Latest news with #YorkshireBuildingSociety
Telegraph
5 days ago
- Business
- Telegraph
Rachel Reeves's reckless flip-flopping is playing fast and loose with people's life savings
Another day, another cowardly retreat from anything resembling fiscal responsibility. Following rowbacks on winter fuel payments and personal independence payments, Rachel Reeves has now changed tack on her well-trailed plans to slash the cash Isa allowance. This time it appears to be the lobbying of Britain's building societies that proved too much to bear, with the likes of Nationwide and Yorkshire Building Society holding the Chancellor's feet to the fire. Regardless of your stance on the policy (you might not like it but I've made mine clear), this persistent flip-flopping is causing serious damage to the country and those who live in it. How can people be expected to make sound decisions about their finances if the Government can't make up its mind? Since January, Reeves has repeatedly failed to shut down rumours that she would limit the amount of cash savers can shield from tax in their Isas. As we approached next week's Mansion House speech, it was being taken as gospel that change was finally coming, even if we lacked the details. But now, less than a week out, the Government has briefed that, in fact, no such move is on the cards soon. (It is important to note that while changes have been ruled out for next week, Isa reform has not been canned.) That didn't stop people planning for it. As Telegraph Money reported yesterday, savers were rushing to stuff their cash under the tax-free mattress, with Skipton and Leeds building societies witnessing 45pc and 47pc jumps in new accounts, respectively, in just one week. Earlier in the year, savers added a record £14bn to these accounts, making rash financial planning decisions based on the best information available. Time and again, our reckless Government is playing fast and loose with people's life savings. Ahead of Labour's first Budget, there was a spike in savers cashing in their pension lump sum as Downing Street refused to deny it was planning to dramatically reduce the tax-free amount people could withdraw from their retirement savings. When the change never materialised, people were left stranded with enormous amounts of capital locked out from their pensions, condemned to miss out on decades of tax-free growth that stands at the core of prudent pension planning. Bestinvest, an investment firm, reported that pension withdrawal requests more than doubled ahead of the Budget in October 2024 compared to the same month the previous year. The damage was done. One reader withdrew £138,000 from two of her personal pensions, a move she was unable to reverse despite most financial firms offering a 30-day cooling-off period for such decisions. Another described how he had felt 'panicked' into making a life-changing financial decision, adding that 'Rachel Reeves's incompetence' had left him 'almost in tears'. Paul Johnson, of the Institute for Fiscal Studies (IFS), said at the time that the Chancellor should 'reflect on the damage done by having allowed various rumours to circulate for so long'. Every time these sorts of rumours are allowed to persist, people act on them. We've spent decades being taught that government leaks are to be taken seriously, with policy briefed in the media and trailed well before changes are officially announced. But perhaps we need to start taking lessons from Sir Keir Starmer's government. They've repeatedly taught us that when the going gets tough, they'll roll over. In the futile pursuit of being liked, they've forgotten how politics works. Governing is a thankless task – even if you give people what they want, they'll spit in your face. Unfortunately, Reeves has inherited a can that has been kicked down the road for years. Growth has contracted once again this morning and this latest U-turn won't do anything to balance the books. Strap in for the autumn – it will be the most painful Budget since austerity.
Yahoo
5 days ago
- Business
- Yahoo
Reeves delays cash Isa reform after backlash
Rachel Reeves is poised to delay controversial plans to reform cash Isas following a fierce backlash from some of Britain's biggest lenders. The Chancellor had been expected to use her Mansion House speech on July 15 to announce a reduction in the amount of money that savers could put into the product. However, she has now rowed back on the plans in favour of encouraging households to put more of their savings into stocks and shares. While the reforms have not been dropped altogether, Whitehall officials are split on how to progress reforms that could see the amount savers can put into a cash Isa tax-free fall from £20,000 to as low as £5,000. Ms Reeves is looking to consult with the industry more broadly about the changes as she responds to a wave of recent opposition from building societies and consumer champions. The likes of Yorkshire, Coventry and Skipton building societies all opposed the reforms, which they said could restrict their ability to raise the funds needed to provide loans to homeowners. Nearly a third of people in Britain have a cash Isa, with around £300bn in savings used by building societies to lend to homeowners. The UK has 42 building societies, serving 26m customers. Chris Irwin, Yorkshire Building Society's head of savings, said earlier this week that 'reducing Isa deposits could make mortgages more expensive and less available'. Mr Irwin said: 'Cash Isas make up 39pc of all building societies' retail savings balances. This provides a vital source of funding to allow us to offer more mortgages to those that need them.' That view was echoed by Jeremy Cox, head of strategy at Coventry Building Society, who added that Ms Reeves's plans could have a wider impact on Labour's ambition to build 1.5m homes by the end of Parliament. He said: 'We want to support the Government's ambition to build 1.5m new homes. Cutting Isa limits could make that more difficult and have a significant impact on economic activity.' However, City stockbrokers supported the plans as their investment platforms would have been bolstered by more money being pumped into stocks and shares Isas. A Treasury spokesman said: 'Our ambition is to ensure people's hard-earned savings are delivering the best returns and driving more investment into the UK economy.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Telegraph
5 days ago
- Business
- Telegraph
Reeves to delay cash Isa reform after backlash
Rachel Reeves is poised to delay controversial plans to reform cash Isas following a fierce backlash from some of Britain's biggest lenders. The Chancellor had been expected to use her Mansion House speech on July 15 to announce a reduction in the amount of money that savers could put into the product. However, she has now rowed back on the plans in favour of encouraging households to put more of their savings into stocks and shares. While the reforms have not been dropped altogether, Whitehall officials are split on how to progress reforms that could see the amount savers can put into a cash Isa tax-free fall from £20,000 to as low as £5,000. Ms Reeves is looking to consult with the industry more broadly about the changes as she responds to a wave of recent opposition from building societies and consumer champions. The likes of Yorkshire, Coventry and Skipton building societies all opposed the reforms, which they said could restrict their ability to raise the funds needed to provide loans to homeowners. Nearly a third of people in Britain have a cash Isa, with around £300bn in savings used by building societies to lend to homeowners. The UK has 42 building societies, serving 26m customers. Chris Irwin, Yorkshire Building Society's head of savings, said earlier this week that 'reducing Isa deposits could make mortgages more expensive and less available'. Mr Irwin said: 'Cash Isas make up 39pc of all building societies' retail savings balances. This provides a vital source of funding to allow us to offer more mortgages to those that need them.' That view was echoed by Jeremy Cox, head of strategy at Coventry Building Society, who added that Ms Reeves's plans could have a wider impact on Labour's ambition to build 1.5m homes by the end of Parliament. He said: 'We want to support the Government's ambition to build 1.5m new homes. Cutting Isa limits could make that more difficult and have a significant impact on economic activity.' However, City stockbrokers supported the plans as their investment platforms would have been bolstered by more money being pumped into stocks and shares Isas. A Treasury spokesman said: 'Our ambition is to ensure people's hard-earned savings are delivering the best returns and driving more investment into the UK economy.'
The Independent
09-07-2025
- Business
- The Independent
Rachel Reeves urged to leave cash ISAs alone
Rachel Reeves is under pressure from building societies and other financial organisations not to reduce the annual cash ISA limit. The chancellor is expected to announce a cut from the current £20,000 allowance during her Mansion House speech on 15 July, aiming to encourage wider investment. An open letter, signed by leaders from Nationwide, Skipton Group, Yorkshire Building Society, and Hargreaves Lansdown, argues that cash ISAs are a cornerstone of personal savings and support affordable lending. The signatories warn that significant reductions to cash ISA limits could make lending more scarce and expensive, potentially undermining economic growth and housing initiatives. Industry experts widely dismiss the plan, stating that simply changing ISA limits is unlikely to encourage investment and could instead hurt responsible savers by forcing them into taxable accounts.
Telegraph
07-07-2025
- Business
- Telegraph
Cutting cash Isas will kill economic growth, Reeves warned
Cutting the cash Isa allowance will 'undermine' efforts to grow the economy, Rachel Reeves has been warned. The Chancellor is expected to confirm that she will reduce the £20,000 cap on the amount that can be shielded from tax in cash Isas each year in her Mansion House speech next week. But the Building Societies Association (BSA), a trade body that represents 49 members including Yorkshire Building Society and Nationwide, has warned that the move could result in mortgages becoming less affordable and threaten to derail Labour's plan to build 1.5 million new homes. It has also warned the change would fail to 'encourage people to invest' in riskier stocks and shares, at direct odds with the Chancellor's reasoning for the cut, which she hopes would spur investment in Britain's faltering stock market. A recent survey by stockbroker AJ Bell suggested that only one in five savers would switch to the stock market if their limits were cut. It is the latest in a chorus of opposition to the move from industry experts, who fear lowering tax reliefs would damage incentives for long-term investment. In an open letter to Ms Reeves on Monday, the BSA said: 'Restricting cash Isas won't encourage people to invest, as it won't suddenly change their appetite to take on risk. 'Any significant reductions to the cash Isa limits would make this funding more scarce, which could have the knock-on effect of making loans to households and businesses more expensive and harder to come by.' It added: 'This would undermine efforts to stimulate economic growth, including the Government's commitment to delivering 1.5 million new homes.' The body has also called for a reassessment of risk warnings in order to encourage investing if suitable, rather than the current messages, which can 'scare people off investing'. Some 18 million people save into cash Isas each year and have long enjoyed generous tax reliefs to encourage financial prudence. Ms Reeves has previously been advised by city executives to reduce the allowance to as little as £4,000 to push more people to invest in the stock market, thereby boosting the economy. There has been intense lobbying both for and against reducing the tax-free allowance by City firms keen to boost investment in the stock market, and building societies who use cash Isa savings to fund loans. Cutting the allowance would mean millions of people could save less each year tax-free, and would face a choice between putting money into taxable savings accounts or investing tax-free in stocks. Isa limits were originally set at £7,000 when the savings accounts were introduced by Gordon Brown, the former chancellor, in 1999. The annual allowance was frozen at £20,000 from the 2017-18 tax year, with no requirement for savers to put money in stocks and shares instead of cash. There are four main types of Isa: cash, stocks and shares, lifetime, and innovative finance. Cash Isas are the most popular product, with savers stashing away a record £49.8bn last year – a 6pc increase on the previous year.
