The chief executive of Leeds Building Society said that people suffering several years of a 0.5 per cent interest rate were not being incentivised enough to carry on saving.
He said: “A key part of our business model as a building society is based on providing security and value for savers. We want to do what we can to support savers and encourage sustainable and responsible long-term financial behaviour.
“The chancellor needs to make life easier for those millions of savers who have suffered in the low-interest-rate environment. We know our members value security and peace of mind, and many investers favour cash as the least-risky savings choice.”
Mr Hill asked George Osborne, chancellor of the Exchequer, to help savers by allowing them to put more of their money into tax-free investments.
He said that the annual subscription permitted for cash ISAs should be raised from £5,760 to £25,000, which Mr Hill said would “significantly increase” the proportion of tax-free interest savers could earn on their nest egg.
At the moment, £5,760 can be put into a cash ISA, or £11,520 for a Stocks and Shares ISA, or a combination of the two. These allowances will increase to £5,940 or £11,880, respectively, for the financial year 2014/5.
Mr Hill added: “Increasing the tax-free savings allowance would act as an extra incentive to more people to start and keep the savings habit, which surely was a key aim of creating ISAs in the first place.”
Anna Bowes, adviser and co-founder of online savings website SavingsChampion.co.uk, said: “I think it is disgraceful that people who have been investing their whole life cannot switch a high amount of that into cash Isas, which would reduce the risk of their portfolio. The only way they can do this is to lose their Isa status so it is time the limits were equalled up for cash savers so that people can reduce the risk of their investment portfolio while retaining the cash-free status of their investments.”