Individual Savings Accounts: AIM Shares

Lord Northbrook Excerpts

Tuesday 31st January 2012 Lords Chamber

Asked by

[Lord Northbrook]

To ask Her Majesty’s Government whether they will reconsider their decision not to allow shares traded on the Alternative Investment Market to be eligible for Individual Savings Accounts.

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

My Lords, individual savings accounts, or ISAs, are the Government’s main tax incentive for non-pensions savings, and they offer a simple, straightforward and trusted brand. The Government believe it is important that ISAs continue to hold these characteristics. AIM shares tend to present a higher level of risk, and can be less liquid. For those reasons, the Government do not intend to make them an eligible investment for the ISA wrapper.

[Lord Northbrook]

My Lords, I thank the Minister for his Answer, which once again is disappointing. I thought that the policy of the coalition Government was to encourage personal choice and, indeed, investment in our smaller and growing companies. The arguments for including AIM stocks in ISAs are very strong. They are supported by the Stock Exchange and the Quoted Companies Alliance, as they were by noble Lords on all sides of the House when the question was raised a year ago. Their eligibility would widen the shareholder base, improve liquidity and facilitate fund-raising. What is the logic of AIM stocks being included in SIPPs but not in ISAs?

[Lord Sassoon]

My Lords, this is a Question that we come back to on a regular basis and my answers are going to sound boringly repetitive. I see the noble Lord, Lord Myners, in his place. He answered this Question in the dying days of the previous Government. The simple fact is that the ISA is a trusted brand in which more than 23 million adults—45 per cent of the adult population—hold shares, and we need to protect that trusted brand and the suite of products within it. On the other hand, the Government have taken a range of measures to support small businesses. In relation to SIPPs, the liquidity requirements of an ISA with a 30-day withdrawal period, in particular, are very different from what might be the case when locking up shares for the long term in a pension savings product.