Government pondering ISA changes - I can’t help but thinking they’re barking up the wrong tree

https://www.independent.co.uk/money/cash-isa-limits-how-much-rachel-reeves-b2701670.html

Seeming more likely that they will reduce the Cash ISA allowance - potentially to as low as £4000. Of course all the backlash this is getting could still tank that plan.

Reeves today said she was considering this to “create more of a culture in the UK of retail investing like what you have in the US to earn better returns for savers and to support the ambition to grow the economy creating good jobs right across the UK."

How on earth will this change achieve that? People who are too risk averse to consider equities will simply move to regular savings accounts or hold funds in MMFs/bonds in a S&S ISA instead. Most of the equity investment in ISAs is in US equities - not sure how that furthers her goal of growing the UK economy and creating jobs across the UK.

What I really wish they would do is instead focus on increasing the S&S ISA annual limit and introducing a British ISA additional allowance as the last government were planning and seems to have now been scrapped. These would actually achieve her goals! People who are already happy to invest in equities would put more in. And if you gave clear cut tax advantages to investing in UK equities and an additional allowance for it I would certainly be happy to throw a few grand a year there. At the very least there are some high dividend yield stocks that would all be paid tax free. That then helps with the UK growth angle.

What do you think?