Thoughts and comments on today’s Budget
Budget 2024 – some good news for British workers, companies and markets.
British ISA to direct an extra £5,000 ISA allowance for investing in UK equities – we mustn’t let this be derailed by consultation.
And good to see that the Chancellor wants to drive more pension money to support UK companies and growth too.
This was a difficult Budget and I really hope it provides the kind of boost for growth that Britain really needs, both now and for the future.
The Chancellor has announced some good news for British workers and also for our companies and markets. A cut in National Insurance will increase take-home pay for employees and the self-employed and emphasis on back to work help is also welcome. The new British ISA and encouragement for pension funds to back Britain better will also bolster UK markets and growth over time.
£5000 British ISA is an excellent start to using domestic investor power to boost domestic growth: Of course I welcome the announcement of a British ISA to be launched later this year. I would have liked the allowance to be higher than £5000, but I am still delighted with this start. There will be a consultation and it is vital to ensure that this much-needed boost for UK markets is not derailed by consultation.
Pension funds will be required to report how much (or little!) they are investing in UK companies and assets: The Chancellor confirmed rumours that he will require pension funds to report how much (or little!) they invest in UK equities. This will show that most of them devote much more of their assets to back other countries and not our own. It is good to see the Government recognises the importance of bringing back domestic institutional investment support for British growth, especially as pension funds receive generous tax reliefs. Despite some already having voiced opposition to reporting their allocation to British companies, this kind of reporting of domestic and international asset allocations is important information for pension scheme members, so they can see what their money is being used for. Taxpayers and ordinary members would expect their long-term funds to help ensure that the future of the UK economy is better and can benefit from higher investment. Using pension and ISA assets to support British growth, is a logical, rational policy option to choose.
The Chancellor is right to expect our pension funds to back Britain, not least because they are receiving massive amounts of money from all taxpayers: Each year, taxpayers put £70bn a year of tax and NI reliefs into people’s pensions. What do taxpayers as a whole receive for that investment? Surely it is not unreasonable for them to expect this money to support British growth, as our pension funds used to, before regulatory decisions drove trustees and managers away from domestic equities.
The Pensions Regulator encouraged a switch out of equities in general and UK equities in particular: In the past 15 years or so, regulatory pressure encouraged much greater emphasis on bonds, telling trustees to focus more on managing risk, rather than higher returns. Even though the capital asset pricing model predicts equities should provide better returns over time than bonds. Traditional large equity weightings were slashed. In addition, regulators focussed on driving down investment management expenses. This well-intentioned measure, however, resulted in widespread use of passive funds, which merely replicate global indices. This meant previous high allocations to UK equities have fallen below 4%, with massive selling of UK shares that has contributed to underperformance of UK markets. Strong domestic fund flows used to support British growth and investment, but this base has been lost. It needs to be revived.
Boosting domestic pension fund and investment in UK markets can improve British growth, markets and pensions but there was no mention of pensioners: The Budget understandably focussed on improving rewards for workers and boosting the economy. However, the tax burden on pensioners has increased significantly since 2010 and I would have liked to see the personal tax allowance increased, to ensure that those only earning a little or nothing more than a State Pension, are not going to be dragged into the tax net. The National Insurance cut and more Child Benefit will benefit working age people, but anyone over State Pension Age does not pay National Insurance at all. But the Budget will help older workers who are below pension age – a group who the Government rightly wants to encourage back into work. There was also more back-to-work support for those who may be less healthy than when they were starting out. The Chancellor, perhaps surprisingly, did not acknowledge the valuable past role of today’s pensioners in building up the country. He could also have mentioned the Government’s higher cost-of-living and Covid payments for pensioners, which were largely tax-free and therefore of more benefit to taxpaying pensioners than others.
4 thoughts on “Thoughts and comments on today’s Budget”
Nothing either, about reparation for the 3 million plus women who’s lives have been ruined by this Government through the delayed pension scam. I have had cancer four times yet have been forced back to work and still live beneath the poverty line. This is SCANDALOUS, as we see Illegal immigrants living in luxury at MY EXPENSE.
a disaster budget for me i have a company pension of just £76 pounds a week i get income tax on that tiny amount with my state pension this amounts to £275 pounds which i am taxed, i pay my rent £110 per week my council tax £28 pound a week ,energy bills water etc there is not much left for food clothing etc , i cant claim any benefits no help with heating bills no £900 per year cost of living ,because work and pensions say £277 pounds a week is to much to claim,people on pension credit receive more state pension than i get plus there rent paid council tax paid £900 pounds cost of living payment heating allowance how is that fair i have worked for 50 years how is that fair the whole system is a joke
useless budget
Whatever this budget was designed to achieve, it is merely tinkering at the edges. We need wholesale reform to significantly reduce taxation and reduce the cost of the state.
It was also yet another act of political self-harm by a conservative government who have just irritated their core vote by doing nothing to prevent fiscal drag.
We done Jeremy – this was your last chance to do something radical and positive – you failed.