My abiding memory of reporting the Autumn Statement this week will be younger colleagues in the newsroom asking “Who on earth is Sid?”
Chancellor Jeremy Hunt said: “It’s time to tell Sid to get investing again,” as he announced his intention to offload a chunk of the government’s remaining stake in NatWest to retail investors next year. His desire to promote share ownership to the masses was admirable, if a little cryptic.
Older readers will remember the 1986 “Tell Sid” television ads from the Thatcher era of privatisation designed to encourage the general public to buy shares in British Gas.
Thanks to the magic of YouTube, it’s possible to revisit this seminal moment in investment history. Characters including a postman, a fisherman, a nurse, drinkers in a pub and even an old lady at a bus stop pass on the telephone number to call and apply for a prospectus (how quaint!) with the message: “If you see Sid, tell him.”
The identity of the mysterious Sid is never revealed, but the message was clear: ordinary people could be investors too. Nearly 40 years later, that sentiment is still something retail investors of all ages can buy into — whether or not they want a stake in NatWest.
Even if the chancellor hired the best agency in ad land, though, he cannot get around the problem that investors can already buy shares in NatWest should they want to. This makes it much harder to whip up a frenzy about a future retail offer, unless the price is deeply discounted.
For all the nostalgic feelings the 1980s ads may evoke, the UK stock market is in a very different place today. The dominance of the Magnificent Seven US tech stocks is the main story exercising investors. The FTSE lags behind major global indices, and London’s claim to be the world’s financial capital has been trounced by New York.
Private share ownership has also declined substantially since the 1980s, and remains much lower than in the US. Shares in UK banks are often in the top 10 most traded stocks on investment platforms, with dividend income being a big part of the attraction. However, they are seen as a proxy for the wider UK economy, and the Office for Budget Responsibility’s downgraded estimates on Wednesday were hardly encouraging. In conclusion — you can tell Sid all you like, but he might not be very interested!
Which brings me to the investors of tomorrow. Some of my younger colleagues thought the chancellor’s speech could be referring to the FT’s very own “Sid”, our former retail banking correspondent Siddharth Venkataramakrishnan, who has penned many a NatWest story in his time.
But you know what? If you wanted to update the archetype of the everyday investor for the 2020s, he’s a pretty good fit.
Our Sid turns 30 next week (many happy returns). In all the years we’ve worked together on the pink paper, we’ve had many conversations about investing. As well as paying into the FT’s staff pension scheme and getting the maximum matched employer contribution, he has a stocks and shares Isa. In common with many younger readers, he became more interested in putting his spare cash to work in the stock market during the pandemic.
However, it’s fair to say the Sids of today are much more interested in buying shares in Netflix than NatWest. This is why I welcome another of the chancellor’s Autumn Statement measures to resolve the row over holding fractional shares within Isas.
Their mums and dads may have piled into a phone box to get a British Gas prospectus, but for the Sids of today, the entry point to investing is using an app on your smartphone to buy a small slice of an expensive tech stock such as Amazon, Apple or Tesla.
HM Revenue & Customs’ view that fractions of shares should not be permitted within tax-free Isa accounts rattled some young investors so much that they told me they watched the entirety of the chancellor’s speech; a comeback for linear TV. In the event, this pledge was outlined in the small print of the Budget documents, and the government will now “engage with stakeholders on implementation” of this and other Isa simplification measures.
Had Hunt not addressed this issue, it would have unnecessarily damaged the Isa brand at a time when ministers and regulators are trying to get more of the population investing for the future.
And of course, Isas are not the only tax-efficient way of doing so. The success of auto-enrolment means many more Britons have become investors without even realising it.
A decade ago, only around one in three private sector workers paid into a company pension plan. They were, of course, more likely to be higher paid, and men. Now, pension saving is pretty much universal, but challenges remain. Encouraging workers to take a much more engaged and active role in managing their money is one. Persuading companies to make more generous contributions for their workers is another.
On this last point, older Sids could take a leaf out of my book by urging younger Sids to ask prospective employers about the staff pension scheme at the end of a job interview. There are huge variations between companies, yet not everyone realises what a valuable perk pensions can be.
And workplace pensions could take on renewed significance in future years with the “pot for life” consultation that Hunt has ordered.
This would give workers the legal right to have their own and their employer’s contributions paid into a single pension of their choice, ending the admin hassle of multiple small pots and opening up competition in the market.
Every time you get a new job, you get a new company pension — but your employer chooses the provider. The average worker can expect to end up with 11 separate pension pots by the time they retire, which helps to explain the estimated £30bn worth of “lost” pensions.
The much-vaunted “pensions dashboard” project promised to make it possible for savers to see all of their pensions in one place, although I may have retired myself by the time it comes into being. And anyone who has tried to make things easier to manage by consolidating their pensions will know how mind-numbingly difficult the pensions industry makes this task.
Despite the faff involved, recent research from Boring Money, the consumer website, found that younger savers were among those most motivated to consolidate their pots.
Whether you invest using a pension, an Isa, or both, getting comfortable investing and actively managing your money online in your twenties is a skill you will learn and improve on throughout your life, rather than starting cold in your fifties or sixties when thoughts of retirement beckon.
Helping the Sids of today and yesterday engage with their investments is a message this chancellor — and the next — should be encouraged to pass on.
Claer Barrett is the FT’s consumer editor and the author of ‘What They Don’t Teach You About Money’. claer.barrett@ft.com Instagram @Claerb
