Key takeaways from reforms to get Britain investing
We examine the government’s ambition to turn Britain into a nation of investors, the news that further changes to ISAs are being considered, and the omission of new pension reforms in Chancellor Rachel Reeves' Mansion House speech.
17th July 2025 08:35
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Kyle is joined by Craig Rickman, personal finance editor at interactive investor, to cover the key personal finance announcements made by Chancellor Rachel Reeves in her Mansion House speech this week. The duo examine the government’s ambition to turn Britain into a nation of investors, the news that further changes to ISAs are being considered, and the omission of new pension reforms in the speech.
The podcast was recorded remotely shortly after the Mansion House speech.
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Kyle Caldwell, funds and investment education editor at interactive investor: Hello, and welcome to On The Money, a weekly look how to get the best out of your savings and investments.
In this episode, we’re going to be covering the key personal finance announcements made by Chancellor Rachel Reeves in her Mansion House speech, which took place on the evening of 15 July.
We’re also going to be talking about which policies didn’t crop up in the speech but remain in the government’s sights.
Joining me to discuss this topic is Craig Rickman, personal finance editor at interactive investor.
Now, before we get into the detail, I just wanted to flag that we’re recording this podcast remotely shortly after the speech was made in order to publish the podcast as usual on a Thursday.
Also, just be aware that the information that we’re providing is based on what we had available to us at the time of this recording.
So, Craig, before we delve into it all, let’s start off with what the Mansion House speech is, and why it matters from a personal finance perspective?
Craig Rickman, personal finance editor at interactive investor: Sure. So, simply put, it’s an annual address, and an opportunity for the government to outline its plans and visions for the financial sector. In terms of the content, what does this involve? So, this includes typically includes things like regulation, pension and savings policy, housing reforms, and that kind of thing.
It’s essentially the government’s way of saying, this is what we’re going to do to make things better, to improve the way things work, to boost the UK economy.
So, if the chancellor does announce changes, and we saw some yesterday, they typically do affect us in some shape or form in terms of how we save, how we invest, and how we borrow.
It’s not to be confused with a Budget. It’s not a fiscal event, but it is important to keep an eye on the Mansion House speeches, what’s going on, and the reforms that have been put forward.
There was a lot of speculation before this speech, mainly around ISAs. Some of the original reports didn’t come to pass, but there were still some reforms that will impact how we interact with our finances.
Kyle Caldwell: In terms of the contents of the speech, the key takeaway from a personal finance perspective was the announcement of the government’s ambition to make Britain more of a nation of investors.
So, Chancellor Rachel Reeves announced in the speech that investment is presented in too negative a light and argued that there’s been too much focus on risk in investing. She said, “For too long, we have presented investments in too negative a light, quick to warn people of the risks without giving proper weight to the benefits”.
It was also announced that there will be a campaign to promote the benefits of retail investments, and that campaign will launch next April. There will also be a brand-new type of Targeted Support for consumers ahead of the new financial year.
Craig, could you explain more about this new type of Targeted Support for consumers?
Craig Rickman: Sure. So, this Targeted Support is something that was launched by the Financial Conduct Authority (FCA), the City watchdog. There was some draft rules on this published a few weeks ago.
The idea of this is that it’ll essentially enable financial providers to suggest appropriate products and strategies to consumers with similar circumstances and characteristics.
This has been given the green light, as you’d say, from April 2026. This potentially could be a big change to the way that people interact with their finances. You could think of it as a middle ground between basic guidance and regulated financial advice. So, it’s some extra assistance with life’s big financial decisions, a nudge if you like, without it being a personalised recommendation. I think the FCA and the government are concerned that less than 9% of adults access financial advice. So, that’s fewer than one in 10 people.
There’s a quote here, and their concern is that many are turning to informal and unregulated sources of guidance such as social media. So, the idea here is to try and help people make better financial decisions or steer them towards them. I think, on the whole, that it’s a good thing.
The government in the Mansion House speech answered one of the key questions around this, which is when will it be available from? So, we’ve got the answer to that. A consultation on Targeted Support is still running, and we should learn a little bit more about how it’s going to work over the coming months. But I feel this could have a really positive impact on consumers, namely to give them more of a steer towards financial decisions, which might be more appropriate for them than potentially what they’re doing at the moment.
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Kyle Caldwell: In terms of the comments made by Rachel Reeves regarding the overemphasis on risk and not enough emphasis on the benefits of investing, that’s music to my ears. I’ve been working in the sector for over 15 years now, and over the years, I’ve had many a conversation with friends about the merits of investing. However, the first thing that always crops up is risk.
A lot my friends will say, “Well, isn’t there a lot of risk involved with investing?” However, of course, this is a misconception if you’re investing for the long term and you have diversification in terms of what you’re investing in, in your portfolio.
Over the long term, the figures show that the best way to try and grow your wealth ahead of inflation is to invest it, and also to invest it in growth assets such as funds that invest in shares. Whereas if you leave it in cash, over the long term, cash is eroded by inflation.
So, I’m really interested to see how the government attempts to…[put] a greater emphasis on encouraging people to think about the merits of investing rather than being put off by the fact that there’s a possibility that the value of your capital can fall.
I touched on diversification, and that’s one of the key ways that investors can reduce risk by investing in a range of different types of investments, different types of funds. This gives a portfolio diversification. What happens here is that when there are short-term periods during which stock markets are volatile, which, of course, can happen, a diversified portfolio helps to safeguard returns, and it also gives the portfolio plenty of scope to grow over the long term.
When it comes to risk, volatility is part of the course of investing in the stock market. We’ve seen very recently stock markets fall in response to US tariffs. And prior to that, the Covid-19 pandemic caused global stock markets to fall suddenly over a short period.
If you go back even further, of course, there was the financial crisis in 2007-08. At the turn of the millennium, there was the tech bubble that spectacularly popped. But over the long term, stock markets do tend to recover and do tend to reward patient investors who are investing for the long term.
If you look at a very long-term chart of a major stock market index, such as the MSCI World, S&P 500, or the FTSE 100, of course, you’re going to see that there’s been some bumps in the road.
But over a 10, 20, 30-year period, those bumps are actually not that big looking on a chart in the grand scheme of things. Over the long term, stock markets do tend to be wealth machines.
Of course, the trouble is there’s no guarantees with investing. There’s no guarantees that a return will be made. There there’s the prospect of capital loss, depending on what you invest in and how long you invest in that investment for.
And that’s why there has to be risk warnings on investment literature, including for funds that highlight that fact.
However, Reeves announced that there will be action to look at our current approach to risk warnings, and that will be reported in January.
Craig, what are your thoughts on this risk warning review? Is it one that you welcome?
Craig Rickman: Yes. I couldn’t agree more. I think there’s this perception among certain sections of society that keeping money in cash is safe and investing in the stock market is a gamble. But as you’ve alluded to, and as a lot of the data shows, when looking at your long-term future, keeping your money in cash tends to be the biggest gamble because there’s a risk that your money isn’t going to keep pace with inflation and that it will erode in real terms.
So, I think the government’s decision, or Rachel Reeves’ decision, to examine risk warnings and try and look at flagging the benefits is a really, really important, and needed move.
Kyle Caldwell: Let’s now turn our attention to ISAs. So, reforms to cash ISAs were heavily touted ahead of the Mansion House speech. The expectation was that Rachel Reeves was giving a lot of thought to cutting the yearly cash ISA allowance from £20,000 to £4,000.
The thinking from the government here was that if there’s less scope to save into a cash ISA every year, then more money may then flow into the stocks and shares ISA version, and this would improve consumer outcomes and also boost the UK stock market.
So, the cash ISA alongside the stocks and shares ISA, they are the two most-popular ISA types. However, cash ISA account openings do trump the stocks and shares ISA version. To give you an example, in the 2022-23 tax year, 7.8 million people took out a cash ISA, more than double the 3.8 million people who took out a stocks and shares ISA.
However, before the speech started, Craig, the Financial Times got the scoop that those rumoured plans to cut the cash ISA allowance are being put on the back-burner for now. In the actual speech, ISAs did get a small mention. Reeves said, “I’ll continue to consider further changes to ISAs, engaging widely in the coming months.”
She also said, “I recognise the potential for ISA reform to improve returns for savers and access capital for UK businesses.”
Craig, we’ve only got that short quote to go off, but it does appear that the ISA system could still be reformed.
Craig Rickman: Yes, absolutely. A cut to the cash ISA limit is a hugely divisive issue, as we saw, in the lead-up to the speech. But I don’t think the prospect of that has disappeared. I think it’s on the table, but it seems the government is perhaps giving itself a bit more time to liaise with the industry, to work out whether it’s the right thing to do or not and I think that’s a sensible move, if only to avert another potentially embarrassing U-turn.
The government could revisit that at some point, but there was some clear signalling towards reform to the ISA landscape. There have been lots of people, lots of companies, urging the government to simplify things. Because, as things stand, there are currently six in operation, and five are open to new subscribers. The thinking is that’s a bit messy, and we need to make things easier, for people to choose the right one.
I guess, namely for this, choosing the right one is between cash, and stocks and shares. [They] are, as you know, by far the two most popular types. So, it very much seems like further ISA reform is in train.
Kyle Caldwell: My personal view, which I know you also share, Craig, is that a simpler ISA system, and potentially less of them, will help break down the barrier of complexity.
If it is a simpler system, that’ll hopefully then encourage more people to engage with the merits of investing over the long term. My view on the cash ISA is that it’s a useful [place] to put money to build an emergency fund, which as a rule of thumb is three to six months’ salary in cash. [So, this is money] that you can access quickly to utilise if you, for example, are unfortunately made redundant or to fix a major problem, such as repairing a roof or getting a new boiler.
But in terms of growing wealth over the long term, as I mentioned earlier, investing is the key piece of the jigsaw for growing wealth and, ideally, investing in growth assets such as funds that invest in shares.
However, while all these reforms are certainly welcome, I do think that what would really help get more people investing is if stamp duty on UK shares was removed. This is an unnecessary barrier to investing in our own home market.
At interactive investor, we’ve been very vocal for a long time in calling for stamp duty to be removed. In response to the Mansion House speech, interactive investor’s chief executive Richard Wilson said, “Stamp duty on stocks and shares is a tax on backing British business, and scrapping it should be the cornerstone of any serious reform. It’s lose-lose. It’s a charge on confidence, a tax on participation, a drag on liquidity.
“It makes investing in UK companies more expensive than it should be and sends the wrong signal about where we want people to put their money.
“We've heard time and time again that the government wants to boost long-term investing. Now it needs to back those words with substance. Getting rid of stamp duty on shares is one of the fastest, simplest, and boldest things this government could do to shift the dial.”
Just to add another point, our own research shows strong support for the removal of stamp duty. Research by interactive investor found that 72% of retail investors will be more likely to invest in UK shares and investment trusts if stamp duty was scrapped compared to just 7% who said lowering the cash ISA allowance would have an impact.
Now, while there was no announcement on cash ISAs, there was an ISA-related announcement before the speech. That announcement was about a fund structure called Long-Term Asset Funds (LTAFs), which can, from the start of the next tax year, so April 2026, be held in stocks and shares ISAs.
LTAFs can already be held in the innovative finance ISA, which was designed for peer-to-peer loans and other less-liquid investments.
For those not that familiar with this structure, LTAFs invest in illiquid assets such as private equity and infrastructure projects.
They were initially intended for pension funds or sophisticated private investors, but it now appears that retail investors are being targeted.
One of the big differences between an LTAF and an open-ended fund is that an LTAF has notice periods, and these notice periods are typically a minimum of 90 days. So, if you’re in a hurry for your money, you won’t be able to access it quickly, whereas open-ended funds offer daily dealing.
These funds have notice periods because illiquid assets are hard to sell quickly, and by having notice periods, they protect investors from the risk that a lot of money exits at the same time if a lot of investors are asking for their money back all at once.
If they don’t have these notice periods, then the investments will have to be sold. There’ll be a fire sale of assets, and then the underlying value of those investments will be sold potentially too cheaply versus their actual value, which will harm the remaining investors in the funds.
For me, as with any fund, it’s important to look under the bonnet, understand what an LTAF is investing in, and be comfortable with the fact that LTAFs have these notice periods, as I think fund investors are very used to having daily dealing. So, that’s definitely something that an investor needs to get their head around when considering the LTAF structure.
Craig, any further thoughts on LTAFs?
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Craig Rickman: I think what’s interesting about it is that, as you note, LTAFs are only currently available in the innovative finance ISA, which compared to the cash type and the stocks and shares type, makes up a really tiny part of the ISA market.
So, in the 2022-23 tax year, there are only 17,000 innovative finance ISAs taken out. In the same year, it was just under 8 million cash ISAs and just under 4 million stocks and shares ISAs. So, it makes up a fraction of the ISA market.
Allowing assets previously reserved for that type of ISA within the stocks and shares version, could suggest that perhaps the government is looking to simplify things, and perhaps move towards a slimmer ISA landscape and perhaps thin some of the herd. But that’s just a thought at this stage, and we’ll have to find out what the government ultimately is going to do with this.
Kyle Caldwell: For the final section of the podcast, Craig, let’s move on to pensions. Ahead of the speech, there was lots of speculation regarding auto-enrolment rates being potentially raised, but there wasn’t any mention of this in the speech.
Now, while there were no new reforms for pensions mentioned in the speech, the chancellor did [talk about] her aim of ensuring that British savers benefit from the success of fast-growing businesses. Craig, this again fits into the government’s aim of trying to get Britain investing and, in turn, boost the UK stock market.
Craig Rickman: Absolutely. That’s been the theme very much throughout Labour’s return to power. And particularly with pension schemes, it’s not just about getting more people investing, but trying to funnel more money into UK assets.
We didn’t hear anything else about pensions. There were reports that the government was looking at auto enrolment and the workplace pension system, namely, whether to start a consultation to consider jacking up the minimum amounts, which are currently 8% of qualifying earnings. So, employees pay 5%, employers pay 3%. But the thinking is that that’s probably not enough for most people to secure a comfortable retirement. So, the government is looking at this.
We know that it’s on the government’s radar as part of phase two of its landmark pensions review, so we’ll come on to it at some point. There are some big decisions to make because if you were to increase auto-enrolment contributions, that’s an extra cost for staff who are still feeling the pinch from the rising cost of living and also employees, too, who have faced some additional costs in recent years in the form of tax rises and the minimum wage increase. So, we didn’t hear anything about that.
We also didn’t hear anything about self-employed pensions. There’s quite a worrying low uptick of pensions among self-employed workers, and we know that’s something the government is keen to address too. Those were two areas that were reported in the lead-up to the Mansion House speech and something that we could learn more about. We didn’t get that, but we will hear more about those two areas and what the government is going to do there at some point.
Kyle Caldwell: So, we’ve now covered all the personal finance announcements that were made in the Mansion House speech.
Before we go, just going back to what Craig said at the start, the Mansion House speech is not the forum for introducing major changes to the tax system. However, we do have the Autumn Budget coming up. I’m sure there’s going to be plenty of rumors about the fiscal rules in place at the moment and about whether there will be any tax changes during that Budget.
We will, of course, in our On the Money podcast, cover the Budget later in the year. We may also do a preview of the Budget.
My thanks to Craig, and thank you for listening to this episode of on the money. If you enjoyed it, please do follow the show in your podcast app and do tell your friends about it. If you get a chance, please leave a review or a rating in your podcast app too.
We'd love to hear from you. You can get in touch by emailing OTM@ii.co.uk. In the meantime, you can find more information and practical points on to how to get the most out of your investments on the interactive investor website. I’ll see you next week.
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