What caught my eye this week.
For most of the week, my Weekend Reading links included articles warning that Rachel Reeves was finally going to cut the cash ISA allowance at her Mansion House speech next week.
The rumours had run for months. At last reality was at hand!
Yet by the end of the week, it was all change.
From the BBC:
Rachel Reeves was thought to be considering reducing the allowance for tax-free cash savings, in a bid to encourage people to put money into stocks and shares instead and boost the economy.
But strong opposition from banks, building societies and consumer campaigners mean any such move has been put on hold.
The Building Societies Association said it welcomed the Treasury stepping back from making any “hasty decisions” on ISAs.
So, we’re finally out of the woods on this one?
Not so fast. That same BBC article quotes a Treasury spokesperson as saying:
“Our ambition is to ensure people’s hard-earned savings are delivering the best returns and driving more investment into the UK economy.”
…and it adds that changes have not been ruled out for the future.
Similar pieces in The Guardian and the FT tell the same on/off story.
Stranger than fiction
Perhaps you blame the media for this.
After all, nothing gets a certain class of drive-by readers clicking and sharing like a threat to their personal wealth.
That was my co-blogger The Accumulator’s initial take.
TA compared the early cash ISA rumours to the annual ‘Pension Allowance to be SLASHED’ bogeyman that’s brought out every March – apparently almost in concert with wealth-gathering (and advertisement-running) financial services firms – only for things to stay the same most years.
But I judged there was more substance to the cash ISA threat. And by Thursday I was readying myself for some modest but smug satisfaction at being proven right.
Foiled again.
Smoke and fire
There are reasons why I don’t entirely blame the media for the ISA story however.
Firstly, many people want to hear about this stuff. Even if it is all rumours.
When the threat to cash ISAs flared up for the second or third time earlier this year, I ignored it in these links. I felt it was time to wait for concrete news from the Chancellor.
Yet readers asked me afterwards why I’d not included the story. Some even sent me links to it themselves.
The more important reason not to shoot the messenger however is it’s the Government itself that is cranking the handle on this rumour roundabout.
That’s why all the main outlets ran with the ‘no change’ story within hours of each other on Friday.
The official word had come down from on high that cash ISAs were to be left alone. So could they please mention this ASAP to their readers?
Make up, break up
For decades now government policy has been more and more determined by focus groups, public relations concerns, and the electoral calculus, as much as by what the country really needed.
And for the past 15 years or so, this strategy has included a much more explicitly open dance to trail potential policies in the press to see how the public reacts.
Whoever is running stuff up the flagpole in Downing Street must have severe tennis elbow by now!
Of course, politicians have rarely ever given us entirely what we needed, unencumbered by worries about the democratic popularity contest. Perhaps unity governments during wartime were the exception.
But with the present crew the situation is getting out of hand.
We saw it before Rachel Reeves’ first Budget. Her doom-laden stocktake on Labour winning the General Election raised more questions than it answered, leading to months of speculation. From an early mood of relief and even optimism, Britain fell into almost a paralytic stupor waiting to find out what Reeves would axe, or where taxes would rise.
And now savers have endured many months of wondering about their cash ISAs – thanks entirely to trial balloons being floated up from Whitehall.
Ask the audience
I understand why they feel the need do this.
Much of the electorate has lost all interest in evaluating policies. The Overton Window to make outlandish pronouncements in opposition about everything from immigration to taxation to nuclear submarines is wide open. But that same fact-free tribalism narrows the freedom to act when in power.
On top of that, judging by last week’s welfare U-turn Labour can’t even predict how a few hundred of its own MPs will respond to its policies. The electorate must be a black box by comparison.
However making up legislation as you go – based on how much furore your hints caused on the Internet and whether you think you can handle any further backlash – is no way to run a country.
Many of us despair at the US president’s reality TV show-style decision making.
But this policy-by-public-plebiscite experiment we’re running is arguably only a more genteel version.
Deal or no deal
There are consequences everywhere – but at Monevator our concern is with people’s finances.
On the one hand, MPs and mandarins alike lambast the public for not thinking long-term about their investments, or for not putting enough money towards their distant retirements.
Yet at the same time ministers fiddle with our savings and pensions vehicles with every other Budget – and threaten to make twice as many changes in between.
Enough is enough. This government started with five long years ahead of it and a big majority. Plenty of time to do what it thought was right upfront, and then to manage the consequences in the aftermath.
Pull the bandaid off if you’re going to do it. Picking at it will just make it worse.
Have a great weekend.
