The chancellor has confirmed she is considering “changes” to ISAs – and said there has been too much focus on “risk” in members of the public investing.
In her second annual Mansion House speech to the financial sector, Rachel Reeves said she recognised “differing views” over the popular tax-free savings accounts, in which savers can currently put up to £20,000 a year.
She was reportedly considering reducing the threshold to as low as £4,000 a year, in a bid to encourage people to put money into stocks and shares instead and boost the economy.
However the chancellor has shelved any immediate planned changes after fierce backlash from building societies and consumer groups.
In her speech to key industry figures on Tuesday evening, Ms Reeves said: “I will continue to consider further changes to ISAs, engaging widely over the coming months and recognising that despite the differing views on the right approach, we are united in wanting better outcomes for both savers and for the UK economy.”
She added: “For too long, we have presented investment in too negative a light, quick to warn people of the risks, without giving proper weight to the benefits.”
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6:36
Rachel Reeves’s fiscal dilemma
Ms Reeves’s speech, the first major one since the welfare bill climbdown two weeks ago, appeared to encourage regulators to focus less on risks and more on the benefits of investing in things like the stock market and government bonds (loans issued by states to raise funds with an interest rate paid in return).
She welcomed action by the financial regulator to review risk warning rules and the campaign to promote retail investment, which the Financial Conduct Authority (FCA) is launching next year.
“Our tangled system of financial advice and guidance has meant that people cannot get the right support to make decisions for themselves”, Ms Reeves told the event in London.
Last year, Ms Reeves said post-financial crash regulation had “gone too far” and set a course for cutting red tape.
On Tuesday, she said she would announce a package of City changes, including a new competitive framework for a part of the insurance industry and a regulatory regime for asset management.
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4:21
Reeves is ‘totally’ up for the job
In response to Ms Reeves’s address, shadow chancellor Sir Mel Stride said: “Rachel Reeves should have used her speech this evening to rule out massive tax rises on businesses and working people. The fact that she didn’t should send a shiver down the spine of taxpayers across the country.”
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The governor of the Bank of England, Andrew Bailey, also spoke at the Mansion House event and said Donald Trump’s taxes on US imports would slow the economy and trade imbalances should be addressed.
“Increasing tariffs creates the risk of fragmenting the world economy, and thereby reducing activity”, he said.
A minister has defended Sir Keir Starmer’s decision to discipline rebellious MPs, saying they would have used “stronger” language against those who are “continually causing trouble”.
Home Office minister Jess Phillips told Sky News’ Matt Barbet that Labour MPs were elected “as a team under a banner and under a manifesto” and could “expect” to face disciplinary action if they did not vote with the government.
Image: Brian Leishman, Chris Hinchliff, Neil Duncan-Jordan and Rachael Maskell.
Pic: Uk Parliament
Brian Leishman, Chris Hinchliff, Neil Duncan-Jordan and Rachael Maskell all lost the whip, meaning they are no longer part of Labour’s parliamentary party and will sit as independent MPs.
Labour backbenchers lined up to criticise the move last night, arguing it was a “terrible look” that made “a Reform government much more likely”.
But speaking to Sky News, Ms Phillips said: “We were elected as a team under a banner and under a manifesto, and we have to seek to work together, and if you are acting in a manner that is to undermine the ability of the government to deliver those things, I don’t know what you expect.
“Now I speak out against things I do not like, both internally and sometimes externally, all the time.
“There is a manner of doing that, that is the right way to go about it. And sometimes you feel forced to rebel and vote against.”
Referring to a description of the rebels by an unnamed source in The Times, she said: “I didn’t call it persistent knob-headery, but that’s the way that it’s been termed by some.”
She said she would have described it as “something much more sweary” because “we are a team, and we have to act as a team in order to achieve something”.
More than 100 MPs had initially rebelled against the plan to cut personal independent payments (PIP). Ultimately, 47 voted against the bill’s third reading, after it was watered down significantly in the face of defeat.
Three other MPs – who also voted against the government – have had their trade envoy roles removed. They are Rosena Allin Khan, Bell Ribeiro-Addy and Mohammed Yasin.
However, it is understood this was not the only reason behind the decision to reprimand all seven MPs, with sources citing “repeated breaches of party discipline”.
Mr Hinchliff, the MP for North East Hertfordshire, proposed a series of amendments to the flagship planning and infrastructure bill criticising the government’s approach.
Mr Duncan-Jordan, the MP for Poole, led a rebellion against the cut to the winter fuel payments while Alloa and Grangemouth MP Mr Leishman has been critical of the government’s position on Gaza as well as the closing of an oil refinery in his constituency.
Ian Byrne, the Labour MP for Liverpool West Derby, wrote on X on Wednesday that the prime minister’s actions “don’t show strength” and were “damaging Labour’s support and risk rolling out the red carpet for Reform”.
Leeds East MP Richard Burgon added that “challenging policies that harm our communities” would “make a Reform government much more likely”.
Ian Lavery, Labour MP for Blyth and Ashington, warned the suspensions were “a terrible look”.
“Dissatisfaction with the direction the leadership is taking us isn’t confined to the fringes,” he wrote.
I’m going to level with you – I am very, very confused.
In fact, I’ve got five reasons why I’m very confused.
The first reason I’m confused is because this is meant to be a show of strength, but most people have literally never heard of these four individuals.
Rachael Maskell is a bit well-known, but if this is intended to impress the public, then I’m not sure the public will notice.
Secondly, if it’s about installing discipline in the parliamentary Labour Party, I’m confused about that. Surely Sir Keir Starmer‘s aim right now should be to unite the parliamentary Labour Party rather than divide it.
After the welfare rebellion, the promise was to listen. Starmer gave interviews saying he was going to create policy more sympathetic to his party.
It was only yesterday morning that Work and Pensions Secretary Liz Kendall said the government’s welfare reforms were in the “right place” – yet the people who helped get them there are suspended.
Suspended for agreeing with what is now government policy is an odd look.
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5:27
Sir Keir Starmer has suspended four MPs from the parliamentary Labour Party for ‘repeated breaches of discipline’.
Fourth, I’m confused at who the most prominent individual to be suspended is – Rachael Maskell.
She was on Sky News within minutes of the suspension looking genuinely surprised and really rather upset.
Now, there’s absolutely no doubt she was a ringleader in this rebellion. Eight days ago, she authored an article in the New Statesman discussing how to organise a government rebellion – so I think that’s pretty much case closed.
But Rachael is of the soft left, not the hard left. And who else is on the soft left? It’s Starmer.
It does feel as if the prime minister is slightly coming for people who have dangerously similar views to him.
I understand this is all about drawing hard lines and showing who’s on your team and who isn’t.
But some of that line looks like it goes awfully close to people that you really wouldn’t want to be on the wrong side of if you’re prime minister.
And finally, three other MPs – Rosena Allin-Khan, Bell Ribeiro-Addy and Mohammed Yasin – have been sacked from their trade envoy jobs. They do retain the party whip.
But here’s the thing that hurts your head: if you are a Lib Dem trade envoy, like Sarah Olney, or if you’re a Tory trade envoy, as George Freeman was until a couple of weeks ago when he was suspended, you do not have to obey the whip – and you can continue to keep your trade envoy role.
But if you’re in the Labour Party and you’re a trade envoy, you do have to obey the whip.
And it’s just one of those mad inconsistencies where if you’re in another party, you can keep your trade envoy role, if you’re in the governing party, you can’t. That just doesn’t make sense at all.
So there are my five reasons why I’m completely confused.