Rachel Reeves: Building society bosses urge Chancellor not to go ahead with Cash ISA cut
Building society bosses have joined forces to urge Rachel Reeves to retain annual Cash ISA limits at its current £20,000.
The chief executives of the Yorkshire and Leeds Building Societies, as well as Skipton Group, are among more than 50 financial experts to sign an open letter to the Chancellor urging her not to go ahead with a cut to the current limit.
The Financial Times has recently reported Ms Reeves is expected to set out a cut to Cash ISA limits in next week’s Mansion House speech as part of her efforts to direct more investment towards the British stock market.
The newspaper reported that, according to a Whitehall figure, discussions were still taking place about the precise limit that will be set for Cash Isas.
Mr Reeves has previously said she will not reduce the overall £20,000 annual limit for ISA deposits but added she does “want people to get better returns on their savings”.
The new letter to the Chancellor warns: “Cash ISAs play a vital role in the broader economy. The funds deposited in these accounts support lending, helping to keep mortgages and loans affordable and accessible. Any significant reductions to the Cash ISA limits would make this funding more scarce which could have the knock-on effect of making loans to households and businesses more expensive and harder to come by. This would undermine efforts to stimulate economic growth, including the Government’s commitment to delivering 1.5 million new homes.
“Cutting the Cash ISA limit would send a discouraging message to savers, who are sensibly trying to plan for the future and undermine a product that has stood the test of time. It would make the whole ISA regime more complex and make it harder for people to transfer money between cash and investments.
“Restricting Cash ISAs won’t encourage people to invest, as it won’t suddenly change their appetite to take on risk.
"We therefore urge you to affirm your support for Cash ISAs by maintaining the current £20,000 limit. Preserving this threshold will enable households to continue building financial security while supporting broader economic stability and growth.”
Robin Fieth, Chief Executive of the Building Societies Association said: “Cash ISAs are used for a wide range of purposes—from saving for a first home to managing finances in retirement. These are not idle funds; they serve real, practical needs for both savers and the building societies, banks and other providers that receive the funds, and use them to support mortgage and other lending.
“Simply changing ISA limits is unlikely to encourage people to invest, but it will hurt people who are responsibly saving for short-term goals, where investing may not be appropriate.”
A Treasury spokesperson said: “We recognise the important role that cash savings play in helping households build a financial buffer for a rainy day. Our ambition remains to ensure people’s hard-earned savings are delivering the best returns and driving more investment into the UK economy.”