Who broke Britain? Welcome to The i Paper’s opinion series in which our range of experts tackle this question and identify the individuals whose decisions caused the country’s biggest problems.
• This woman tried to fix childbirth. Instead, she accidentally tortured millions
• The money man whose gigantic error left Britain destitute
• You won’t know James Bevan, but you should know what he did to this country
• Boris Johnson wrecked Britain. But this man left even deeper scars
• The arrogant superbanker whose stunning hubris brought Britain to its knees
• The hardcore socialist whose ruinous idea is why Liz Truss became PM
• The ‘Red Tory’ behind one of the most anti-feminist ideas in British politics
Martin Lewis, the campaigning journalist and personal finance guru, is the closest thing this country has to a secular saint. Over the last two decades, his crusades against unfair bank charges, missold payment protection insurance, and incomprehensible energy bills have led to legal changes. The website he set up, Money Saving Expert, attracts around 16 million visitors a month and has 9.1 million subscribers to its weekly Money Tips email.
He is one of the few experts genuinely feared by politicians of all political parties – no one wants to get into a public spat with Britain’s most trusted financial expert. The cost-of-living crisis has been a defining feature of the UK’s economy for years now and the war in the Middle East looks set to intensify it. As money gets even tighter, more and more people will turn to this expert for help.
He may seem an odd choice to feature in a series of columns looking at the people who broke Britain. But the culture of British money-saving advice, a culture he has done more than anyone else to create, has left the nation as a whole poorer.
Money Saving Expert is full of helpful advice and useful tips. During a typical week last month, it explained to readers how to claim a Kinder chocolate bar worth £1 at no cost, alerted people to an excellent mobile phone contract priced at just £3 per month and highlighted a 50 per cent off fruit and veg deal available to users of the Lidl Plus app. Shopping around, looking for the best deal and taking advantage of special offers is all good personal financial hygiene. And – especially when times are tough – Money Saving Expert provides an excellent public service.
But compare and contrast British personal finance advice to its American equivalent. On this side of the Atlantic, the tone is set by Lewis and his ilk – switch your energy and mobile provider regularly, run your washing machine at odd hours to access cheap electricity, look out for the best current account and take up special offers at retailers. In America, the advice is to build wealth by buying cheap exposure to the stock market through low-cost tracker funds. The focus is less on slight savings in bills and at the check-out and more on how to materially grow one’s financial security.
Almost two-thirds of Americans invest in stocks and shares, compared to just under one-quarter of Britons (excluding pensions). In the tax year ending in April 2024 (the last for which statistics are available), almost £70 billion was funnelled into tax-free cash individual savings accounts (ISAs) but just £31bn in stocks and shares ISAs.
Saving in cash rather than investing in stocks has cost the public dearly. In the decade to the end of 2024, cash ISAs attracted an average annual interest rate of just 1.66 per cent. By sharp contrast, the average annual return from global stock markets, in sterling terms, was almost 13 per cent. Both of these numbers, crucially, ignore inflation. Adjusting for the change in the price level, the value of cash savings has fallen in real terms over the last decade.
AJ Bell, an asset management company, has calculated that £1,000 invested annually since 1999 into a cash ISA would be worth £36,290 by 2025. The same £1,000 a year invested in British stocks rather than cash would have been worth £67,866. If invested in global stocks, it would be worth £92,000. Given that the total value of cash ISAs held by the British public is now £360bn, that is billions of pounds in forgone returns each year. Or quite a lot of free £1 Kinder bars.
Of course, one might argue that the kind of money-saving tips doled out by Lewis are targeted at the general public rather than those with the ability to invest in stocks and shares. Even leaving aside the fact that America rather clearly demonstrates that buying stocks is not just something for the rich, this is hard to square with the British data. Almost ten million cash ISAs were opened in the last tax year and almost 40 per cent of all British adults hold one.
Cash is useful as a rainy-day fund but holding savings in the form of money almost certainly means losing out to inflation in the longer run. Yes, stocks can go down, but over the long term, they generally offer a much higher return than cash. Lewis himself says so in a section on stocks and shares ISAs on his website, “done right, investing should beat saving”, he notes. The vast majority of the holders of cash ISAs would be better off switching at least some of their money to a stocks and shares ISA, a message the government too is now eager to push.
So why don’t they? Partially because Britain lacks a stock investing culture. A myriad of deeply rooted factors can explain that: the national obsession with holding some form of housing wealth, a long legacy of generous defined benefit pensions, which meant financial security could be outsourced for someone else to think about, often poor financial advice and a long cultural memory of some high-profile scams in the 1980s and 1990s that degraded trust in the financial industry.
But whatever the reason, the consequences have been costly. A household able to save £23,000 a year – and more than 5 million cash ISAs receive a contribution of more than £5,000 annually – would be much better served, over the medium to longer term, by following the American fashion and buying cheap exposure to stock markets.
The problem, as both the financial industry and now the government have cottoned on to, is a lack of awareness. Though Lewis does, on occasion, delve into investing, it forms a small part of his work compared to other areas. If Lewis doesn’t feel entirely comfortable discussing it, he could point to sources that do more prominently. The vast majority of British savers do not grasp that holding cash for decades is a surefire way to pass up returns or that, over the longer run, buying stocks and shares is not only more lucrative but, in many ways, safer than sticking money in a bank savings account or an ISA.
Changing that will be the painstaking work of years of wider consumer information and education. Lewis – with his well-deserved reputation for integrity, the experience accumulated over decades and with his huge public platform – is better placed than anyone else to carry this task out. The fact that he concentrates on saving money rather than growing wealth makes him one of the people who broke Britain.