The Motley Fool welcomes the Government’s decision to make ISAs a permanent feature of the savings landscape, but calls for a rise in annual limits

We welcome the proposals to combine PEPs and Child Trust Funds within the ISA framework. Clear commitment and joined-up thinking from the government regarding tax-free savings schemes is vital in giving people the confidence to invest for the long term.

Cash ISAs have been an enormous success, with the number of new accounts more than doubling from 4.6m in 1999/00 to 9.9m in 2005/06 (1). However, only a fifth of the nation’s total cash savings of £567b (2) are currently in cash ISAs, and the average annual amount saved in cash ISAs has consistently exceeded the £2,000 level (3). This suggests to us that there would be massive support for an increase from the current cash subscription limit of £3,000 a year.

The Motley Fool has a strong investment heritage and would also welcome a clearer distinction between the cash and share components of ISAs. The number of share ISAs opened has declined from 4.6m in 1999/00 to 3.0m in 2005/06 (1), with investors reluctant to commit fresh money in the wake of the stock market slump that took place in the early part of this decade.

To encourage more share investment, the Government should consider a change that means putting money into a cash ISA does not reduce the amount people can contribute to a share ISA, as it currently does. The introduction of a £5,000 cash ISA limit and a separate £10,000 share ISA limit would send an excellent signal that the Government is truly committed to helping people save and invest for the future.”