Rachel Reeves’s “Savvy Squirrel” is anything but savvy

Savvy Squirrel is the mascot for the latest government campaign to get people investing, rather than “squirrelling away” their money in savings accounts. But there is something you should know about red squirrels. They aren’t much good at anything. At the end of the 19th century, there were over 3.5 million of them knocking around the UK. Now they are all but extinct in England and Wales, while across the UK there are well under 300,000 of them left – mostly in Scotland. They succumb easily to squirrel pox carried by grey squirrels; they aren’t as big or as good at finding food as grey squirrels; and when they do find food, they often fail to hang on to it.

It’s nice that they put food away for the winter (everyone loves a saver). But depending on whom you listen to, they lose anywhere up to 25% of the food they cache to either theft or forgetfulness (scientific arguments about the spatial memories of the red squirrel are ongoing). They also can’t seem to be helped. There are some 47 different organisations trying to stop them disappearing from the UK altogether. But their numbers just keep falling. They are, effectively, Britain’s pandas.

Imagine being a policymaker in the UK, knowing all this, looking for a mascot for a new campaign to encourage ordinary people to invest and choosing this animal. One that never invests, only saves; that saves in such a way that guarantees a negative return in not just inflation-adjusted terms but also in nominal terms every single year; and which is heading down the path to extinction despite large sums of taxpayers’ money being chucked at it every year.

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Margaret Thatcher’s plan to get shot of the UK’s nationalised industries and create a culture of shareholder democracy at the same time.

The Savvy Squirrel campaign is an infantile attempt (the squirrel is animated) to pick up where that left off. Expect to see Savvy Squirrel on billboards near you soon if you haven’t already, on taxis in Manchester, or on the telly with the messages “Take the next Step. Invest” and “Saved a bit? Why not invest a bit?” The message isn’t idiotic, of course. The UK has an unusually high savings ratio and households have lots of cash – there is around £ 2 trillion sitting in our accounts.

That doesn’t make sense. Not for the savers themselves – once you have six months worth of emergency cash, given up the superior returns that come from an equity portfolio, makes your future less comfortable than it could be. Not for the market – all that money could be flowing into the UK stock market, bolstering liquidity, valuations and the associated ecosystem of profession that the UK needs to keep supporting. And not for the state, either – the less people invest, the less wealth they will have on retirement and the more expensive they will be for the state.

That’s why chancellor Rachel Reeves wants to encourage people to “have a small stake in the future of this great economy”. However, if Reeves really wants the UK to become a nation of shareholders, there are more useful things to be done. The first might be to explain to the 22 million people with auto-enrolment pensions in the UK that they are already shareholders, what that means and why it matters. That needs to be done on social media rather than on the telly, as it is best to take information to where people are already talking about these things. Next would be to work on making things more simple rather than more complicated: every change to the pension system and the ISA system makes people trust the wrappers they should be using to invest less.

Then there is the tax system – if you want people to invest in shares, maybe cut capital-gains tax to a level where is it not an effective wealth tax (at current levels it almost always taxes nominal rather than just real gains). The same goes for stamp duty on shares, another one of the UK’s underappreciated wealth taxes, and one you pay even inside your ISA and SIPP (when they say tax-free, they don’t mean entirely tax-free).

Reeves might also take a very firm line on annual general meetings (AGMs). The government is reviewing the rules on corporate reporting, and there is talk of removing the requirement for in-person AGMs and shareholders’ votes on executive pay. Both are appalling anti-shareholder democracy ideas.

Finally, risk warnings. There are changes to these on the way, but if you try to buy any investment product you will find “capital at risk” warnings everywhere. So heavy-handed has the warning system been, says Holly Mackay of Boring Money, a financial research platform, that they are “akin to British Airways telling anyone trying to book a flight how many aviation deaths there have been in the last year”. The result is that around 75% of cash-only savers think that there is a less than 50% chance that £1,000 invested today will be worth more than £1,000 in five years. Either these overly nervous people were squirrels in a past life or the regulators have overplayed their hand.

Risk warnings need to be toned down and the ability of both funds and the listed companies themselves to advertise their wares rapidly ramped up. The Savvy Squirrel campaign has something going for it. It shows that the government recognises there is a problem with the investing environment in the UK. However, it also shows that they won’t be solving it any time soon. Not like this, anyway.

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