Saving sustainably

We already encourage saving - why not encourage sustainable saving instead?

The post-Budget row over tax relief for charitable giving has obscured the fact that there are many tax reliefs given for profitable activities without any consideration for the public benefit of the activities being effectively subsidised. Around £40bn a year of relief against income or capital gains tax goes to support pension saving, ISAs and protect individual gains from the sale of residential property. In times of austerity shouldn’t we be looking more closely at how this money is used? Could the Government use the policy leverage created by such subsidies to encourage more responsible behaviour in the financial sector that benefits the taxpayer as well as the individual investor?

Britain’s economy before the credit crunch was based on high borrowing to fuel increasing consumption which drove economic growth. As individuals we didn’t save enough for our own financial security, and as a country, we haven’t invested enough in our economic future. To face the long term challenges to our economic prosperity like an ageing population or climate change, we will need a more resilient economy that has far stronger foundations of savings and investment.

So what happens to the money that we combine with the tax subsidy in order to save for the future?

Well, we know that pension funds and institutional investors place much of this in the stock market, but the evidence shows that more and more of this capital is used for high frequency trading rather than long term investing. Andy Haldane of the Bank of England is one high profile regulator who is very concerned with this development. Cash placed in ISAs earns a very low rate of interest and, in as much that these funds bolster bank balance sheets and help fund lending to the economy, we also know that the majority of such lending actually funds property loans and financial speculation. Less than 20 per cent of UK bank lending goes to the productive economy of growing businesses. Finally we know that fees and charges in the investment and banking sectors are notoriously opaque, and competition is far from perfect.

So there is an understandable lack of trust in the finance sector, yet the government has to find a way to convince the public not just to save more, but channel those savings into productive investment. One way to do this is for the government to be more explicit about encouraging savings and investments that apply responsibility criteria and enhance social and environmental well being, as well as financial returns. Moreover, it should be using the existing subsidies to enforce this principle. In an era where all subsidy has to be made to work harder for the public interest, there should be a principle that, in return for tax relief, savers and investors should be able to demonstrate a contribution to the public good. This will not be easy to do, but there is a growing set of voluntary standards and codes of practice which investment organisations can apply to demonstrate they are taking a responsible approach, looking a long term interests, not just short term profits.

In my recent report for Green Alliance, Saving for a sustainable future, I make the case for these principles to be used in public policy and set out a few ways in which it could be applied:

  • Pension tax relief could be made conditional on responsible standards being applied.

  • Banks could only be able to offer tax-free Cash ISA accounts if they could demonstrate responsible and transparent lending practices.

  • Capital gains tax relief for the sale of a residential property could be made conditional on certain energy efficiency improvements being made to the building.

There is political consensus on the need to rebalance our economy and reshape British capitalism in way that better incorporates the values of society. Applying these ideas to existing taxpayer subsidies is a good start.

Green - well, yellow - Britain. Photograph: Getty Images

Chris is an independent environmental policy consultant working on sustainable finance, climate change, energy policy and the green economy. He is a fellow of the Finance Innovation Lab, and an associate of Green Alliance, where he has written on the Green Investment Bank, environmental tax reform and sustainable savings policy.

He was previously head of Climate Change at the Environment Agency and senior research fellow for sustainability at IPPR. Follow @chrisjhewett on twitter.

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She knew every trick to get a home visit – but this time I had come prepared

 Having been conned into another couple of fruitless house calls, I now parry the proffered symptoms and generally get to the heart of the matter on the phone.

I first came across Verenice a couple of years ago when I was on duty at the out-of-hours service.

“I’m a diabetic,” she told me, “and I’m feeling really poorly.” She detailed a litany of symptoms. I said I’d be round straight away.

What sounded worrying on the phone proved very different in Verenice’s smoke-fugged sitting room. She was comfortable and chatty, she had no fever or sign of illness, and her blood sugar was well controlled. In fact, she looked remarkably well. As I tried to draw the visit to a close, she began to regale me with complaints about her own GP: how he neglected her needs, dismissed her symptoms, refused to take her calls.

It sounded unlikely, but I listened sympathetically and with an open mind. Bit by bit, other professionals were brought into the frame: persecutory social workers, vindictive housing officers, corrupt policemen, and a particularly odious psychiatrist who’d had her locked up in hospital for months and had recently discharged her to live in this new, hateful bungalow.

By the time she had told me about her sit-in at the local newspaper’s offices – to try to force reporters to cover her story – and described her attempts to get arrested so that she could go to court and tell a judge about the whole saga, it was clear Verenice wasn’t interacting with the world in quite the same way as the rest of us.

It’s a delicate path to tread, extricating oneself from such a situation. The mental health issues could safely be left to her usual daytime team to follow up, so my task was to get out of the door without further inflaming the perceptions of neglect and maltreatment. It didn’t go too well to start with. Her voice got louder and louder: was I, too, going to do nothing to help? Couldn’t I see she was really ill? I’d be sorry when she didn’t wake up the next morning.

What worked fantastically was asking her what she actually wanted me to do. Her first stab – to get her rehoused to her old area as an emergency that evening – was so beyond the plausible that even she seemed able to accept my protestations of impotence. When I asked her again, suddenly all the heat went out of her voice. She said she didn’t think she had any food; could I get her something to eat? A swift check revealed a fridge and cupboards stocked with the basics. I gave her some menu suggestions, but drew the line at preparing the meal myself. By then, she seemed meekly willing to allow me to go.

We’ve had many out-of-hours conversations since. For all her strangeness, she is wily, and knows the medical gambits to play in order to trigger a home visit. Having been conned into another couple of fruitless house calls, I now parry the proffered symptoms and generally get to the heart of the matter on the phone. It usually revolves around food. Could I bring some bread and milk? She’s got no phone credit left; could I call the Chinese and order her a home delivery?

She came up on the screen again recently. I rang, and she spoke of excruciating ear pain, discharge and fever. I sighed, accepting defeat: with that story I’d no choice but to go round. Acting on an inkling, though, I popped to the drug cupboard first.

Predictably enough, when I arrived at Verenice’s I found her smiling away and puffing on a Benson, with a normal temperature, pristine ears and perfect blood glucose.

“Well,” I said, “whatever’s causing your ear to hurt is a medical mystery. Take some paracetamol and I’m sure it’ll be fine in the morning.”

There was a flash of triumph in her eyes. “Ah, but doctor, I haven’t got any. Could you –”

Before she could finish, I produced a pack of paracetamol from my pocket and dropped it on her lap. She looked at me with surprise and admiration. She may have suckered me round again, but I’d managed to second-guess her. I was back out of the door in under five minutes. A score-draw. 

Phil Whitaker is a GP and an award-winning author. His fifth novel, “Sister Sebastian’s Library”, will be published by Salt in September

This article first appeared in the 23 June 2016 issue of the New Statesman, Divided Britain