Money Expert Condemns 'Stick Approach' to Savings
In a controversial autumn Budget move, the Labour government has announced it will slash the annual cash ISA allowance, drawing immediate criticism from leading money saving expert Martin Lewis. The change, revealed on Thursday 27 November 2025, will see the cash ISA limit reduced from £20,000 to £12,000 for most savers.
Chancellor Rachel Reeves outlined the policy, which is specifically designed to encourage younger people to invest in Stocks and Shares ISAs. The government believes this shift will foster a stronger investment culture. However, individuals aged 65 and over will be exempt from this new, lower limit.
Industry Backlash Against 'Half-Baked' Reforms
Martin Lewis did not hold back in his assessment, labelling the reduction the 'wrong move'. He argued that the government should be focusing on positive incentives and improving financial education rather than using what he described as a 'stick approach' to influence saver behaviour.
While Lewis conceded that the new £12,000 cash ISA limit is still a substantial amount that would require significant monthly savings for most people to maximise, he fundamentally disagreed with the strategy. His concerns were echoed by prominent figures in the finance industry.
Tom Selby, a director at investment platform AJ Bell, joined the chorus of disapproval. He publicly urged the Chancellor to reconsider the policy, characterising the plans as 'ill-thought-out' and 'half-baked reforms' that could undermine savers' confidence.
What the Budget Changes Mean for You
The core of the Autumn Budget decision creates a clear divergence between different types of ISAs. While the cash ISA allowance is being cut, the Stocks and Shares ISA limit will remain at its current £20,000 level. This creates a clear incentive for savers to consider investment products over traditional cash savings accounts.
The government's exemption for over-65s acknowledges that this demographic often relies more heavily on accessible cash savings for income in retirement. The debate now centres on whether nudging younger savers towards the stock market through a reduced cash allowance is the most effective and fair method, or if, as Martin Lewis advocates, a focus on education and empowerment would yield better long-term results for the nation's financial health.
