The cash ISA allowance is looking unlikely to be cut next week, despite rumours circulating that Rachel Reeves could announce the move in her Mansion House speech on Tuesday 15 July.

Speculation suggested that the Chancellor would cut the £20,000 allowance, perhaps to £5,000, to nudge people to invest more for better returns and to support UK investment.

But unconfirmed reports today suggest Ms Reeves will instead focus on new plans to provide consumers with the information and support they need to invest.

The Government is expected to continue talking to industry members and others about the options for reform, with a broad consensus that the UK’s savings and investment culture needs to be encouraged.

A cut in the cash ISA allowance could have encouraged more investment in stocks and shares, some parts of the industry have argued.

Sarah Coles, head of personal finance, Hargreaves Lansdown, said that “rushing into a change” would have been “a real blow for savers and may not get more people to invest anyway.”

She said: “Changing the boundary on advice and guidance will be truly transformational. Once companies can offer targeted support to their clients, it will help more people build their understanding and confidence, so they choose to branch out into investment because they know it’s right for them – rather than feeling pushed into it to retain their ISA allowance.”

Ms Coles added: “There is a real opportunity to simplify choice and open up investment opportunities. Dropping the ‘stocks and shares’ language and updating the ISA to call it an investment ISA would help overcome needless confusion.”

Simon Merchant, chief executive of savings platform Flagstone, said: “It’s reassuring to see the Chancellor listening to industry and stepping back to consider the broader implications surrounding cash ISAs.”

He said cutting the allowance would have had a significant impact on both the savings and lending markets.

Mr Merchant added: “We welcome the chance to have a meaningful conversation with the Treasury - one that properly considers the nuances and real-world consequences of such a sweeping change. This policy feels like it was cooked up by people with vested interests. Now it’s time for the government to do the right thing and ensure people have the support they need to make good personal finance decisions.”

Jason Hollands, managing director of Bestinvest by Evelyn Partners, said: “Despite the apparent retreat on cash ISAs, this does not mean ISAs are out of the woods yet. With the Government seeing ISAs as a way to boost UK growth, the Chancellor may well be very receptive to the lobbying by some in the City who argue stocks & shares ISAs should be refocused on UK equities, either wholly or by requiring a minimum allocation.

“If we are to get more people investing in stocks & shares ISAs, particularly in UK equites, I would urge the Chancellor to consider more positive, constructive moves such as scrapping stamp duty on UK share purchases in ISAs, so they live up to the tax-free promise in full.”