- Critics claim it will benefit only the better-off
- And that it adds to the complexity of the once-simple Isa system
- Potential disadvantages outweighed by fact it will encourage private investors
Poor old Jeremy Hunt. As if it were not bad enough to be called a fiscal drag queen on Radio 4, experts were quick to take potshots at his Great British Isa.
Critics claim it will benefit only the better-off and that it adds to the complexity of the once-simple Isa system.
But these potential disadvantages are outweighed by the fact that it will encourage private investors – and maybe even big City fund managers – to take a fresh and less jaundiced look at UK plc.
Contrary to the prevailing narrative that the UK market is washed up, there are plenty of shares to put into a Great British Isa.
I was struck last week by the contrasting fortunes of telecoms testing group Spirent and Geordie pie-maker Greggs.
Undervalued: Contrary to the prevailing narrative that the UK market is washed up, there are plenty of shares to put into a Great British Isa
In keeping with the view British firms are at rock bottom, an undervalued Spirent succumbed to a bid from a US rival.
At the same time, Greggs, a quintessentially British business which has made billions from the simple proposition that people like pies, notched up 27 per cent growth in profit. Its shares have gone up by nearly 60 per cent in five years, or around 4,700 per cent since 1993.
Okay, we can make pies, but the UK is useless at tech, according to our detractors.
But another company from Tyneside, software group Sage, is up 64 per cent in the past 12 months. Cybersecurity group Darktrace, which has suffered by association with Mike Lynch, the tycoon currently facing fraud charges in the US, is being re-evaluated and has seen its shares go up by 45 per cent in the past year.
Defence champion BAE Systems for many years traded at a discount to its US rivals.
It is closing that valuation gap, not only because of war in Ukraine but due to improved performance, lower debt and a shrinking pension fund deficit.
Then there is Melrose, which traditionally made its money by buying unloved industrial assets, improving them and selling at a profit.
More recently, it has reinvented itself as a pure-play aerospace business: last week it announced it had doubled earnings and is expecting higher profits than previously thought for 2024. Shares are up 71 per cent in the past year.
On the fashion front, Next has been consistently solid. After a torrid period, M&S is up 50 per cent in the past year and back in the FTSE 100 elite index.
The denim and the Jaeger coats are so good they are threatening my solvency. None of these are intended to be share tips, merely to illustrate the point there are plenty of attractive companies listed in the UK that can be bought at decent prices.
And one point often overlooked when comparing the UK with the US is that much more of the return on British shares comes from dividends.
As for Isas only helping the well off, my own investing career began when I was a skint young journalist. I resisted the temptation to sell free shares in a couple of former building societies and put them in a Pep, the forerunner of today’s Isa, instead.
Gradually, dividends came, which I invested in other shares to diversify, and I put in extra money when I could. Over the years, it has gradually grown to a respectable sum.
Along with the public offer for NatWest – some free shares for taxpayers who bailed out the bank would be nice – the Great British Isa could inspire a new generation of investors.
