Mark Kleinman: Reeves’ ISA reforms pose more risk than reward
Mark Kleinman is Sky News’ City Editor and the man who gets the Square Mile talking in his weekly Morning Wire column
Reeves’ ISA reforms pose more risk than reward
If it ain’t broke, don’t fix it. That sounds like the right epithet to apply to the Treasury’s approach to reforming individual savings accounts (ISAs), one of the most important investment innovations of the last 30 years.
Unfortunately, under Rachel Reeves, anti-growth tax cock-ups like the impact of business rates reforms on Britain’s hospitality industry have become routine; even worse, entirely new categories of crisis are being created.
The decision to rip up a relatively simple ISA system in a country where a long-term savings culture is desperately needed and replace it with a confusing patchwork of schemes is a mess entirely of Reeves’s making. Rightly, the industry is making its anger known.
By City standards, a meeting last week involving investment platforms, asset managers, trade bodies and officials from the Treasury and HM Revenue & Customs was a cauldron of discontent. It’s quite a feat, but Reeves’s officials seem to have devised an overhaul with which hardly anyone is satisfied. A string of ISA u-turns ahead of November’s Budget have proven utterly futile, with industry now left to clean up the Treasury’s mess.
As one savings industry source put it: “The whole policy is backward, but what we’re being told is that the chancellor has decided this is a good idea and so everyone has to backfill rules and regulations to make it happen.”
There are myriad problems with the reforms: proposals to tax cash balances held in stocks and shares ISAs risk undermining the perception of ISAs as a tax-free product altogether; the preference of cash ISA savers not to invest in listed equities is unlikely to change, meaning overall savings levels may come down; and the age restriction on cash savers will hurt those looking to derisk their finances before they hit 65.
A letter to Reeves last week from Michael Summersgill, the AJ Bell chief executive, was even more scathing but it should have left the chancellor in no doubt: the industry is determined to fight on, and convinced that she will buckle under the pressure. On recent evidence, who can blame it for holding that conviction?
Rolls-Royce boss’s new pay package should fly with investors
Let’s call it adding to the pay-Rolls. Britain’s premier manufacturing champion looks like achieving its latest unlikely feat of engineering: hiking its chief executive’s maximum potential pay package by two-thirds without eliciting a murmur of protest from shareholders.
As I reported on Sky News last weekend, Rolls-Royce Holdings has been consulting its leading shareholders on a new three-year pay policy that will see Tufan Erginbilgic’s maximum annual pay award rise to more than £13.5m by virtue of a 50pc rise in his annual bonus entitlement and a doubling of his long-term share award from 375% of salary to 750%.
(The anomaly of his £13.6m package in 2023 was largely the result of compensation Erginbilgic forfeited by leaving his previous employer.)
In percentage terms, the increase looks steep – in reality, it’s anything but. Rolls-Royce was barely off its knees when he was recruited to replace Warren East after the pandemic. Now, it stands firmly entrenched in the ranks of Britain’s ten largest public companies.
“Tufan has created close to £100bn in shareholder value. It is now a fundamentally different company,” said one top 20 investor. “He has restored competitiveness, credibility and engineered a business school case study. He is grossly underpaid for the value he has delivered for shareholders.”
Other fund managers say much the same about Turbo Tufan, which is why Rolls Royce’s annual meeting this year should be closely watched, even in a year when many of Britain’s biggest companies (including Lloyds Banking Group and Shell) are engaging in their own pay policy reviews. If Erginbilgic’s future pay package receives anything other than overwhelming approval, the investors who care about the future prosperity of Britain’s most prestigious name will need their heads examined.
Ministers’ plans to overhaul merger probes face their own inquiry
The biggest shake-up since 1948: that’s how some competition lawyers badged this week’s overhaul of the Competition and Markets Authority’s approach to scrutinising corporate mergers. In a 39-page document published on Tuesday, the Department for Business and Trade was unapologetic about the launch of a consultation which it says will aid the government’s mission to fuel economic growth but which has left some anti-trust experts aghast.
There is certainly a degree of schizophrenia embedded in reforms which include creating CMA board sub-committees to examine deals and wider markets while at the same time insisting that independence from government will be strengthened. The CMA chair, chief executive and other board members are, after all, appointed directly by ministers.
The prevailing winds are already clear. A recent piece of research by the US law firm Simpson Thacher & Bartlett compiled for the FT disclosed that the CMA did not block a single merger last year – the first time since 2017 that the watchdog gave every deal a clean bill of health.
That trend did not last long into 2026, though, with the CMA last week ordering Aramark to sell Entier after concluding that their combination last year risked harming choice in the provision of offshore catering services to oil rig workers. And Aramark’s corporate law firm on the deal? You guessed it: it was Simpson Thacher & Bartlett.