'Reeves should cut cash ISA limit and revive Brit ISA,' says Merryn Somerset Webb

Scrap cash ISAs and set up a Brit ISA for stocks, says Merryn Somerset Webb

Rachel Reeves, UK chancellor of the exchequer,
(Image credit: Anthony Devlin - WPA Pool/Getty Images)

Poor Rachel Reeves. She doesn’t seem to get much right – and even when she does things still seem to go wrong (see welfare reform). And so it is with her perfectly sensible thoughts on cash ISAs. All UK adults get a £20,000 ISA allowance – which they can pop into a tax-free wrapper and either hold in cash or invest in the equity or bond markets. More than 7.8 million people have cash ISAs, around double the number who use the wrapper for investing.

Reeves had been planning to change the allowance such that a maximum of £4,000 or £5,000 could be kept in cash, with the rest having to be invested. Her public thinking was simple: over the long term, the stock market provides very significantly better returns than cash – and it makes sense for as many people as possible to take advantage of those returns. History firmly backs her up on this: in the last ten years the UK’s passion for cash ISAs has, says Schroders’ Duncan Lamont, left households more than £500 billion worse off than had they invested in global equities.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.