Labour MP warns of cut to ISA allowance

Since most ISAs are in cash, which are attracting the worst rates the banks are paying in many cases, and since the interest rates are pretty much zero, would this make much difference? Excuse me while I say whoopee bloody doo!

What a moron. This comment just shows why his party were incompetent in government and not trusted to run the economy after May. Heavens knows why Citywire wastes column inches on idiots like this.

To say "ISAs cost the Treasury" is nonsense; there is no "cost" to the Treasury. There is only a theoretical amount of tax that would have been paid if I - or any other ISA investor - had made the identical investment outside of an ISA. And these days returns are so poor that it is very unlikely I - for one - would have done this.

Anon 1 - that surprises me - what's your data source?

How about cutting taxes and actually paying savers something! Topics like these would be more relevant. In any case I was not under the impression that Labour were actually in government.

I can't see why anyone pays any attention to the financially incompetent Labour party. The party is bankrupt in about 10 different ways. They can't look after their own money, they couldn't look after the country's money, they are morally bankrupt over Iraq and survived on solely on spin propaganda and the whips texting their MP's in instruction from one or two megalomaniacs at the top.

Jonathan,

What utter tosh you write. Labour were let down massively by the Bankers and Financiers, most of whom I have little doubt are Conservative through and through. And we arer now being led to the slaughter by a group of people most of whom, if not all, would be classed as being in the top 5% of 'the wealthy' of this country. I am lucky enough to be financially comfortably off, and retired, and what the Conservative Government does is unlikely to have much effect on me. But I do have a 'social conscience' and I fear that we now have another 'Thatcher' who will cause massive long term damage to those who are sadly at the 'bottom of the pile'.

Richard,I presume you are another one of those socialists who are wealthy enough to afford to be a socialist.Lucky old you!

I was under the impression ZaNu Labur were now in Opposition? Is the Coalition now going one better than the previous Administration in leaking proposals to the Opposition, (rather than the press), to gauge public reaction before deciding whether to implement unpopular proposals?

Or is the ZaNu Labour member simply trying to stir up trouble? Me thinks the latter, considering one of the first acts GO did on entering office was to link future ISA allowances to RPI.

Go away ZaNu Labour. You are history. No one pays the slightest attention to what you are told to say by your Union paymasters.

There IS a cost to the Treasury for ISAs, or at least the Treasury think there is :

http://www.hmrc.gov.uk/stats/tax_expenditures/table1-5.pdf

However, unless there is a radical re-think of the whole concept of ISAs, reducing the maximum investment limit is unlikely to have any meaningful effect on the 'cost' as it can only influence future ISA investments, not those already in existence. The perceived 'cost' of ISAs to the Treasury is £600m less in the current fiscal year than the last presumably as a result of lower interest rates. The effect of any reduction would be that cash savings levels would likely fall, the opposite of what the Government wants.

The Tax benefit on Equity ISAs is only of any real use to those who have maximised the allowance each year and for whom CGT would be a problem (and you need big funds for that to be the case) or those invested in Fixed Interest.

I think this is just Labour scaremongering amongst those who dont know better.

I really do not see any point in writing about the views of some odd ball labour politicean we all know that they are financially incompetent, I doubt this geek has any more inside storey into the present Goverments intentions than I do. As for the excuse that it was as most of the population know negligent bankers who caused the crash the labour lot in power at the time & the FSA clearly failed to regulate the banks at all in any meaningfull way. There is no doubt whatever that the tax payer is owed a huge debt by the banks. Whilst some seem to believe we should let them off, whilst I do not wish too see the city destroyed, the banks should be made to repay the taxpayer by proper responsible regulation. This may well hit the share price of the banks but they should be older and wiser by now, and big enough to take it on the chin.

Er...grumpy old man! What does that actually mean? That only wealthy people are socialist? That doesn't even begin to make sense.

Ironically in the US, Bush has presided over the biggest swing towards socialism ever experienced by the US. The government nows owns pretty much all the housing that is mortgaged. The banking bailout (which was inititated by Bush's people) has cost the US more than than the Lousiana purchase, Marshall plan, New Deal, Korean war, Vietnam war, space race, and gulf war put together. One in eight Americans are on food stamps. In the US they only get unemployment benefit for two years. Increasing numbers of people are falling off the back of the safety net and sleeping in their cars and on the streets. Not benefit cheats. People who want to work. People whose lives and jobs were taken away by the greed of a banking and political class that has lost it's marbles. If they don't support those people, riots will not be far away. Socialism is simply a natural progression from capitalism run amok. It's either that or anarchy.

Taking away our few means of saving has become the latest form of state theft. Allowing the Bank of England to ignore inflation at 3% is bad enough. Lowering the ISA limit really would be the last straw. Actually no...banning private ownership of precious metals...THAT would be the last straw. I wouldn't put it past them.

With financial mismanagement of the country and the CITY, the government and bankers have taken away all incentives to savers. Now, saving money in a savings account or an ISA gives you so little interest that the cost of recovering Tax on the interest would be greater than the interest.

Labour spent it, now the ConDemmed will claw it all back + interest. As much as I hate the idea of cutting everything to save the country from financial armageddon, it is precisely for that reason that it must done. If we aren't past the point of no return already??? Sadly it is the failure of all of the past governements of this and many nations that have brought us all to this crunch point. We also know that the safeguards were already in place to prevent this sort of crisis from happening again; but the corporations insisted that they be removed, our governments agreed and then of course with a little time the sh*t inevitably hit the fan. Talk about being doomed to repeat the failures of the past!

Cuts are all very well, but any country that fails to keep a manufacturing base, doesn't support it;s home farming industries and squanders its resources, whilst not using the ones it has is surely heading down the wrong road. Doesn't take a genius to see it does it, just a fool. As another person who is getting grumpier and older I do not like many of the things I see happening to this country and many others too. With that I mean the power of corporations over government and the ease with which they are all so willing to go to send us to war! It seems the banks have it all their own way. Not only do they receive money they should never have been given but they reward the prudent people of this country with virtually nothing. Why would we have any faith in any steps they take to prevent this from happening again when they are responsible for this time around? Perhaps it all happened around the time the Police adopted a shoot to kill policy and with it our entire legal system got flushed down the toilet? If everything is just so OK now, then why do we think Gold just keeps going up and up? Could it be that things are far worse than they would ever like us to know/believe? Hold onto your shirt.... Broken Record, Blah Blah Blah...

New Labour, same old nonsense.

Rajah,you missed the point that I was trying to make to Richard.My view is that we seem to have a rather voluble stream of 'celebrities and other commentators' who regularly spout forth worthy socialist thoughts about spending money the country (or most individuals)hasn't got, in order that life may go on as 'normal' for the downtrodden proletariat. They themselves are so well off that many things a Government may do such as raise taxes to pay for the largesse,will have minimal affect on their own lives.

In a nutshell,it is easy to proclaim socialist views when you are sufficiently wealthy for the often corrosive affects of socialist policies to not majorly impinge on your 'lifestyle'.

Lord Sugar,Bono, Stephen Fry ...anybody!

Jonathan,,

Who said anything about being wealthy? 'Financially comfortably off' is nowhere near being wealthy. My wife and I live modestly and have to budget carefully like most people.

Your clearly very biased views prevent you from understanding what I and others may say. In my view Labour made huge improvements in this country: to mention just one - the health service is massively better now than it was in 1997. Yes Labour spent a lot of money in improving the NHS, and, sure, everything is not perfect. Without the Financial crisis brought about by the bankers and financiers not only in this country but around the world we would not be in the position we are now. And, by the way - who was it that deregulated the banks etc. ? I think you will find it was Mrs T.!!!

Socialists only want to share in the wealth of those richer than themselves.

Grumpy Old Man you missed out the real crowning turd in the socialist rich list, I am of course talking about The Big Guy: Mr BOB CROW (£133k+ a year!) i bet that his wage is not affected by the strike action he advocates.

effected even

Anon2,yes one could add quite a few names to my small list!

Richard,the rate of return on the investment in the NHS is poor, and for the amount of cash poured into this and other public sector services,the country should have enjoyed far greater improvements.

The last Government ballsed up the dentists,the G.P's( far more pay for a poorer service),the police force(service?),huge Council Tax rises,and for good measure shat on civil liberties....all that and damn' near bankrupted the country as well.Face it,Labour ALWAYS leaves a mess behind because they are financially incompetent or should that read incontinent?

Anon2,you were right first time.....affected by the strike action,not effected!

Well i covered both gramatical horses then

Richard

There is a difference between 'Deregulation' and 'Supervsion'.

Thatcher deregulated the banking system hoping that the deregulated building societies would knock the Big 5 down to size. All was fine whilst the BoE supervised them, after all are were bankers. The mistake was to transfer supervision to a bunch of Civil Servants who had never heard of the old banking canon 'Never lend long and borrow short' and neither had Gordon Brown. At least John Major was a qualified banker.

There is a clear problem with the ISA allowance.

With only a modest annual allowance - it is difficult to see how there could be much impact to tax receipts. But I would assume the total amount saved within ISA's grows each year as wealthy people invest faster than people withdraw and / or die.

Therefore a greater amount of assets each year are not available for income or capital gains tax.

There is a cost to the treasury. If ISA's were abolished overnight and all monies held in them were treated as a savings account or a unit trust - the treasury would start to rake in billions in income and CG tax.

Difficult one for the policitians as a drop in ISA allowance would be seen as anti-saver but there is no doubt that wealthy folk benefit much more than poorer folk from the ISA's and the cost to the treasury will continue to grow and the % of all savings held in ISA's will keep rising.

Can see something being done that makes it a bit fairer and a LOT more complicated.

Reply concerning comments from Grant: ''ISA's being unfair as they favour the wealthy''

ISA's were inroduced as a follow on from the TESSA a/cs to enable savings to be made into either cash based or equity investments. I believe that they are a very easy way for the 'ordinary' person to build up over time a substantial holding in asset based investment, Unit Trusts, Investment Trusts- encouraging people to look ahead some 20/30 years building up a base from which they can draw income or spend capital if necessary when income reduces on retirement. OK it may be small savings in the short term but true savings/build up of resources for an'ordinary' person will only come thru' setting aside a small amount on a regular basis in asset based investments.

Citywire should stick to reporting the facts and not publicise the scaremongering stories put out by an MP whose party has just been ousted from office.This story is not worthy of further comment.

A load of Socialist tripe like all they say lately.

I do though expect the ISA situation to be looked at, if only because the banks are seeing ISA,s as funds they do not need to act competitively on.

what a bunch of selfish arseholes who post on this forum.

Steven.....why the bile?

Hmmm...

Doesn't anyone remember the PEPs - £9K per year (6K in a general PEP and £3K in a single company PEP) could be salted away and not only was no tax paid but the Advance Corporation Tax was refunded - and that added 25% to all dividend income. On top of that there were TESSAs which allowed you to roll up £9,000 in tax free savings. .

These were replaced by ISAs - £7K per year to start with of which £1K had to go into an insurence policy.

Our far thinking ?prudent? chancellor later to be PM and preside over the biggest debt in our history - abolished a tax : Advance Corporation Tax - yes he did abolish it BUT - and here's the rub - this meant that 25 % of income within pensions was lost when the rebate on the abolished tax was stopped. The Advance Corporation Tax was refunded as it was a tax free wrapper. This helped to put the big hole in pension funds.

Remember VCTs also allowed you to roll over capital gains tax when they were introduced. Our noble ?prudent? chancellor / PM abolished this. As a direct result of his abolition of the Advance Corporation Tax the refund of 25% of net dividends was also stopped.

All in all - the labour government took away enormous chunks fo tax relief that encouraged savings introduced by the previous conservative administration.

The bankers get the blame for the current debacle - but remember that it was the masses of 'sub-prime' mortgages that caused the problem initially - and in this context it means that money was lent to people who had no real idea of how they were going to repay it. In this country, the 'prudent' chancellor encouraged the continuing 'boom' by encouraging masses of consumer debt.: this now has to be repaid as well as the government debt. It's a double whammy : people are spending less cos they have less to spend AND they are repaying their debts.

I enter this debate late; grumpy old chap this Richard fellow sounds like a guilt riven fabian whose attraction to socialism is an intellectual pursuit with little experience of the realities.

So long as we have people in this world we shall suffer these nit picking arguments, they lead nowhere; If equality of livelihood is the aim then everyone should surrender their income and await their dispensation after the state has taken its cut. But then of course none could be bothered to work since there would be no incentive.

No, arguments regarding fairness are pointless.

I listened to the new Labour leader yesterday and it pretty much summed up all politics, not just a dig at labour.

In the morning he wanst getting married and thought that the public were big enough to accept him and his partner as they were.

Instantly I thought, oops the church votes are going to be hit.

By lunchtime he was getting married!!!!!!!!!!!!!

By teatime he started talking about fairness in society and gave a boring PC type of speech which attempted to tick the boxes in very part of society.

Dear me this is what we are down to.

Steven Parker you are a fool, these ISA allowances are a brilliant way for hard working 'normal' people to save for various times in their lives including retirement and maintain flexibility ie access to their money.

ISA's are very important to the wider population.

Continuity is important to the population and amount and name changes of generic products is not helpful to the population.

We need to change our election system so we start getting back to honest policy making and looking after the wellbeing of the country on a limited budget and not trying to get votes by offering sweeteners that we cannot afford.

I notice the Tories are talking out of their back-end as usual verbally bashing people who have a social consideration for others,of which they aint.I retired with quite a few bob and delight in giving to others not so well off but there again the Tories need thier cash for essentials like stockings and suspender belts and mountains of oranges(remember,I do)

Re David however on the 30th Spetember it was definately the new Labour leader.

I never understood the Orange bit did you? Bin liners neither.

Normally it is "suckling pigs"well cooked and laid on a table and stuffed with an orange in the mouth.

Chris B (Slough UK)...

I think you will find that it was Tony, sorry, Anthony Charles Lynton Blair AND The Labour Party, who sent us to war.

Richard Dyer-Smith ...

Harry S. Truman said "The Buck Stops Here", Government runs the country not People, not Businesses, not Banks, not Financiers - it solely is responsible.

Finally,

"ISAs cost the Treasury" It is high time that this issue was corrected. The Treasury does NOT have any money - it is ours, they are just the trustee (although they don't seem to stop governments wasting it ).

In all Treasury communications the correct usage, if indeed there is a "cost", should be ... it cost the TAXPAYER, not "the Treasury".