Rachel Reeves should leave ISAs alone

Voters won’t want to thank Rachel Reeves if the Office for Budgetary Responsibility (OBR) turns out to be right in its forecast for zero real growth in earnings in 2026 and 2027. But static earnings could turn out to be the least of problems for households. They will take an even dimmer view of the Chancellor if they wake up to find half their savings have evaporated. But that is what may well happen if, as Treasury documents suggest, Individual Savings Accounts – or ISAs – are reformed in the next Budget to discourage people from holding cash and encourage them to stuff their savings into the stock market instead. 

Reeves won’t want to hear herself compared with Nigel Lawson, whose portrait she removed from No. 11, but in one sense she shares his views: she sees the point of ISAs as being to try to boost the UK stock market.