UK Chancellor John Healey to Reverse Cash ISA Cut and Scrap Gas Standing Charges
John Healey announced that the planned reduction of the cash ISA allowance will be abandoned and that daily gas standing charges will be removed, measures welcomed by many financial advisers.
Chancellor John Healey said the government will scrap the proposal to lower the cash ISA allowance from £20,000 to £12,000 per year and will eliminate daily standing charges on household gas bills. The reversal follows criticism that the cut would have discouraged savings and added complexity to a widely used tax-free product.
"Scrapping the planned cut to the Cash ISA allowance would be a welcome U-turn. Saving was never the problem; the challenge is giving people the confidence to take the next step into investing," said Maike Currie, vice-president of personal finance at PensionBee.
Financial planners welcomed the decision, noting that cash ISAs provide a simple entry point for savers, especially those with lower risk tolerance. Winston Ruddick of Broadstone called the move “welcome news for savers” and said it would help people build tax-free savings without needing to move into riskier stock-market products.
Some commentators warned that protecting cash ISAs could miss an opportunity to push more investment in equities. Michael Healy, chief executive of IG Consumer, argued that the government should have redirected incentives toward stock-market investing to boost long-term wealth and economic growth.
Healey also announced the removal of gas standing charges, describing them as “unfair and outdated.” The change will shift the fixed daily fee into the unit rate of gas, which the Treasury estimates will save an average household about £45 a year.
"Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space," Healey said.
Energy secretary Miatta Fahnbulleh added that the reform aims to give families more control over their energy bills.
Industry observers noted that policy reversals can impose costs on firms that have already prepared for the original reforms. Jo Harris of Quilter highlighted the resources spent on adapting systems and communications for the now-abandoned cash ISA changes.
The budget is expected to be low-key on spending, with the Treasury focusing on fiscal stability amid high borrowing costs.