Despite claiming that he is the private investors' champion, Gordon Brown did not have any goodies in his red box to encourage everyone to save more. In fact, this year's Budget raised fears that people on middle incomes might put less money in savings and investments due to 1 per cent increase in the national insurance contributions (NICs) from next April.
High earners might do better than others from the changes to NICs, and at the other end of the spectrum, poorer pensioners and people with low incomes are in line for an uplift from various tax credits being phased in this year.
Liz Walkington, of the brokers RJ Temple, said: "There were no specific measures to encourage investment. Instead we will have higher taxation from the freezing of personal allowances and an extra 1 per cent on national insurance contributions. That will reduce saving."
The hope was that rules surrounding individual savings accounts (Isas) or tax governing pension contributions would be improved. Both measures would have tackled the massive gap, estimated by the Government to be pounds 27bn, between what people are saving for their retirement and the sum needed for a decent standard of living.
Isas, introduced in 1999, form a core plank of Mr Brown's strategy to encourage more personal investment and have attracted pounds 80bn since they were set up. But they will become less attractive in 2004 when dividends earned on shares held within an Isa cease to earn tax relief. There is also no certainty about their long-term future because Mr Brown has guaranteed their existence only until 2006.
John Whiting, tax partner at PricewaterhouseCoopers and president of the Chartered Institute of Taxation, believes there will be extra benefits for Isa buyers, but not until next year. He said: "This was one Budget too soon. With some of the tax incentives running out in 2004 we will hear next year about the future of Isas."
But the lack of incentives in this Budget are unlikely to encourage Christopher and Emma Bryan, from Tooting in South London, to save more. At present, their only substantial investment is their pounds 200,000 mortgage. Mr Bryan, 33, is an accounts manager at a greeting cards company, and contributes pounds 2,000 into a pension and his wife, who is a full-time mother to their two young children, does not have a pension.
The couple did not feel they could up their savings, especially as the increase in NICs will cost them pounds 254 a year, on Mr Bryan's pounds 30,000 salary. Mrs Bryan, 27, does not feel the money will improve the National Health Service. She said: "The extra funds will be swallowed up in bureaucracy. …