Reeves should use the Budget to unleash this £250bn game-changer

The notional justification is that in their original “personal equity plan” form, Isas were intended to encourage investment in UK shares, not as a way of avoiding tax on interest-bearing cash deposits.

Strict rules were initially applied to ensure a certain minimum flowed into UK shares. Over the years, these have been watered down, and today there are virtually no restrictions.

You can even invest your Isa in the grand Ponzi scheme of crypto if you really must.

Yet with the return of higher interest rates, cash is where most Isa allocations are now ending up.

According to the latest Bank of England data, out of £2.24tn in household cash savings, around £435bn is held in cash Isas – or more than is invested in stocks and shares Isas.

But let’s not beat about the bush; the unspoken primary purpose of reducing the tax break for cash Isas is not to tilt the playing field back in favour of stock market Isas, but to collect more tax revenue.

Those using the Isa tax-free wrapper for cash savings will in future have to pay tax on the interest earned on £8,000 of the money they would previously have put into the Isa.

This equates to around £320 of interest annually for each Isa. Individually, this might seem insignificant, but spread across all cash Isa savers, it adds up to a tidy sum for a Chancellor who is already reduced to scraping the bottom of the barrel for additional sources of revenue.

I doubt that in practice the new cap will do much to divert money into the stock market. There is a good reason for saving in cash rather than shares – subject to inflation and currency depreciation, a pound is always worth a pound.

If you need money for a rainy day, you can be certain that what you get out is, in nominal terms at least, worth at least as much as you put in.

It’s true that over time equities consistently and by a considerable margin outperform cash and bonds, which is why it is always advisable to invest your pension in stocks and shares.

But there are sometimes long periods of underperformance. In the extreme example of investing at the peak of the market just ahead of the crash of 1929, for instance, you’d have been waiting until sometime in the 1950s to get your money back, or more than 20 years.

Even in the less volatile conditions that have ruled since the end of the Second World War, the average peak to trough for S&P 500 bear markets is more than 30pc, and the average duration around a year and a half.

If you had to access your money during one of these sell-offs you’d have lost out badly. It is also easy to see why savers are loath to invest in the UK stock market per se.