If Cash ISAs are ended by Government.

garfield33

Hi everyone

A question from someone who is very new/naive/ignorant of banking, economics, policies etc, so please be gentle!
It's been said that the aim of the mooted reduction / scrapping of cash ISAs is to encourage people to use S&S ISAs instead, in order to drive investment and boost the UK economy.

The money that is in cash ISAs - the banks/building societies use that to lend out to people / businesses / as mortgages? So it's not sitting there doing nothing, it is being used to drive the economy in another way?

masonic

garfield33 said:

Hi everyone

A question from someone who is very new/naive/ignorant of banking, economics, policies etc, so please be gentle!
It's been said that the aim of the mooted reduction / scrapping of cash ISAs is to encourage people to use S&S ISAs instead, in order to drive investment and boost the UK economy.

The money that is in cash ISAs - the banks/building societies use that to lend out to people / businesses / as mortgages? So it's not sitting there doing nothing, it is being used to drive the economy in another way?

It's a reasonable argument. But it could be argued that driving growth in house prices is not what is desirable. Personal loans aren't either as they will tend to drive inflation, and business lending I suspect makes up a minor element of what consumer savings are used for. In the end it is a rather pointless debate as depriving people of cash ISA allowance is not going to convince them to invest, let alone invest specifically in UK businesses, however those are defined. People will already tend to invest as much as they are willing and is appropriate, because they benefit from better long term returns in doing so. If willingness is the problem, then the answer isn't the stick.

Ocelot

garfield33 said:

Hi everyone

A question from someone who is very new/naive/ignorant of banking, economics, policies etc, so please be gentle!
It's been said that the aim of the mooted reduction / scrapping of cash ISAs is to encourage people to use S&S ISAs instead, in order to drive investment and boost the UK economy.

The money that is in cash ISAs - the banks/building societies use that to lend out to people / businesses / as mortgages? So it's not sitting there doing nothing, it is being used to drive the economy in another way?

Many people have pointed that out, so you're not wrong.

slinger2

If the government cuts the annual allowance for the Cash ISA component, some savers will likely put the rest of the allowance into a S&S ISA. However these savers are likely to pick cash-like investments, which is probably not what the government is wanting. So they'd need to change the rules about what you can invest in, in a S&S ISA. All pretty complicated, which is why I'm personally not expecting such a change from this April. What they could do is simply cut the £20k, that's surely the easiest thing to do. Cutting down to £4k seems unrealistic but £18k or £15k or £10k seems possible.

Alpine_Star

Looks like Reeves is kicking the can down the road, for the moment at least, according to FT.

poseidon1

Alpine_Star said:

Looks like Reeves is kicking the can down the road, for the moment at least, according to FT.

Thanks for sharing, just a shame very few will ever see this  piece of 'insider' FT reporting.

bristolleedsfan

poseidon1 said:

Alpine_Star said:

Looks like Reeves is kicking the can down the road, for the moment at least, according to FT.

Thanks for sharing, just a shame very few will ever see this  piece of 'insider' FT reporting.

https://www.ft.com/content/2212c043-6ae6-40b0-b1ef-fc756b3895fe

Middle_of_the_Road

bristolleedsfan said:

poseidon1 said:

Alpine_Star said:

Looks like Reeves is kicking the can down the road, for the moment at least, according to FT.

Thanks for sharing, just a shame very few will ever see this  piece of 'insider' FT reporting.

https://www.ft.com/content/2212c043-6ae6-40b0-b1ef-fc756b3895fe

Although the article can only be accessed by creating an account, you don't need to pay a subscription to view limited content.
e-mail confirmation unlocks the piece.

bristolleedsfan

Middle_of_the_Road said:

bristolleedsfan said:

poseidon1 said:

Alpine_Star said:

Looks like Reeves is kicking the can down the road, for the moment at least, according to FT.

Thanks for sharing, just a shame very few will ever see this  piece of 'insider' FT reporting.

https://www.ft.com/content/2212c043-6ae6-40b0-b1ef-fc756b3895fe

Although the article can only be accessed by creating an account, you don't need to pay a subscription to view limited content.
e-mail confirmation unlocks the piece.

I read article without doing anything.

poseidon1

bristolleedsfan said:

poseidon1 said:

Alpine_Star said:

Looks like Reeves is kicking the can down the road, for the moment at least, according to FT.

Thanks for sharing, just a shame very few will ever see this  piece of 'insider' FT reporting.

https://www.ft.com/content/2212c043-6ae6-40b0-b1ef-fc756b3895fe

To clarify what I actually meant is vanishingly few people would ever think to visit the FT for any kind of news content.

Probably based on it being considered  too elitist and inaccessible with or without the expensive paywall. 

it would certainly be my preferred daily news outlet,  but for the annual (discounted)  £374 digital  subscription. Not an issue when it used to be a perk of my job, but not so appealing when paid from my own resources. 

Quality trust worthy journalism ( like anything else ) comes at a premium price.