Kevin Brown, savings specialist at Scottish Friendly comments on the Chancellor’s decision to retain the £20,000 annual cash ISA allowance

“It’s surprising, and hugely disappointing, that the Chancellor has abandoned the planned reduction in the cash ISA allowance. We supported the change as a step towards encouraging more people to consider investing and building the potential for better financial resilience across households in the UK.

“By reversing plans this afternoon, the Government will have to answer the lingering question of how it will now deliver the investing culture it wants to create.

“Cash plays an essential role in household finances. It provides an emergency buffer and security for money people expect to need in the near term. However holding cash for many years also carries risks, particularly when inflation erodes its spending power. For those who can put money away for the long term and can accept investment risk, investing offers the potential for better returns over the longer term.

“Scottish Friendly’s position has consistently been that changing the allowance alone would not transform behaviour. It needs to be backed by the right education and public awareness campaigns – such as that featuring Savvy the Squirrel, the mascot for UK government-backed, and industry-led public awareness campaign 'Invest for the Future' – to help people understand when saving is appropriate, when investing might suit their goals, and the risks involved.

“With the reduction now scrapped, certainly for now, that work becomes even more important. We now hope the Government will explain how it will help give people the confidence to consider investing. Keeping the allowance unchanged does little on its own to address the barriers that prevent people from taking that first step.”