BGF calls for a new British ISA to drive Britain’s long-term growth

BGF has today become a lead signatory of an open letter advocating for a new creative approach to reforming ISAs at next week’s Autumn Statement, via a new British ISA or “BRISA”.

By giving taxpayers the chance to invest their full £20,000 allowance in UK listed companies, from next year, ISAs could put £68bn a year to work on behalf of the UK economy.

The letter has gathered more than 90 signatories including over 50 listed corporates employing over 150,000 people, alongside asset managers who hold multi-billion of investments in UK listed companies.

The call for action was a coordinated by BGF, Singer Capital Markets and a number of other key market participants, to encourage urgent solutions to the severe challenges facing the UK listed markets.

BGF, which invests in both Quoted and unlisted UK growth businesses, highlights the importance of nurturing the UK’s capital markets.

Paul Stevens, Head of Quoted investments at BGF, said: “The UK’s capital markets have been experiencing a downward spiral of investment with growth companies particularly impacted. This is making it increasingly difficult for companies to raise capital, invest for growth, compete on an international scale and, crucially, create British jobs and prosperity.

“We are highly supportive of proposals to boost investment into UK growth companies including the creation of a new British ISA and pension reforms. In order to respond to immediate needs of UK quoted companies and safeguard the future of the UK listed markets, bold action is required now.”

Read the letter in The Times today, 15th November 2023, and in full below.

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Open letter in full

Sir,

The Chancellor has made long-term decisions and boosting investment the two cornerstones of his economic strategy. Public equity markets are the mechanism for delivering on these pledges. They direct capital to growth companies, support growth across all regions in the UK and retain a world-class ability to attract talent and intellectual property to the UK. However, a downward spiral of investment and lower valuations has taken hold, resulting in companies being taken private and looking to other international markets, stifling growth and impacting the tax revenues crucial for funding public services.

A creative approach to reforming ISAs at next week’s Autumn Statement would help reverse this spiral by putting the £68bn a year invested into ISAs to work on behalf of the UK economy. A major oddity of the current ISA regime is that it offers the same incentives for savers to invest in overseas as well as domestic businesses. In seeking to respond to the challenge laid down by the US Inflation Reduction and CHIPS Acts it is important that the tax relief provided by ISAs supports UK investment, jobs and growth.

A new British ISA or “BRISA” would, from next year, give taxpayers the chance to invest their full £20,000 allowance in growing the UK economy and supporting her companies. This would drive interest from a wider pool of investors and create a multiplier effect, reviving interest in raising equity in the UK, driving economic growth, spreading prosperity and boosting tax revenues. Investors could still put money into overseas firms, just without the support of an overt tax break.

A recent Grant Thornton report showed AIM-listed companies alone supporting more than 400,000 jobs across the UK. According to the Quoted Companies Alliance, small and mid-sized firms contribute over £25bn to the Exchequer, equivalent to 4p of income tax. The Government’s own reports show listed companies invest more in Research and Development, fuelling the cause of higher productivity.

A British ISA, together with recent and planned pension reforms, can help deliver levels of investment needed to achieve the energy transition, level up the economy and create the jobs of the future. The time for talking is over. Bold action is now required.

Yours sincerely