The Building Societies Association (BSA) has warned that any reduction to the Cash ISA limit would be counterproductive to the Chancellor’s goal of strengthening the UK’s investment culture, with potential negative effects on savers, the housing market and the wider economy.
In its Budget submission to the Treasury, the BSA said that lowering the annual Cash ISA limit would not drive more people to invest but would instead penalise responsible savers, restrict financial flexibility and risk increasing the cost of mortgages.
Cash ISAs, it said, are not “idle money” but serve practical purposes, helping people build financial resilience, save for a house deposit or manage their finances in retirement.
The BSA’s analysis suggests that reducing the Cash ISA limit from £20,000 to £5,000 could result in 17,000 fewer mortgage loans and a £7bn reduction in GDP over five years.
The association warned this would weaken economic growth and reduce tax revenues, contradicting the Government’s aims.
Andrew Gall, head of savings at the Building Societies Association, said: “We are very concerned that the Chancellor is still considering cuts to the Cash ISA limits.
“We support efforts to help more people to invest and grow their wealth, especially in the UK, but cutting the Cash ISA limit simply won’t achieve this.
“Instead it would undermine one of Britain’s most successful savings products and a stepping stone that has helped millions to build financial resilience and confidence to invest for their future.
“We call on the Chancellor to listen to the millions of people who rely on Cash ISAs to save safely and flexibly.
“Rather than restricting their options, we should build on what is already working and help people to make informed choices about their finances.”
