The Treasury argues its Isa change will benefit British savers with higher returns, British companies with an injection of cash and the UK economy by better financing for the private sector.
Someone who invested £1,000 each year since April 1999, in a stocks and shares Isa would have £50,000 more than if they invested the same amount in a cash Isa, according to AJ Bell, an investment company.
A report from the Treasury select committee, published on Saturday, found that the cash Isa was “among the most popular and well-understood savings products” in the UK.
MPs recommended that rather than raiding cash Isas, the Chancellor should look at other tax allowances on savings, potentially including the personal savings allowance.
‘Not the right time to cut the cash Isa limit’
Dame Meg Hillier, chairman of the committee, said: “This is not the right time to cut the cash Isa limit. Instead, the Treasury should focus on ensuring that people are equipped with the necessary information and confidence to make informed investment decisions.
“Without this, I fear that the Chancellor’s attempts to transform the UK’s investment culture simply will not deliver the change she seeks, instead hitting savers and mortgage borrowers.”
Earlier this year, more than 50 building societies wrote to Ms Reeves to warn the changes would not “suddenly change [savers’] appetite to take on risk” and “could have the knock-on effect of making loans to households and businesses more expensive and harder to come by”.
However, critics have warned that savers will baulk at the extra risk of investments in shares. Building societies, who risk losing out on funding, have also campaigned against the move.
Asked about the criticism, Ms Rigby said: “I think investing and the information around investing is the preserve of too few people and traditionally a wealthy few. That’s why we want to build up this culture of retail investment and a shareholding democracy.”
She added: “When Thatcher left office, one in five UK adults owned shares. Fewer than one in 10 do now… If someone wants to label this Thatcherite then so be it.”
The minister declined to confirm what new thresholds would be adopted in the Budget.
