Treasury Minister Emma Reynolds has declined to rule out potential cuts to cash ISA allowances amid reports of significant reductions.
The Chancellor Rachel Reeves is reportedly considering a proposal to slash the maximum annual amount savers can put into cash ISAs from £20,000 to £4,000.
When questioned in the Commons, Reynolds avoided directly addressing the rumoured changes. She instead told MPs that the Government is "committed to promoting savings and investment".
The potential reduction would mark a dramatic shift in tax-free savings policy if implemented. Cash ISAs have been a popular vehicle for British savers looking to protect their money from taxation.
During Treasury questions, Reynolds said: "Cash savings provide a vital source of savings for a rainy day, we recognise that."
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Labour ministers have refused to rule out a cut to the ISA allowance
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The current £20,000 annual allowance has been a cornerstone of the UK's personal savings landscape. Any reduction would potentially impact millions of savers across the country, analysts warn.
The rumoured cut to £4,000 has already sparked concern among opposition MPs and financial experts. Reynolds emphasised the Government's desire to build "a better investment culture in our society".
She expressed concern that currently only "eight per cent of people who can afford financial advice" have opportunities for better rewards.
The Minister also wants more Britons to benefit from "investing in British companies and others in our economy".
Reynolds indicated that the Government is examining the Financial Conduct Authority's review of the "bias guidance boundary".
She reiterated her wish to expand investment opportunities beyond the small percentage who can afford financial advice. Conservative MP Peter Bedford challenged the Treasury on the rumoured changes.
He asked: "Will the Chancellor rule out this punitive measure, that will see savings drop, and push even more people into income tax?"
Bedford also described the potential cut as "widely reported" in his question to ministers. Reynolds did not directly address the specific £20,000 to £4,000 reduction claim.
She instead reiterated that the Government is "committed to promoting savings and investment" and noted that "all taxes will be kept under review".
Treasury Minister James Murray was also pressed on employer National insurance contributions, with the rate expected to rise next month.
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PAHe did not confirm whether the rate would rise again during the current Parliament, leaving Shadow Treasury Minister James Wild to claim that Labour's "jobs tax" would damage the economy.
Wild specifically highlighted concerns about 750,000 hospitality jobs facing employer national insurance for the first time.
Such a move would cost the sector £1billion, according to the Shadow Minister. However, Murray defended the Government's position, stating businesses "benefit from the stability which this Government has brought to the economy".
He acknowledged the NIC changes were "a tough decision" with consequences.
