General Election 2024: Labour backs British ISA plans but Natwest share sale under ‘review’
The Labour party is intending to push ahead with the government’s plans to introduce a British ISA if elected to power in a boost to efforts to get cash flowing into the stock market, CityAM can reveal.
The comments from a Labour spokesperson mark the party’s first public stance on one of the government’s flagship City reform policies after days of doubt over whether Rachel Reeves and Keir Starmer would push ahead with the scheme.
Plans for a British ISA were announced by the Chancellor Jeremy Hunt in his March budget this year to tempt more investors into the stock market with a £5000 tax-free allowance for investment in British listed companies.
Under the timelines set out by Hunt, a consultation on the plans will close on the 6th June but no firm date has been marked to launch the products into the market.
Those plans were thrown into doubt by Rishi Sunak’s move to call an early election in July and caused the Treasury to place “everything under review”, a source told City A.M. last week. However, the Labour party has indicated it will now back the ISA plans if elected to power.
“Labour has no plans to drop the British ISA,” a spokesperson told CityAM “Labour wants to make it as easy as possible for people to feel the benefits of saving and investing their money, including through increased utilisation of stocks and shares ISAs.”
Since their announcement in March, the British ISA plans have proved divisive in the City due to the fact that a relatively small amount of investors will actually qualify for the tax-break. Several of the top retail investment platforms have lambasted the measure as a “charade” and “tokenist”.
The backing from Labour marks its most firm stance yet on the British ISA plans after it pledged to “simplify the ISA landscape” last year. The move may also restore some certainty to the Treasury’s post-election planning, which has been plunged into chaos by Sunak’s gamble to hold the election in July rather than the Autumn.
Ministers have been looking to overhaul the regulation and rules around the City amid fears over its attractiveness as a financial centre, but a number of the plans remain a work-in-progress.
Under Shadow Chancellor Rachel Reeves, the Labour party has vying for the affections of business and has broadly backed the government’s City reform agenda, including efforts to unlock more capital into the markets. However, it is unclear where its priorities will lie and which specific measures it will take forward if elected, effectively causing the Treasury to press pause and shelve some of its work.
Among the areas thrown into doubt by the election are the plans to offload a chunk of the government’s remaining stake in Natwest to retail investors, drawn up by the government in a bid to ignite a culture of investment in the UK.
In his budget in March, Jeremy Hunt described the sale as a “tell Sid” style moment for investing in the UK, a reference to the Thatcher-era move to privatise British Gas and sell shares to the public.
The plans were already on shaky ground after the Treasury U-turned on the intended structure of the deal and paused a bidding process with retail investment platforms to handle the sale, City A.M. previously revealed.
After Sunak called the election on Wednesday, the Treasury confirmed last week that the sale will not go ahead during the election period. The Labour party has now said it is yet to make a firm decision on whether to push ahead with the plans if elected.
“Labour will review the details if we form the next government after the general election,” a Labour spokesperson told CityAM “Any decisions we take will be about ensuring value for money for the taxpayer and investors.”
Natwest itself has been buying back its shares from the government and it now looks likely that the Treasury and UKGI, the body that manages the investment on behalf of the government, will sell the shares via other methods.