Individual Savings Accounts: AIM Shares

Debate between Lord Lee of Trafford and Lord Sassoon

Tuesday 31st January 2012 Lords Chamber

[Lord Sassoon]

My Lords, I am very happy to confirm that ISAs have indeed been a very successful product. As I said, 45 per cent of the population over the age of 16 hold them. On the latest numbers that I have seen, the total value of ISAs is £350 billion. It was a successful initiative of the previous Government. It is the main savings product of a large part of the population and we should not do anything to undermine the value of that brand.

[Lord Lee of Trafford]

Can my noble friend name any organisation, any professional body or any serious investment commentator that supports the Government’s policy?

[Lord Sassoon]

My Lords, it depends what question they are asked and what the considerations are. I can see that lots of people have an interest in wanting AIM shares to be eligible for ISAs. However, I suspect that if they were also asked whether they wished to see AIM shares lose some of the tax benefits that they have in the way of eligibility for enterprise investment schemes and venture capital trusts and particularly the inheritance tax advantage that comes with their status as business property relief, they might not be so keen on this change.

Individual Savings Accounts

Debate between Lord Lee of Trafford and Lord Sassoon

Monday 20th December 2010 Lords Chamber

[Lord Lee of Trafford]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as owning an ISA and a number of shares in AIM-quoted companies.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, individual savings accounts are the Government’s main non-pensions savings incentive and are held by 20 million adults. The Government believe that ISAs should be mainstream savings products and therefore do not intend to allow shares on the Alternative Investment Market, which can be riskier and less liquid, to be qualifying investments for ISAs. Companies listed on AIM may already benefit from other incentive schemes, such as the enterprise investment scheme and venture capital trusts.

[Lord Lee of Trafford]

My Lords, I thank my noble friend for his Answer but I find it very thin and disappointing. The arguments for allowing AIM shares to be eligible for ISAs are, frankly, overwhelming. They are supported by the Stock Exchange and the Quoted Companies Alliance. Eligibility would widen the shareholder base, improve liquidity and facilitate fundraising. It would also be tax neutral from the Treasury’s point of view. What is the logic in allowing AIM shares to be eligible for SIPPs but not for ISAs? I thought that the policy of this coalition Government was to encourage personal choice and indeed investment in our smaller growing companies.

[Lord Sassoon]

My Lords, I am sorry to disappoint my noble friend, who has been assiduous over the months in asking questions about AIM shares and ISAs. Within the range of products available, there are distinct differences between the aims of ISAs and those of other savings channels. When the ISA was introduced in 1999—and it has been an enormously successful investment channel—it was intended to be a mainstream product with easy access and liquidity. A line therefore has to be drawn between the sort of investments that are thought suitable to qualify and those that are not. AIM shares were kept out in 1999 and I believe that it is still appropriate, taking into account principally the nature of the product and the ease of access to liquidity investment, that they should be. SIPPs, which are a more sophisticated, tailored pension product with a different time horizon—for example, they do not require 30-day withdrawal—can rightly benefit from having a much wider range of investments held within them.

Individual Savings Accounts

Debate between Lord Lee of Trafford and Lord Sassoon

Wednesday 9th June 2010 Lords Chamber

[Lord Lee of Trafford]

I declare an interest as an owner of shares in a number of AIM quoted companies.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Government are considering this question and welcome representations from interested parties. They will set out their approach in due course.

[Lord Lee of Trafford]

I am grateful for that Answer. I had hoped that the noble Lord might achieve instant popularity by giving a rather more positive Answer, but we obviously welcome him with his considerable City experience. At 30 April, 1,250 shares were quoted on the Alternative Investment Market with a total capitalisation of £64 billion. The Stock Exchange believes that capital raising would be much easier if AIM shares were made eligible for ISAs. In broad terms, a decision by the Government would be tax-neutral. Given that shares quoted on the Channel Islands Stock Exchange are eligible for ISAs, does the Minister agree that it is time that the Government changed their decision and gave investors the choice?

[Lord Sassoon]

I agree with the noble Lord that there are 1,250 companies on AIM, but of those about 750—60 per cent—have a market capitalisation of less than £25 million. I also remind your Lordships that the purpose of the ISA was to hold mainstream products, so there is a tension between the very many smaller companies on AIM and the fundamental purpose of an ISA. The Government have a number of schemes for assisting the capital raising of smaller and medium-sized companies. I have not seen any evidence that it would be materially easier for those companies, albeit that there clearly would be some effect at the margin, if AIM shares were included in ISAs.