Premier Miton Investors has publicly called on the Government to add £5,000 to the annual £20,000 ISA allowance for investment in UK equities exclusively.
A new ‘Great British ISA’, as the asset manager has dubbed it, would sit alongside existing ISA products, and ‘funnel retail investor savings into listed UK equities’.
The firm said the proposals would complement the Government’s Edinburgh Reforms, which focus on making the UK a technology and life sciences leader through early-stage investment in private, unlisted startups.
The GB ISA would help foster an attractive listing environment for start-ups and private companies, according to Premier Miton.
It would follow a similar legal and regulatory structure to existing ISAs and be made available through the same channels, such as fund supermarkets.
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Premier Miton noted most people’s ISA allowance is left sitting in cash. According to FCA data, 8.4m people who have £10,000 or more of investable assets hold the majority or all of it in cash.
If these people invested the maximum £5,000 in the GB ISA, £42bn could be raised for listed British businesses in the first year, the firm has calculated. Repeated over five years, the figure would be £210bn.
This would drive down the cost of capital and deepen liquidity, could lift company valuations, and would encourage firms to list in the UK rather than abroad.
Implementation of the proposal would also help to defend UK companies from being taken over by overseas buyers hunting for bargains, Premier Miton argued.
Chief executive Mike O’Shea commented: “Ensuring companies have access to the capital they need will encourage them to scale up and list here in the UK. This will mean that companies’ headquarters, and all the associated high-paying roles, tax receipts and international prestige, remain here in the UK.
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“At Premier Miton Investors, we think more British savings should be going into British companies. Our proposal, for a Great British ISA, would sit alongside other existing ISAs, and help retail savers invest directly into listed UK equities.
“The GB ISA would fully unlock the potential of the City, to not only scale up smaller private companies, but to provide those same companies with an attractive listing environment to stay and grow here in the UK. With cross-party political will, we can deepen the capital liquidity on offer to British businesses and make the UK listing regime the global capital of capital.”
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