City experts are welcoming reports that chancellor John Healey will scrap plans to slash the annual cash Isa allowance from £20,000 to £12,000 a year.
According to the Financial Times, Healey had concluded that this is the wrong way to persuade people to invest more in stocks and shares.
The move had been announced by Healey's predecessor, Rachel Reeves, in an attempt to encourage people to invest in UK companies.
It would have meant that from 6 April 2027, anyone under 65 would only have been allowed to save up to £12,000 in a cash ISA. Anything above that will have to move into a stocks and shares Isa.
director of public policy athas cheered the move, and criticised "calamitous reform agenda", saying:
"Rachel Reeves' ISA reforms were a car crash, lamented by most of the retail investment industry, who criticised the complexity they would add for little consumer benefit, and building societies, who warned they would increase mortgage costs. Given the Prime Minister's main focus is on easing cost-of-living pressures, we shouldn't be surprised the Cash ISA cut is set to be unceremoniously ditched.
"While the central aim of encouraging more people to invest for the long-term was the right one, the route Healey's predecessor chose to achieve this was painfully convoluted, hardening the border between short-term saving and long-term investing and adding overwhelming complexity – not to mention a tax charge – into the system in the process.
chief customer and operations officer at points out that u-turns have costs:
"There is also a lesson here about how policy is made. The industry has already spent an inordinate amount of time and resource preparing its systems, products and customer communications for these changes.
That is time that could have been spent innovating and improving outcomes for customers. Policy inevitably changes, but announcing complex reforms and asking firms to prepare for them only to reverse course before they take effect is the worst kind of policymaking."
The Green Party have accused the government of 'tinkering' by scrapping gas standing charges in the budget, rather than taking 'bold action'.
A spokesperson says:
"Abolishing standing charges is more tinkering from a Government that is failing to take the bold action needed to end the cost of living crisis.
"Energy bills have skyrocketed in recent years and are set to rise by hundreds of pounds again this winter.
"'Hope' is an easy thing to promise but will not be delivered by a business-as-usual budget."
British energy bills are predicted to rise 16% in January to reach the equivalent of about £2,000 for the typical annual dual fuel bill, up from £1,729 a year in the current quarter.
director in sustainable future at has welcomed the move, saying:
"Ditching the gas standing charge rightly takes a big chunk off millions of people's energy bills, sharing costs more fairly and giving cash-strapped households a much-needed boost.
This measure will provide relief to the poorest households who ration their gas use but it will also mean that switching to electric heating such as heat pumps is a better deal for some households that use more gas.
With no end in sight to the international conflicts that are pushing up the price of fossil fuel heating, this Budget will be one to watch for additional measures needed to bring people's bills down and wean us off reliance on imported oil and gas."
Abolishing standing charges on gas is also attractive to the Treasury, because it won't cost them anything!
UK research and charity foundation recently published a very handy case for abolishing the gas standing charge – which included five reasons why it would be an "an impactful policy change":
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It reduces bills for a majority of people
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It is progressive: poorer households will save more than wealthier ones
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It supports electrification by reducing the electricity-to-gas price ratio
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It should be popular, because people view standing charges as unfair
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It costs the Treasury nothing
They also explain that "every home pays the same standing charge, but the amount of gas used varies a lot, and is skewed by a small number of households with outsized consumption."
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The median dual fuel household uses 9,700 kWh of gas per year, but the average is 11,900 kWh.
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The top five percent use over 25,000 kWh annually, which jumps up to over 42,000 kWh for the top one percent.
Abolishing the standing charge doesn't mean that gas user will save money.
Because the cost is shifting onto the unit rate of gas, a household that consumes a lot of gas might end up paying more overall.
Currently, regulator Ofgem has capped gas bills at 7.97 pence per kWh, plus the 29.68p daily standing charge.
Consumer advice website has estimated that today's move could add around 1p to each kWh of gas used.
Based on their estimations, using current energy prices, this would see the typical gas unit rate rise from 7.97p/kWh to 9.11p/kWh, they say here.
The Treasury argues that households who don't benefit from an automatic saving will still have better control over their bills without the worry of affording the standing charge.
It aso says the government will set out "targeted mitigation for a small number of households" in the future.
Abolishing the standing charge will help households control how much they spend on gas, explains energy secretary :
"Too many families face unfair charges, so we're making it easier for people to take control of their energy bills.
"By removing one of the nation's bugbears - taking standing charges off gas bills, with extra support for those who need it - we'll give millions of people breathing space.
"Tackling affordability is my number one priority, and I will keep doing everything I can to protect people from unaffordable bills."
John Healey has pledged to provide households with "breathing space" from the rising cost of living pressures.
And the Treasury has just announced a new measure to help – the government is removing standing charges from household gas bills in Great Britain.
These fixed daily fees – £108 a year for the typical household on average – cover the costs of connecting to a supply. They are controversial as households pay them even if they only use little energy
will ask regulator to end this "unfair and outdated practice" in 2027, or as soon as possible afterwards.
The plan is to shift the cost of standing charges into the unit rate of energy instead.
The Treasury says this could save 60% of account-holding households around an average of £45 off their annual bill.
says:
"Gas standing charges are unfair and outdated so I am scrapping them to give millions of households a bit of breathing space.
"My Budget will draw a line in the sand on an energy policy that has failed British billpayers for years, letting extra costs on bills pile high and leaving households even more exposed to global shocks."
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It's budget day! And City investors are expecting that chancellor avoids any bold spending pledges or tax hikes in his first fiscal statement.
Investors anticipate a cautious budget from the chancellor, reasoning that he will prioritise stability in the bond market at a time when borrowing costs are close to their highest levels in around two decades.
With memories of Liz Truss's budget disaster yet to fade in the City, traders will be alert to any signs that is wavering on the government's fiscal rules - but the mood music from the Treasury is that fiscal stability is still in vogue.
Last night, the chancellor warned that the world is "a highly uncertain place."
In a video released before the budget, he said:
"Conflicts abroad are pushing up energy prices, and the cost of living here at home – piling pressure on the families, on businesses and on our public finances."
One key question for the City is how much fiscal headroom the chancellor has chosen to maintain. That buffer - which measures the safety margin the government enjoys to hit its fiscal rules - will have shrunk as UK borrowing costs rose this year. Back in March, the headroom was a comfy £23.6bn.
Economists predict it will have fallen to between £15bn and £20bn - a figure below £15bn might spook the City.
reported on Tuesday that investors they've spoken to largely expect a low-key, low-volatility event today.
They told clients:
"No investor we spoke to contemplated a risk of the fiscal headroom coming in at below £15 billion, and most we spoke to said that even £15 billion (our base case) would be a disappointment, with consensus in recent days shifting towards between £15 billion and £20 billion."
Bank stocks could be hit by the budget too - we're expecting new taxes on the banks, but we don't yet know if Healey will simply reverse the Tory-era cut to the bank surcharge, or raise it by more.
The agenda
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12.30pm GMT: The budget statement begins
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1.30pm GMT: Office for Budget Responsibility releases its latest economic and fiscal outlook
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2.30pm GMT: Office for Budget Responsibility press conference