Banks have urged the Chancellor to drop her plans to cut the tax-free Isa savings allowance.
Rachel Reeves has been urged not to plough on with a cash ISA rule change which would worst-hit state pensioners. Banks have urged the Chancellor to drop her plans to cut the tax-free Isa savings allowance.
Labour Party Chancellor Mr Reeves has been lobbied by City executives to “leave Isas alone” as she prepares to overhaul the savings product used by millions.
Robin Fieth, the chief executive of the Building Societies Association, told The Telegraph: “Simply changing Isa limits is unlikely to change savers behaviour and will do little if anything to boost investment. Ideally, the well-understood £20,000 Isa limits should be left alone.”
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But experts warn that pensioners would be particularly affected by any reduction in the cash ISA allowance.
Rachel Springall of Moneyfacts said: “Fundamentally, there will be savers out there who do not want to be forced to place their hard-earned cash in a pot which could be at risk.”
James Blower, founder of Savings Guru, added: “As a nation, we are more risk-averse and like the safety and security of cash with guaranteed returns.”
A Treasury spokesman said: “We want to support people to save and absolutely recognise the important role that cash savings play in building a buffer for a rainy day.
“We also want to ensure that savers are getting the best returns possible, while boosting the economy to create jobs right across the UK. No decisions have been made.”
Stuart Haire, the Skipton Building Society chief executive, told The Telegraph that the Chancellor should “leave cash Isas alone”.
He said: “We agree with the Government that people in the UK should increase, if they have the wherewithal and the risk appetite, the amount of money they have got in equities.
“However, changing the cash Isa limit will not do that, so therefore it’s the wrong tool to achieve the policy outcome.”
