ISAs won't benefit the poor
Saturday 06 December 1997
So why is it that when I heard Geoffrey Robinson, the Government's Paymaster General, saying the Individual Savings Account (ISA) will "benefit the many, not the few", I reached for the bucket?
Proposals for the ISA were announced this week at a fractious press conference, in which Mr Robinson attempted to justify the pounds 50,000 lifetime cap on tax-free savings into the new account.
It wasn't just the sight of Labour's richest minister, one apparently skilled in the black art of tax avoidance, telling me about ISAs which had me gagging. It was the assumption that we would buy the Government's line.
This was the claim that its proposals would hit only a tiny minority of the really wealthy, those with pounds 50,000 or more held in PEPs and Tessas by April 1999.
Now, of course, wealth is relative. If you are unemployed, pounds 50,000 is one heck of a lot of money.
But for many hundreds of thousands of people, this is simply the amount they have accumulated over the years in the hope that it will help them when they retire.
They are the ones who will be hit by the ISA proposals, not the super- rich, people like Mr Robinson, who will always find ways of dodging taxes on their assets.
I can already hear plaintive questions: "But what about the worse off? Won't they benefit from the ISA?"
Again, benefits are relative. Yes, millions will potentially benefit. If you are saving money in a building society account, placing it into an ISA instead will earn you more. The ISA will mean banks and building societies offering tax-free savings accounts into which millions of people will transfer up to pounds 1,000 a year.Then again, most lower-paid people could never afford to save even a fraction of that amount.
Moreover, the annual cash limit of pounds 1,000 into ISAs is important. It suggests that the Government has another purpose. It is that of capping the amount of tax foregone on savings schemes by the Inland Revenue to an annual limit of pounds 1.5bn or thereabouts.
As for encouraging more people to save, I don't buy a word of it. Imagine the scene. You are at the Tesco checkout and in your hand you have the pounds 5 change from your weekly shop. To the left is the ISA desk, where you are in with a chance to take part in a lottery that will win 50 people a prize of pounds 1,000 each month. To the right is the National Lottery till, where you are in with a chance of pounds 5m or pounds 10m. Even a supposedly serious personal finance editor such as myself can guess which way most of us will turn.
The reality is that the ISA is a shabby way of taxing a swathe of hapless individuals who made the mistake of taking at its word a previous government's tax pledges.
Most people who have invested in PEPs and Tessas in the past 10 years are middle class. They aspire to a better future and are prepared to make sacrifices. Their "bargain", if that's the right word, would have meant setting aside more money over 20 or 30 years in order to reach their financial goals.
We may be scornful of their propensity to save, even jealous of the higher earnings that have allowed them to do so. But we should also feel contempt for a Government which uses class war language to justify extra taxes on them, when the richest and most powerful people in our society will, as always, get off scot-free.
- 1 As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
- 2 The ten most unequal developed countries in the world
- 3 Saudi Arabia 'seeking to head United Nations Human Rights Council'
- 4 New Zealand 'the best country to work as a prostitute', says sex worker advocacy group
- 5 Irish people are travelling home from all over the world so they can vote to legalise gay marriage
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
The day that Britain resigned as a global power
Labour leadership: Battle lines are drawn as members battle over party's ideology at first hustings of the contest
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof