Rachel Reeves is expected to backtrack on plans to cut the tax-free allowance for cash ISAs, amid growing criticisms and building societies reporting a jump in new accounts being set up. 

“Differing views” from within government and a longer consultation time with the financial sector have contributed to the pause in the policy, according to a report in the Financial Times. 

The rule change had been intended as a mechanism to get money out of savings pots and circulating around British businesses. 

Treasury officials had hoped that the move might nudge consumers towards higher yield stocks and shares ISAs, though industry figures have argued that the policy would more likely push consumers away from the savings products altogether. 

But the Chancellor has faced a chorus of voices opposed to the change, with Skipton Building Society warning that the policy could drive up the cost of mortgages. 

Ahead of the anticipated rule change – which Reeves had planned for her Mansion House speech on 15 July – there was a 45 per cent spike in the number of new cash ISA accounts, according to the building society.

Stark warnings

Around two thirds of ISAs are the cash variety and research by the Building Society Association (BSA) found that 18m Brits have a cash ISA.