inaugural (and disastrous) Budget that she was planning a clampdown on the right to take tax-free cash from pensions. It resulted in some people being panicked into taking cash when it wasn’t in their financial interests to do so. Decisions that in most cases couldn’t be unwound (not that the Chancellor, or for that matter Rayner, cared).
And sadly the games continue, now with individual savings accounts (Isas) which allow adults to save or invest up to £20,000 a year within a tax-free wrapper.
For most of this year, the Chancellor has made it clear she intends on giving Isas a makeover to end all makeovers. Isas, she argues, should be about investing (preferably in UK company shares) and little about saving.
Deputy Prime Minister Angela Rayner sent a memo to Chancellor Rachel Reeves in March calling for more taxes to be imposed on savers
It’s a misguided Government policy driven by a Chancellor obsessed with repairing the damage she did to the economy in her Budget – and one which ignores the fact that millions of people have no desire to invest in shares. Cash, as far as they are concerned, is king.
Yet she is compounding the errors of her ways by keeping us guessing as to what changes to Isas she will make.
Initially we were led to believe the makeover could be radical, with the tax breaks removed from all existing cash Isas. Some 18 million people have a cash Isa and £300 billion of deposits sits in them.
That was never a goer – it would have triggered a savers’ insurrection. It was more of a shock-and-awe tactic designed to soften us up for less dramatic – but still undesirable – Isa changes.
Recently Reeves’s focus has been on restricting the slice of annual allowance that can be saved in cash: from £20,000 to £4,000. This has also gone down like a lead balloon – with young and old alike.
My mailbag has been swamped with letters from angry readers urging the Chancellor to back-track, prompting us to launch the Hands Off Our Cash Isas campaign (a big thank you to those who have backed it). Last week, for a fleeting moment, it seemed Reeves had heeded our campaign (I even received some applause emojis on social media).
Following a BBC interview, it was reported that she had backed down on plans to cut the cash Isa allowance.
Cash Isas are used by young and old alike, to save towards a deposit on a first home or to build a pot of rainy-day money
But what she actually said is she was ‘not going to reduce the limit of what people can put into an Isa’.
In other words, she would not be cutting the overall £20,000 allowance. Nothing was said about the cash Isa limit.
The Treasury confirmed this, telling me the Chancellor’s BBC comments referred to the annual Isa limit, not the cash limit. Its spokesman added: ‘I think reporting is a bit excited.’
Despite the clarification, Reeves remains under extreme pressure not to cut the cash Isa allowance.
Cash Isas are used by young and old alike, to save towards a deposit on a first home or to build a pot of rainy-day money. Thousands of readers have backed the Daily Mail’s Hands Off Our Cash Isas campaign – while research by investment platform AJ Bell suggests only one in five cash Isa savers would migrate to UK shares if their cash allowance was reduced.
Rachel Vahey, the company’s head of public policy, says a lower annual cash Isa limit would be a ‘lose-lose for everyone’.
Banks and building societies agree. Representatives from leading banks recently told Emma Reynolds, economic secretary to the Treasury, that any cash Isa restriction would impose higher tax bills on pensioners and do little to bolster economic growth.
The Building Societies Association has warned any curtailment in cash Isas could crash the mortgage market by causing loan rates to rise and lenders to pull deals.
Chief executive Robin Fieth told me: ‘Different Isa limits for cash and investments would be tricky to administer and unlikely to lead to any meaningful benefit to UK growth.’
It now looks like we will have to wait until the Budget on October 30 to know the precise details of Reeves’s Isa makeover.
Yet the message from a growing band of savers and financial services businesses is loud and clear: ‘Rachel from Accounts: Hands Off Our Cash Isas.’
Pete Murphy and his son Barney, second and first left, with friends at their favourite pub near Arsenal’s ground
Today marks the end of the Premier League football season. Although Arsenal lost out to Liverpool in the race for the title, it won’t stop ‘Gooners’ Pete Murphy and son Barney travelling to Southampton to back their team. Proper supporters.
Like most fans, they will have a drink before the game, but they will only go to a pub that accepts cash. Pete, 61, a former foreign exchange dealer in the City of London, is passionate about cash and believes that retailers should always offer customers a cash option.
Indeed, he is such an avid fan that a couple of years ago he persuaded his Arsenal mates to change their pre-home drinking venue to the Duchess of Kent pub on Liverpool Road in north London – a pub that gleefully takes cash as well as contactless payment.
Ahead of the game against the Saints, Pete told me: ‘Before I book to attend a big event such as a day’s racing at Ascot or a golf tournament at Wentworth, I always check whether they take cash. If they don’t, I won’t go through with the booking.’
Pete, who is getting married in July, believes that a law should be passed requiring all retailers to take cash.
‘It’s our legal tender after all,’ he said.
It’s a view backed by the campaign group Payment Choice Alliance – and a sentiment that I also endorse wholeheartedly.
We need a payment choice in this country. Hands off our cash!
