A Cultural Shift to a Savings Revolution – WMA response to the 2015 Budget
18th March 2015
Today the Chancellor announced his anticipated final pre-election budget. The Wealth Management Association (WMA) welcome the focus on supporting savers, pensioners and a long term investment culture in the UK. Our ongoing work is aimed at encouraging a cultural shift in the UK to a “savings revolution” and at increasing the participation of the retail investor in the growth aspects of the UK economy.
Our community contributes an overall £5.5 billion to GDP, supports over 65,000 jobs and represents more than 4 million retail investors, therefore we were delighted to welcome several plans from today that chimed with our ongoing work.
Building on the fact that Britons are already saving the largest proportion of their incomes since 2004, further growth in long term savings and investment will support businesses, jobs and economic development which is essential for the future of UK plc and its position as a global leader in Financial Services.
Initiatives particularly supported by the WMA include:
Help to Buy ISA – “Homebuyers Accounts”
The WMA’s submission to the Chancellor in anticipation of today’s Budget recommended a homebuyers account “that allows individuals to save for a deposit in shares and/or funds, tax free, so long as they used money to buy their first property.” The announcement of a new help-to-buy ISA is an extremely welcome initiative, which will increase the savings of individuals for their first home through contributions from the government.
Increased Personal Savings Allowance
The new Personal Savings Allowance will mean that the first £1000 (£500 for higher rate tax payers) of interest earned on savings will be completely tax free. This is a positive step that should help to encourage people to save – whatever their amount of wealth – and will mean that savers receive a greater return. This is a good start to Osborne’s proposed “savings revolution” away from debt to long term saving.
Fully Flexible ISA
From this autumn people will be able to move money in and out of their ‘cash ISA’ account without losing any of their tax-free entitlement for that tax year. The WMA are encouraged that investors will have far more flexibility and hope that consideration will be given to extending this freedom to the stocks and shares part of an ISA. The range of eligible investments will also be expanded to include non-equity assets such as certain listed bonds with a commitment downstream to look at including further debt and equity securities so retail money can be used to invest in the smaller end of the economy where the growth is.
Government Sales of Shares
The Budget announced a sale of £13 billion of the mortgage assets still held from the bailouts of Northern Rock and of Bradford and Bingley and a sale of at least a further £9 billion of Lloyds shares in the coming year. To further enhance these positive changes WMA urge that retail investors are considered when companies are bought to the market and would also like to see a review in the way Small and Medium Sized Enterprises (SMEs) are floated on the stock market as WMA believe flotation as a public listed company is the most desirable outcome. Not only does it help the company to raise the funds at the most efficient price, but it also imposes market discipline on a company: a greater plurality of owners; a codified standard of governance; and greater scrutiny by market authorities.
National Insurance Abolished for Young Workers
The WMA also supports the abolition of National Insurance for employing under 21s and young apprentices as this will help to encourage companies to employ younger workers, and ensure they are well-trained to become the workers of the future. This is essential for improving the lives of the young people, as well as to ensure the future strength of businesses and the economy.
WMA CEO Liz Field, commented:
“WMA are delighted that the proposals outlined by the government today provide positive reinforcement to a cultural shift towards saving and investments. 4 million private clients are already represented by our wealth management community and the growth this allows for UK plc and the returns for the investor cannot be underestimated.
Several of the key elements from WMA’s budget submission have been addressed which will help the financial services industry retain its global leadership status and add ever more value to the person on the street.
Initiatives on elements such as tax-efficient savings and pension reforms are positive for business and individuals alike. They further encourage economic growth and allow increased freedom and flexibility for individuals to manage their own long term savings and financial futures.”
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Notes for Editors
About the Wealth Management Association (WMA)
- The Wealth Management Association (WMA) is a trade association representing 186 Wealth Management firms and Associate members.
- 110 Full members are wealth management and stockbroking firms that deal directly for over 4 million retail investors.
- They deal in stocks and shares and other financial instruments for individuals, trusts and charities through a range of services spanning execution only, advisory and discretionary fund management.
- 76 Associate member firms provide professional services to our full member firms.
- WMA’s aim is to ensure that business, regulatory, tax and other relevant changes across Europe are appropriate and proportionate for the investment community and their clients.
- The WMA exists to support its members and their clients in the following ways:
- To be an advocate for the sector with governments, regulators and the wider financial services community;
- To influence policy and decision makers within the wider sector to the benefit of WMA members and their clients;
- To research and provide definitive information about the sector as required for members and in support of the influencing and advocacy objectives;
- To be a thought leader, making members aware of emerging changes, regulations and issues as well as providing support to forms to enable them to develop good practice and overcome challenges;
- Facilitating the sharing of good practice, enabling the membership as a whole to benefit from the latest developments affecting the sector.
- Our member firms manage in excess of £650 billion of wealth in the UK, Ireland, Channel Islands and Isle of Man.
- The firms operate across more than 580 sites, employing over 32 000 staff.
- The firms also run 6 million client portfolios and carry out over 20 million trades a year.
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