Labour’s potential plan to abandon the new British ISA has been welcomed by investment bosses who argue it was “doomed to fail”, as the Treasury insisted it was still weighing up the measure.
The former Conservative government drew up plans for the new savings product earlier this year as part of its spring Budget.
It was set to give people an additional £5,000 tax-free allowance to invest in UK companies and help boost the City.
The new Government is thought to be planning to drop the British ISA despite saying it would not do so prior to July’s general election, according to reports in the Financial Times.
A Treasury spokesman said “no decisions had been made” over the product, adding: “The Government will provide further information on its plans for the British ISA in due course.”
Bosses of top investment platforms have weighed in on the reports, praising officials for potentially ditching the “ill-conceived” idea.
Michael Summersgill, chief executive of AJ Bell, said the British ISA was a “political gimmick that was doomed to fail in its objective of boosting investment” in UK-listed businesses.
“The new Government deserves huge credit for consigning this ill-conceived idea to the policy dustbin and will hopefully now take a more sensible, long-term approach to ISA reform than their predecessors, focused on simplification for the benefit of consumers,” he said.
Dan Olley, chief executive of Hargreaves Lansdown, said the group was “pleased” about the potential scrapping of the product “because simplicity is key when it comes to getting people to start investing”.
“The UK ISA would have added complexity with little real benefit for many,” he said.
“Our data clearly shows that British retail investors are already enthusiastic backers of British companies.”
When the British ISA was first unveiled, former chancellor Jeremy Hunt said he had received calls from more than 200 City representatives to reform the ISA system and encourage more people to invest in UK assets.
The product was set to apply to people who max out their £20,000 tax-free allowance on an ISA, a savings vehicle that offers people tax-free interest payments.
Meanwhile, Dan Moczulski, the UK managing director of trading platform eToro, said that “more needs to be done to stimulate investment in the UK, reinvigorate our capital markets and get more people investing as well as just saving”.
“I would like to see the new Government begin to show their cards on this issue and give us a roadmap for how they will support retail investing in the UK,” he added.
