The Financial Times reported yesterday that Reeves will revisit cash ISA reform, but that there were “differing views” about how to move forward and ministers wanted more time to consult with the industry.
The main change that had initially been slated for Reeves’ Mansion House speech on 15 July was lowering the tax-free cash ISA allowance from £20,000.
By changing the limit, Reeves wants to encourage the public to invest in stocks and shares, including in British companies.
Cash ISA reform has been widely criticised by the mortgage industry, especially by building societies, who warned that as the deposits are used to fund lending, it could make mortgages more expensive.
The Building Societies Association (BSA), alongside 51 building society, mutual and financial company signatories, penned an open letter to Reeves earlier this week, warning that the move would also discourage savers and make the whole ISA regime more complex.
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The letter added that the change would not encourage people to invest as it “won’t suddenly change their appetite to take on risk”.
Cash ISA reform had been on the cards for the Spending Review earlier this year but was delayed following backlash.
