The Conservative Party’s offer of discounted bank shares appears designed more as a headline-grabber in the run-up to the general election than a serious attempt to create a better savings culture.
The proposals for a “people’s bank bonus”, outlined by Shadow Chancellor George Osborne this weekend, will offer discounted shares in the state-owned banks when they are sold off.
Such a move would obviously be a big departure from the current administration’s aim to sell off the stakes when conditions allow to maximise the return to the taxpayer. RBS shares are still trading at 30 per cent less than the Government paid for them.
Would it really be sensible for the Tories to use a large amount of taxpayers’ money to encourage low to middle earners to use any spare money they might have to buy some volatile shares?
If the Conservatives want us to believe they are the party to reverse the decline in the savings culture overseen by this Government and previous ones, they must offer us much more.
They could start by listening hard to certain arguments being presented to them by the industry.
This week’s Money Marketing includes a round table exploring what the future holds for the current raft of pension reforms. One key theme running through the debate was the need to align long-term and short-term savings regimes.
A key barrier to people saving into a pension is the concern that this money will be locked away until a distant date. Offering early access to a percentage of accrued funds or the better promo-tion of Isas to run alongside a pension vehicle in the form of a lifetime savings pot would help address this.
This idea is already on the Conservative party’s radar. Plans for a lifetime savings account appeared in their last manifesto and the Cameron-friendly thinktank Policy Exchange has recently carried out some work on the interaction between different savings vehicles.
George Osborne’s recent pledge to scrap forced annuitisation sent out the right signal to savers but more is needed to ensure that the upcoming introduction of auto-enrolment will be a success. The Conservatives should be focused on long-term reforms to create a joined-up savings regime which encourages people to save more rather than gimmicky policies to create a bit of short-term exposure.