The chief executive of the Building Societies Association (BSA) has written to Rachel Reeves calling on the Chancellor to keep the cash ISA.

Cash ISAs are an “important source of funding” for banks, building societies, credit unions and other providers, the BSA stated, as the deposits can be used to fund loans to households and businesses.

According to figures from HMRC, over 18 million people have a cash ISA. Almost half (47%) of these accounts are held by people with incomes of less than £20,000 a year, and the average savings balance is just under £13,400.

The BSA has warned that substantially reducing the role of cash ISAs would have knock-on impacts on the price and availability of these loans, if providers had to replace the funds from other sources.

“Cash ISAs help consumers to achieve their savings goals,” BSA chief executive, Robin Fieth, said. “They play an integral role in the UK savings market and have done for many decades. They represent a policy success upon which we should seek to build, rather than to curb.”

Building societies paid an estimated £3.6bn in interest on savings into cash ISAs in 2023, according to figures published by the BSA, which represents the UK’s 42 building societies.

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