Remember when the winter fuel payment was a simple pensioner benefit? Reeves quickly put a stop to that. First she scrapped it for 10million pensioners. Then she staged a giant U-turn and paid it to everyone, while taking it away from the better-off. The whole thing is now so convoluted hardly anybody can follow it. Sadly, that wasn’t a one-off. It’s the Rachel Reeves blueprint. Take something people broadly understand and smash it up. Then piece it back together. Badly.
She’s done the same with the state pension. Next year, the new state pension will rise above the frozen £12,570 personal allowance for the first time, and become taxable. Reeves came up with a fiddle where those who only get the state pension won’t have to pay tax. It sounded sensible for half a second, but it’s now turned into a total shambles that benefits almost nobody. She’s created similar havoc with the jobs market.
Britain had low unemployment for years. Then Reeves slapped £26billion of extra National Insurance on employers and slashed the payment threshold, while pushing through hefty minimum wage hikes. The result? Youth unemployment has rocketed. She’s crushed the prospects of a whole generation. Her answer? Cobble together a state-backed youth package that probably won’t create a single decent job.
That’s the pattern. Destroy something that functions reasonably well, then replace it with a cock-eyed Whitehall fudge nobody understands. Lately she’s turned her attention to ISAs. Predictably, chaos ensued.
Before Reeves intervened, savers got a straightforward £20,000 annual allowance to split between Cash ISAs and Stocks and Shares ISAs as they pleased. ISAs still needed a bit of gentle simplifying. Instead, she’s added another layer of confusion.
First, she cut the Cash ISA allowance to £12,000 for the under-65s to push savers into shares, while keeping the Stocks and Shares ISA at £20,000 for all. That comes into force next April. In principle, I agree with the idea. Younger savers should invest more in equities because long-term stock market returns usually beat cash.
But Reeves has handled it in the worst possible way. She forget that most Stocks and Shares ISA platforms allow investors to park money in cash, while they decide which stocks or funds to buy. So she decided to hit anyone who did this with a 22% tax charge.
It didn’t take long for savers to spot a loophole in her daft rule. They could first max out their £12,000 Cash ISA. Then, put 1p in shares, and the remaining £7,999.99 of their annual ISA allowance into low-risk ‘money market’ funds. These can be bought inside a Stocks and Shares ISA and invest in “cash-like instruments”.
Reeves hadn’t seen that coming. Nor had anybody at the Treasury. And now they’re stuck. So are banks, building societies and investment platforms. They’re unsure what systems they need to build by next April.
So where does that leave savers? With an ISA regime that’s even more complex and confusing than before. A supposedly simple savings product now comes wrapped in caveats, workarounds and technical traps.
As the Express recently revealed, more than half of Brits are unclear on her ISA changes and risk losing out on thousands in tax-free savings as a result.
Reeves hasn’t just messed up our benefits system, state pension, jobs market and savings culture. She’s crushed growth, lost control of borrowing and risks driving us off a fiscal cliff.
The ISA disaster is just the latest example of the wreckage she’s inflicted on our country. And she’s not done yet.