The way to get the UK investing is staring Reeves in the face

The chancellor need look no further than auto-enrolment for a blueprint on how to simplify the stock market

Imogen Tew

Wednesday October 29 2025, 6.00am GMT, The TimesShareSave

If you sift through the raft of personal finance policies that have been implemented this century, you would struggle to find something with more mass appeal than auto-enrolment.

Turns out, shifting ten million workers towards saving for retirement with them barely noticing the money leaving their payslip is considered by almost everyone to be a good thing.

Since 2012 most workers have been automatically enrolled into a pension pot through their workplace. Employees pay a minimum of 5 per cent, employers a minimum of 3 per cent. It has boosted the retirement savings of many and gently introduced a large chunk of the population to the stock market. Bravo.

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What makes the policy so good is the lack of friction for the saver. They do not have to sign up (it works on an “opt out” basis), nor work out which investment company to use or choose a portfolio from thousands of investment funds.

In short, it is the exact opposite of the stocks and shares Isa — the weapon of choice for the chancellor, Rachel Reeves, who hopes it can help turn Britain into an army of investors dutifully sticking their cash in British stocks.

Plenty has been written about Reeves’s mission to nudge us all to invest more. There was talk that the cash Isa limit would be slashed to as little as £4,000 (down from a total of £20,000 that can be spread across Isa types as you wish) in a bid to push savers towards a stocks and shares alternative. This policy has been shelved, un-shelved and re-shelved, so no one is quite sure if it is a real contender.

The latest theory is that Reeves plans to scrap stamp duty on UK stocks (typically charged at 0.5 per cent) within the Isa to spur on more investment. Apparently she could also mandate a requirement for investors to have a minimum amount in British stocks to qualify for the Isa’s tax benefits.

I doubt any of these policies would have the desired effect. Forcing people to pay less into a cash Isa will mean that the money will instead be put in regular savings accounts, risking tax bills, or the money simply won’t be saved at all. Any extra rules around what you can and cannot invest in within an Isa will only increase confusion, and a change to stamp duty would save someone £5 on an £1,000 investment. It will hardly move the needle.

Serious attempts at changing saver behaviour should instead look to the success of auto-enrolment. In particular, it should focus on the ease of getting an investment account opened and money invested.

A better plan would be to launch a sidecar investment pot alongside someone’s auto-enrolment pension. It could be opt-in, but there would be an option for workers to automatically put 3 per cent of their salary into an investment Isa. In an ideal world, it would be as easy as opting into benefits such as your company’s healthcare scheme or discounted gym membership.

You wouldn’t need to offer any choice of investments. A cheap global tracker that follows an index would do the job nicely (and if Reeves insists, this fund could be overweight in UK equities).

Research from the Investing and Saving Alliance, a trade body, found that 27 per cent of those with £5,000 or more in a cash Isa found working out the differences between different types of stocks and shares Isas and choosing an investment fund was “difficult” or “very difficult”. Even those who had stocks already said the process was time-consuming.

Some 29 per cent of those who had at least £5,000 in a cash Isa had tried to open a stocks and shares Isa in the past but never saw it through — 9 per cent gave up after looking at information on stocks and shares Isas, 15 per cent got to the point of comparing Isa products or investment funds and 5 per cent were ready to invest, but decided not to.

• Could your tracker be riskier than you thought?

If the mission is to get more people investing, surely these stats tell us all we need to know about how we should go about it.

Sidecar investing isn’t a silver bullet, and would naturally come up against the same hurdles as auto-enrolment. It doesn’t help the self-employed, for instance, and there are hundreds of thousands of small pension pots that savers have lost track of after moving jobs.

We would likely see something similar for Isas opened this way, but at least they would help many wannabe investors jump the hurdles to getting started in the stock market.

Tinkering with the Isa allowances or complicating the investing process further with new rules and limits seems the opposite of what’s needed — especially when we have the blueprint of auto-enrolment to follow.

View this The Times article CLICK HERE