BSA warns Cash ISA cuts could harm savers and the economy

The Building Societies Association (BSA) has cautioned that reducing the Cash ISA limit could work against the Chancellor's goal of fostering a stronger investment culture, potentially affecting savers, the housing market and broader economic growth.

In its Budget submission to the Treasury, the BSA emphasises that cutting Cash ISA limits would not encourage more people to invest. Instead, it would penalise responsible savers, limit flexibility and could push up mortgage costs.

Cash ISAs are not idle money. They help people build financial resilience, save for a house deposit or manage finances in retirement. They also lay the groundwork for future investing and provide essential funding for mortgages and other lending.

The BSA’s analysis indicates that reducing the annual Cash ISA limit from £20,000 to £5,000 could result in around 17,000 fewer mortgage loans and lower GDP by approximately £7 billion over five years, potentially undermining economic growth and tax revenues.

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."