My hopes for a UK investment revolution following lessons of Yorkshire ISA Experiment: James Ashton
ELON Musk’s blockbuster flotation of SpaceX last month was a reminder of the excitement that new stock issues can generate. The Yorkshire Post’s ISA Experiment was a wonderful example of what public companies have to offer investors much closer to home.
One focus of our campaigning at the Quoted Companies Alliance this year is to get more domestic capital behind domestic companies. This “home bias” exists in many other countries, but in the UK, the world’s second largest hub for asset managers, the opposite is true. Pension fund consolidation and pledges to buy British are encouraging but change is not happening fast enough.
We advocate for shifting the billions in pounds of pension and ISA tax relief towards investment in UK companies, instead of offering tax-efficient ways of backing Musk or other overseas billionaires to build farflung empires.
The reason is simple: the sooner a UK company has to go abroad for capital to boost its business, the sooner UK jobs, tax contributions and intellectual property risk leaving these shores too.
It is a lazy assumption that UK quoted companies do not offer growth potential, as I hope many Yorkshire Post readers have discovered in the 12 months of this experiment. Many of these companies would remain quoted for longer if they saw greater demand for their stock and therefore higher valuations with which to raise cash, invest and reward staff.
York-based animal health specialist Animalcare has terrific expansion plans, but its private equity takeover means far fewer investors will benefit from the upside. Similarly, Middlesbrough’s Ramsdens, the jewellery retailer, foreign currency exchange and pawnbroker, will be controlled from Texas before long because of a bumper cash offer the board felt it could not turn down.
The prime minister-in-waiting, Andy Burnham, talks about striving for “good growth in every postcode” and to achieve that means reconnecting local communities with their local companies. How much of the £120bn of assets run by the Border to Coast Pensions Partnership – whose chief executive, Rachel Elwell, featured in these pages recently – is invested in South or North Yorkshire? That is where many of the local government workers whose pensions it looks after hope to spend long and happy retirements, safe in the knowledge their grandchildren can find good jobs and the tax take is sufficient to fund roads and schools. That is long term thinking.
Personal investment plays a huge part in what the QCA hopes can be a revolution 40 years after “Tell Sid” created a buzz around British Gas shares. Watch out for Savvy the Squirrel leading a nationwide investment campaign from September. Risk warnings on investments are being moderated, and not before time. It is vital that people understand the rewarding upside to investing and not just fear the risky downside.
Every investor aspires to beat the market. Congratulations to the participants in The Yorkshire Post’s ISA Experiment who managed to do just that.
I am not a financial adviser, but it is just as important to recognise the risk of not investing at all. Cash might seem the safe option, but its value gets eaten away by inflation. Everyone needs some cash at hand, but what if more people also had their own stake in some of the Yorkshire corporate champions based all around them?
James Ashton is chief executive of the Quoted Companies Alliance