Brown fails to cash-in on savings accounts as snags make investors 'less inclined'

Chancellor Gordon Brown has been criticised by for his "anti-saving policies" after a new survey revealed 30 per cent of UK savers feel 'less inclined' to opt for Individual Savings Accounts backed by the government.

Oliver Letwin, Shadow Chancellor, said that fresh calculations confirmed suspicion that people had lost trust in the government's pro-saving stance at a critical moment.

He said: "Since 1997 the proportion of household income saved has fallen from 10 per cent to 6 per cent. This confirms what we have been saying for a long time."

The Conservative MP enforced that as a knock-on effect of Mr Brown failing to provide sufficient incentive for savers there is now "massive disappointment at how the government has consistently undermined ISAs."

Mr Letwin was reflecting on findings gathered for asset manager, Isis, by NMG Research - in response to intentions to cut the amount that can be saved into stock and shares ISAs from £7,000 to £5,000.

Intentions to slash cash amounts allowed on Isas from £3,000 to £1,000 are also expected from April 2006.

Last April, the Chancellor abolished the remaining 10 per cent dividend tax credit on shares and share-based funds held within ISAs.

Disappointment from savers over the measures was logged in Isis's probe with disillusioned investors highest among people aged 45-54, accounting for 45 per cent of respondents 'less inclined to invest'.

Jason Hollands, head of communications and strategy at Isis- one of the UK's largest fund managers, appeared to support concerns made by the Shadow Chancellor, saying the bleak outlook from the cuts was expected.

"These findings are sadly no surprise to us, since key players in the investment industry have repeatedly warned the government about the negative impact of sentiment that such measures would generate."

"When Labour replaced Personal Equity plans with Isas, these were heralded as a flagship part of government policy to encourage private savings. But the flagship increasingly looks like it is being torpedoed by its own side."

Meanwhile, some financial advisers said that no creditable effort had been made by the government to combat debt or boost saving incentives despite their importance in fostering better approaches to long-term investment.

A Treasury spokesman responded: "The government has put in place a raft of measures to boost savings in this country, including the Savings Gateway and the Child Trust Fund."

Mr Hollands stated: "A significant proportion of investors appear to have concluded that since the government is no longer committed to Isas, why should they bother?"

 

11th June 2004

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