Richard Oldfield said the £20,000 upper limit for investing in a tax-free cash individual savings account (ISA) should be reduced.

A major investment firm has urged Labour Party Chancellor Rachel Reeves to push through her cash ISA shake up. Schroders boss Richard Oldfield said the £20,000 upper limit for investing in a tax-free cash individual savings account (ISA) should be reduced.

Labour Party Chancellor Ms Reeves is being lobbied by the City to change the rules ahead of her mini-Budget this month in a bid to boost growth. It is thought the limit could be cut from £20,000 a year to £4,000.

Oldfield argued that it was an ‘anomaly’ that the current limit for saving in cash Isas should be the same as that for stocks and share Isas. He said: “I know having cash Isas is really important for certain segments of the country and we’ve got to continue to support that. But I would advocate for having a reduced Isa limit. The debate is by how much.”

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Oldfield said: “We all accept that we need to grow the UK economy. And to grow the UK economy we probably need more risk-taking than we have today.

No one is going to argue with that. If we take the amount of money that goes into Isas, that is a huge tax credit that we’re all paying for and at the moment a large portion of that is going into cash Isas.

“Over any time period that creates a worse investment outcome for our clients than actually having it in an investment Isa. So I think it is a really important debate to have. Having the levels equal is a bit of an anomaly.”

Sue Hayes, chief executive of Nottingham Building Society, said yesterday: “We believe it is important to enable a market where saving is encouraged and incentivised and alongside other societies, we advocate for the current cash Isa regulations to be maintained.”

Last week, Leeds Building Society’s chief executive Richard Fearon added his voice to the opposition, saying that hundreds of customers had raised concerns, with many believing it would be ‘unfair’ to change the rules.

“They like that their money goes towards helping others buy a home” Fearon said. “They don’t want to invest in stocks and shares and they feel they will be penalised for saving.”