- Premier Miton calls for new ‘Great British ISA’
- New wrapper would have extra £5,000 annual allowance
- AJ Bell argues six different ISA variations already cause confusion
Fund manager Premier Miton (PMI:AIM) is calling for a new ‘Great British ISA’ designed to invest solely in UK equities that it believes would help encourage private companies to list in the UK and stay and grow here in Britain.
The asset manager wants UK policymakers to add a further £5,000 to the annual ISA allowance for investment exclusively into the new GB ISA, on top of the current £20,000 annual allowance.
One compelling argument for the mooted GB ISA is it would funnel retail investor savings into UK-listed shares, thereby boosting the valuations of UK companies, although the product wouldn’t appeal to investors hungry for exposure to international shares.
WHAT IS THE GB ISA?
Premier Miton’s GB ISA plan has been drawn up to help support UK listed shares and complement the Government’s Edinburgh Reforms, which focus on making the UK a technology and life sciences leader through early-stage investment in private, unlisted startups across tech, innovation and science.
The new ISA product would specifically direct investment into UK listed companies, providing an attractive listing environment for UK start-ups and private companies to stay and grow here in the UK, argues Premier Miton, and the proposals come at a time when chancellor Jeremy Hunt is set on directing a chunk of the UK’s £2.5 trillion pensions war chest into the UK economy.
According to Financial Conduct Authority data, 8.4 million people with £10,000 or more of investable assets hold the majority or all of it in cash. Assuming these 8.4 million people invested the maximum £5,000 in the GB ISA, £42 billion could be raised for listed British businesses in the first year alone. If repeated over 5 years, UK plc could benefit to the tune of £210 billion.
Premier Miton points out these inflows could support improved company valuations, keep them from listing overseas and help to defend the UK’s best companies from being taken over by overseas buyers.
CEO Mike O’Shea commented: ‘Ensuring companies have access to the capital they need will encourage them to scale up and list here in the UK. This will mean that companies’ headquarters, and all the associated high-paying roles, tax receipts and international prestige, remain here in the UK.’
O’Shea added: ‘The GB ISA would fully unlock the potential of the City, to not only scale up smaller private companies, but to provide those same companies with an attractive listing environment to stay and grow here in the UK. With cross-party political will, we can deepen the capital liquidity on offer to British businesses and make the UK listing regime the global capital of capital.’
RADICAL OVERHAUL
However, Premier Miton’s proposals are the complete opposite of the radical overhaul of the ISA system called for by AJ Bell (AJB) in April, which would see all exiting ISAs consolidated into to a single ‘One ISA’ product with a £20,000 annual subscription limit.
Co-founder Andy Bell pointed out that ISAs are currently too complicated and savers are faced with too much choice as the investment platform set out a blueprint for a single ISA solution.
By bringing together the different ISA types but stripping away the unnecessary and unpopular Innovative Finance ISA, the proposal leaves a flagship ‘One ISA’ savings and investment vehicle with a single set of rules.
Bell commented: ‘A One ISA system would help to encourage competition, making it easier for customers to compare just a single type of ISA product and switch between different providers.
‘The introduction of a government bonus within Lifetime ISAs has added significant complexity to ISAs and there is a strong argument that removing the bonus and effectively abolishing Lifetime ISAs would make ISAs significantly simpler for consumers and less open to political interference. However, the bonus does provide an incentive to save so if it were retained following ISA simplification, the government should consider making it more flexible and extending its reach.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (James Crux) and the editor of the article (Martin Gamble) own shares in AJ Bell.
