JEFF PRESTRIDGE: Act to keep Keir Starmer's hands off your cash

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Changing of the guard: New PM Keir Starmer

Eddie Browne, a retired biscuit maker, is among my most loyal readers. Over the years, he has never been frightened to give his opinion on the key money issues of the moment.

In fact, I feel cheated if an email from him isn't waiting for me on a Sunday morning when I wake up screaming for a coffee infusion.

It's not always complimentary – Eddie is as plain speaking a person as you will ever wish to meet – but invariably he is bang on the mark. 

He knows his pensions and is a shrewd investor, currently thrilled with the fact that a small stake in last month's London listing of budget computer firm Raspberry Pi has delivered exciting returns.

Eddie, who once worked for United Biscuits in Manchester helping make McVitie's Jaffa Cakes, sent me an 'extra' email two days ago – in the wake of Labour's resounding victory at the polls.

He didn't pull his punches. 'My first reaction was to cry – and then scream,' he said. 'God help the country I love. I fear for the financial future of my children and grandchildren.'

His take on what awaits us is doom laden: 'Low economic growth, higher taxes and financial chaos within three years.' 

It's a view shaped by living through the Labour governments of the 1970s and a period of high inflation, unemployment, labour disputes and a bailout from the International Monetary Fund.

But it is also based on a Labour agenda Eddie believes will drive talent out of the country, force yet more pensioners into paying tax, and impose higher taxes on savers and investors.

By the shrewd use of tax-friendly Isas and pensions, Eddie has side-stepped some restrictions imposed on tax-efficient wealth creation by ex-Chancellor Jeremy Hunt.

It is a strategy I implore readers to embrace as Labour prepares to ramp up investment taxes even more – and introduce a harsher inheritance tax regime. The time for crying and screaming is over. Protect your wealth from Labour.

One of the few times Eddie took me to task was six months ago when he gave me a 'yellow card' for suggesting that some of the investment trust industry's oldest beasts should change their names to reflect what they do. 'What matters,' he told me, 'is that investors do their homework and understand what they are investing in.'

Two of these 'oldies' – Alliance (founded in 1888) and Witan (1909) – are actually changing names, but not to highlight their global investment mandates. It is because they are combining to form a £5.6 billion investment trust that will go by the name of Alliance Witan.

When the deal goes ahead this autumn, the combined investment beast should become a FTSE100- listed stock – joining Scottish Mortgage as a flag waver for the investment trust industry.

The merger, with Alliance very much in the box seat, makes sense. Alliance, the bigger of the two trusts, has been rejuvenated in recent years, with new managers to oversee its investment portfolio, Witan has not sparkled.

Since Willis Towers Watson (WTW) took over the wheel at Alliance in April 2017, shareholders have enjoyed total returns of 105 per cent, Over the same period, Witan has delivered 65 per cent. Enough said.

The two trusts are similar. First, both invest across stock markets in search of a mix of capital and income return.

Secondly, they are committed to growing dividends for shareholders (paid quarterly) with Alliance having 57 years of annual divi growth under its belt – Witan, 49.

The two also parcel out slices of their portfolios to a number of specialist fund managers in order to extract returns from markets. On all three counts, Alliance scores better than Witan.

Post merger, it is no surprise that WTW will take control of the combined portfolio. We don't know yet how many managers it will use to run the trust's assets, but I can't imagine that all those currently employed across the two trusts will be retained (only GQG Partners and Veritas are common to both funds).

While the merger seems tickety-boo, there is no room for complacency. Alliance Witan will have to deliver on the promise made by its chairman in waiting (Dean Buckley, current chair of Alliance) to provide shareholders with excellent value for money.

This should be reflected in total annual charges of below 0.6 per cent – less than the 0.62 and 0.76 per cent charges levied by Alliance and Witan respectively. The trust will then need to keep driving down this cost, demonstrating that it is firmly on the side of investors.

Crucially, it must keep doing what Alliance has done for the past seven years – generate returns above the average of its global equity investment trust peer group. WTW will be key to this. It must demonstrate beyond doubt that its multi-manager approach is a winning formula.

Provided it can meet these two goals, the combined trust has a rosy future, especially if it markets itself to the public as Alliance has been doing rather successfully for a while.

In recent years, most investment trusts have gone into near communications lockdown in response to Covid – and cash saving coming back into fashion. As a result, they have drifted off the radars of many investors, raising doubts about their future.

But Alliance has bucked this trend, resulting in a healthy appetite for its shares. Alliance Witan must do the same, maybe encouraging other trusts to follow suit.

Discounts for cash, anyone?

Cash usage continues to decline, despite the best efforts of Cash Access UK to ensure high streets have an ATM, bank, post office or banking hub.

According to cash machine network Link, £235 million was withdrawn from ATMs on polling day last Thursday – down 27 per cent from the previous polling day on December 12, 2019, when Boris Johnson stormed to victory.

'People are using less cash,' admits Link's Graham Mott.

Exodus: Cash usage continues to decline, despite the best efforts of Cash Access UK to ensure high streets have an ATM, bank, post office or banking hub

'Increasingly, they are using cards and their phones to make day-to-day payments.'

Some retailers are fuelling this cash exodus by only accepting card payments. But a few are bucking the trend, as I found out eight days ago when enjoying some tapas at a local restaurant.

Payment by cash, the menu spelled out, would entitle me to a 4 per cent discount if I spent under £90 – or 8 per cent if my bill came to more.

I've also had builders offer me a discount if I paid in cash – but never retailers.

Let me know if you have experienced the same: [email protected].

The tax-free fun of Premium Bonds 

On the theme of the moment – protecting your wealth from Labour – a quick shout out for Premium Bonds.

If you are looking for a product to sit alongside your tax-friendly Isa and pension, which will not see you embroiled in any nasty Labour taxes heading your way, then this National Savings & Investments offering should be right up your street.

All prizes, dished out monthly, are tax-free and the current prize rate is equivalent to an average annual interest rate of 4.65 per cent. Some holders will do better than this, others worse.

While this percentage may be cut if interest rates in the wider economy are reduced in the months ahead, Chancellor of the Exchequer Rachel Reeves won't be able to take a bite out of your winnings.

The maximum holding per adult is £50,000 and prizes range from £25 to £1million.

Premium Bonds add a little bit of fun to your saving – which Labour can't quell.