‘From a nation of savers to a nation of investors: Labour must stay the course’

 One of the most significant economic reforms initiated by Rachel Reeves as Chancellor of the Exchequer supported the ambition to transform Britain from a “nation of savers” into a “nation of investors.” Through the Mansion House reforms and the wider Financing Growth strategy, Reeves presented a case for a financial system that works harder for working people while unlocking the capital needed to support growth. One which new Chancellor John Healey should take up. 

At the heart of this agenda is a clear economic challenge. The UK has some of the lowest levels of retail investment participation in the G7. There are 29 million adults who have cash in a low-interest rate account of around 1%. Meanwhile, British businesses need patient capital to invest, innovate, and grow. The insight behind Labour’s reforms is that these two challenges are connected. If a modest proportion of household savings can be channelled into productive investment, working people can build greater long-term wealth while supporting economic growth that benefits the wider country. This is not about encouraging reckless risk-taking through unregulated financial products and advisers or undermining the importance of cash savings. It is about creating a financial system that empowers people with the support and guidance they need from regulated firms to make informed decisions about their financial futures.

READ MORE: ‘A Fair Banking Act is essential to allowing every postcode to access growth’

Recent reforms have focused on building financial confidence, encouraging long-term investment and strengthening the role of financial services in delivering economic growth. Regulated firms are delivering targeted support through a new regulatory framework that allows firms to provide personalised suggestions to groups of consumers with similar characteristics without providing full financial advice. For decades, many people have fallen into an advice gap: unable to afford financial advice but lacking the confidence to make investment decisions alone. This new Labour government under the leadership of Andy Burnham should continue this mission of turning Britain to a nation of investors. 

This democratisation of investing is a socialist policy. For generations, the benefits of capital ownership have been concentrated among those with higher incomes and greater financial knowledge. Labour’s approach seeks to widen access to those opportunities, allowing working people to share more directly in the country’s economic success. HM Treasury, the Financial Conduct Authority, the Money and Pensions Service, and the wider financial services industry are united around the ‘Invest for the Future’ campaign. The campaign, announced as part of the 2025 Leeds Reforms, aims to increase consumer understanding of investing and encourage long-term financial planning. 

This Labour government under Andy Burnham should build on this momentum. For example, removing the Lifetime Individual Savings Account (LISA) from the Individual Savings Account (ISA) allowance. Under the current framework, contributions to the LISA count toward an individual’s overall ISA allowance, which is capped at £20,000 annually. Limiting the ability to diversify savings across other tax-advantaged investment options.

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Britain’s financial literacy gap has too often been reinforced by a regulatory culture that emphasised risk without giving sufficient weight to opportunity. Of course, consumers need strong protections, but they also need information that empowers rather than discourages. Reforms to investment risk warning and replacing outdated and overly prescriptive fund disclosure with information that helps consumers to better understand the potential risks, costs and returns associated with investment products is a step in the right direction. 

This agenda matters now more than ever. The Social Market Foundation’s recent research shows that 54% of Generation X (about 7.5 million people) are projected to have inadequate retirement incomes. 15% of this cohort have both low pension savings and limited assets, such as personal investments, to rely on at retirement. Future governments will face growing pressures on the welfare state if more people reach later life without sufficient financial resilience. Expanding access to long-term investing cannot solve that challenge alone, but it is a strong aspect of the solution. 

A Labour government committed to inclusive growth should not retreat from this agenda. It should go further and ensure that more people have a genuine stake in Britain’s future prosperity.

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