The Treasury Committee has cautioned Chancellor Rachel Reeves against reducing the annual cash Isa allowance, arguing that the move would not encourage savers to invest in stocks and shares but could instead push up mortgage rates. In a report published on Saturday, MPs stated that cutting the limit from £20,000 to £10,000, as speculated ahead of the November budget, would likely fail to promote a shift to equity investments without a cultural change.
Martin Lewis, founder of MoneySavingExpert, told the committee that the idea that restricting cash savings would drive people into stocks and shares is false, emphasising the need for better financial education. Building society bosses also warned that reduced cash Isa inflows would make the mortgage market less competitive, potentially increasing costs for homebuyers.
Committee chair Meg Hillier said the chancellor's ambition to help savers earn better returns is supported, but now is not the right time to cut the cash Isa limit. She stressed that the Treasury should focus on equipping people with information and confidence to make informed investment decisions, warning that without improved financial education, the policy could harm savers and mortgage borrowers.
The budget, scheduled for 26 November, is expected to involve tough fiscal decisions amid downgraded productivity estimates from the Office for Budget Responsibility, which could cost the chancellor an estimated £20bn annually. Other measures reportedly under consideration include changes to stamp duty, inheritance tax, and income tax.
