It is always awkward talking about politics and the general election at social occasions, but virtually all of my friends, regardless of their political outlook, position on Brexit or size of bank balance, are telling me the same thing: “I just don’t know who to vote for!”
We have debated at length what would be the most damaging to the UK economy — a hard left Labour government, or a hard Brexit under the Tories. Neither appeals.
It reminds me of a terrible game called “Would You Rather” that poses questions with equally unpalatable options, such as “Would you rather always stink and not know it, or always smell something that stinks that no one else can smell?”
The one thing we all agree on is that Brexit has overshadowed all other attempts at policymaking for more than three years, and it shows.
So whatever form the next government takes, here are four areas of our personal finances that I’m ardently hoping future policymakers will turn their attention to. You could call it my money manifesto.
Champion private investors
When I first heard about Labour’s plans to give employees a financial stake in the companies they work for, I wanted to like it.
Why? I got started as an investor by purchasing discounted shares in Pearson, the former owner of the FT, via the company Share Save scheme. It was easy to do — save between £5 and £500 every month for three or five years, then use the cash to buy shares at a discounted option price (should shares be trading below this level, you will at least get your cash back).
I more than doubled my money when the first scheme vested, and swiftly transferred it to a stocks and shares Isa where I diversified my gains over a range of investments. It has been growing there — tax free — ever since.
It is possible for unlisted companies to set up Share Save schemes, and the UK also has Share Incentive Plans which allow employers to give free shares to staff.
The next government should champion and promote the use of these existing schemes.
I oppose Labour’s plans to force large companies to hand up to 10 per cent of shares to workers. Dividends would be capped at £500 per year, with any surplus passed to the government, thus ratcheting up the tax burden on UK companies. Investors of all sizes are rattled at the implications.
Instead, the next government should think of better ways to encourage UK private investors.
We are inherently champions of patient capital, holding assets for the long term and reinvesting dividends in carefully selected companies we see a future in. As consumers, we are an important force in holding companies to account, as reflected in the rise of environmental, social and corporate governance (ESG) investing.
The next government should take a similarly long-term view of the rules governing our long-term savings in pensions and Isas.
The slow death of final-salary pensions means the investment risk is now firmly on us. Yet if we don’t make private provision for our retirement, the future state will have to step in.
So politicians should keep the meddling to a minimum, and find better ways of incentivising women and the self-employed to save.
Protect consumers from financial harm
The billions of pounds released by pension freedoms has created a parallel boom in unregulated investments which are high risk and unsuitable for most. The Financial Conduct Authority finally did something right this week when it banned the promotion of mini-bonds — but why did it take so long?
The £1bn of Isa cash pouring into peer-to-peer lending is another risk mismatch threatening to become the next “stable door” for regulators to slam. And we will have to wait until next year for investigations into the Woodford crisis to conclude.
I have long campaigned for banks to take collective responsibility for solving the scourge of push payment fraud, and properly look after customers who fall victim to scams. Having lost life-changing sums of money, customers are left to battle the relentless admin alone — chasing receiving banks, filing police and fraud reports and facing a nail-biting wait of weeks and months until the ombudsman rules on their complaints.
The voluntary code is a start, but based on the experiences recounted by FT readers, the treatment of fraud victims is bafflingly inconsistent.
Tax the self-employed simply and fairly
The gig economy has brought greater flexibility to the workforce — at a cost to the worker in job security, lost pension provision and burdensome taxation.
Employment rights are being denied to freelance contractors as companies struggle to fathom April’s IR35 rule changes. The next government should delay these measures, invest time in designing a simpler and fairer system — and stop the Loan Charge while they’re at it.
Paying freelancers in loans to avoid tax is contentious, but these offshore umbrella companies were designed by multimillionaires, promoted by accountants and barristers and sanctioned by large banks who pushed their freelance IT contractors into using them (for a price).
A hollowed out HM Revenue & Customs allowed this to continue for years, and is now relying on retrospective legislation to collect up to 20 years of tax from contractors as the so-called advisers melt into the background. Whatever HMRC claims, the loan charge will result in bankruptcies and the destruction of businesses that many have spent a lifetime building up. Tragically, the policy has been linked to seven suicides.
For these reasons and more, over 200 politicians from all parties say the loan charge should be suspended, yet only the Lib Dems and the SNP have mentioned it in their manifestos.
A financial education for all
Financial education needs to be properly resourced and taught in all UK schools and colleges, and the learning shouldn’t stop after the age of 16.
Martin Lewis, the Money Saving Expert, the Open University and the government’s Money and Pensions Service are all doing worthwhile things, but a joined up approach is needed. We have set up FT Schools to promote greater financial awareness among students aged 15-18, and workplaces are increasingly seeing the benefits of focusing on financial wellbeing.
If we fail to make these connections, we risk seeing consumers remain in ignorance about aspects of finance that can make a truly life-changing difference to their circumstances.