Savers' new dawn

Since they were launched in 1999, Individual Savings Accounts, or Isas, have been a great success. More than 20 million people have invested an estimated £440 billion in both the cash and share versions. Today, the launch of the so-called super Isa, announced by George Osborne in his Budget, will usher in a new and overdue boost to savings. This newspaper has good reason to welcome the reform, since we had long urged the Treasury to overhaul the outdated rules for Isas to allow more to be saved free of tax and for the transfer procedures to be simplified. The Jeremiahs have issued warnings that today’s launch will be accompanied by administrative difficulties as millions of savers seek to take advantage of the new opportunities. But teething problems are to be expected and high levels of interest in the super Isas will be an indication of their likely success, not of imminent failure.

Given the baleful impact on pensions of government interference and the misselling scandals in the financial sector, it is hardly surprising that people are reluctant to put their money aside for the future for fear of getting ripped off. Indeed, Isas are one of the few financial instruments that are still trusted; so they need to be sufficiently flexible for people nearing retirement, and simple and accessible enough to encourage young people to save as well.

The biggest reform will see a rise in the overall annual allowance from £11,880 to £15,000 and there will no longer be a distinction between cash and shares. When so much of our money is taken – and often wasted – by the state, any opportunity to shelter more of it from the taxman is to be grabbed with alacrity. Moreover, anything that can encourage saving in a culture that has relied far too heavily on borrowing can only be a good thing.

more