JEFF PRESTRIDGE: This is why savers should be very, very angry at Reeves' mad, bad plan to slash the annual cash Isa allowance

In nine days, and after months of speculation, we should finally find out the damage that the Government wants to inflict on our tax-friendly Isas.

I warn you, it isn’t going to be pleasant. For those who prefer cash to shares, prudence to risk taking, Labour is going to leg you over something rotten. Prepare to be angry. Very angry.

As part of her Mansion House speech in London a week on Tuesday, Chancellor Rachel Reeves is likely to confirm that, from next April, savers will no longer be able to put up to £20,000 a year into a trusty cash Isa.

In future, savers will be treated as second-class Isa citizens, with first-class citizenship reserved for those who want to invest.

While investors will still have access to the full £20,000 annual allowance, cash savers will be able to tuck away considerably less – maybe as little as £4,000.

This seismic change to Isas will be sold to the nation on the grounds of economic good.

The pitch will go as follows: the more money that flows into shares (preferably UK shares), the better the stock market will perform, benefiting listed businesses, investors and the wider economy.

Although some people in the City have swallowed this explanation hook, line and sinker, they are in a minority. Most professionals that have opined on this overhaul of Isas are singularly unimpressed.

Last week I chatted to Charlotte Ransom, chief executive of wealth manager Netwealth. She spoke for many in the City when she said that ‘cash shouldn’t be treated as a second-class asset’.

She added: ‘Cash serves important roles. It preserves liquidity, provides a buffer against stock market volatility and supports shorter term financial goals. For some, cash will be the most suitable option for all or part of their Isa allowance. It shouldn’t be denied them.’

She is dead right. Cash Isa savers should not be sacrificed at the altar of an all-out investment agenda.

Two final thoughts. First, if the Government is really determined to go ahead with its ‘investment focused’ Isa rebrand, it will surely have to look at whether the current rules are fit for purpose.

If they stay as they are, there will be nothing to stop someone taking out a stocks and shares Isa and using it simply to shelter £20,000 in cash rather than investments. Isa providers, such as AJ Bell and Hargreaves Lansdown, pay half decent interest on such cash balances.

Similarly, there would be nothing to stop someone transferring funds from an existing stocks and shares Isas into a cash Isa.

Secondly, my view on this mad, bad Isa overhaul is that it is not just being driven by a Government desire to get us all investing in UK plc.

It is part of a grand plan to cut the cost of Isas (more than £4billion of forgone tax a year) by forcing savers away from cash Isas and into savings accounts where interest earned is liable to income tax.

From a business point of view, Santander’s acquisition of TSB ticks many boxes.

It will considerably scale up Santander’s UK operations, making it the country’s third largest bank (based on personal account cash balances) with 28 million customers. Only Lloyds, which once owned TSB, and NatWest will be bigger.

It will also allow the combined entity to strip out back-office costs (make staff redundant) and axe duplicate branches, generating savings of some £400 million a year – and by implication fatter profits for Santander.

Yet from a customer perspective, the positives are less clear cut.

In theory, any administrative savings should in part flow through to keener financial deals for customers: lower mortgage rates, higher savings rates. Yet that’s far from guaranteed – it hasn’t always happened in the past when banks have been smashed together.

A larger high street network – Santander currently has 349 branches while TSB has 175 – should also give customers access to a wider choice of local branches. But that will only happen if the two banks’ products end up on a common IT system, allowing customers to pick and choose which branch they use.

Such migrations do not always go swimmingly, as TSB knows all too well. Seven years ago it suffered a calamitous IT meltdown when customers’ accounts were being migrated from Lloyds to new owner Sabadell.

We also do not know whether the TSB brand will remain on the high street or disappear. Mike Regnier, boss of Santander UK, says the deal will ‘materially’ enhance competition in the banking industry. How has he arrived at this conclusion? You don’t have to be an economist to understand that when you take out a business rival, it reduces – rather than enhances – competition.

I asked the bank to quantify the number of overlapping branches that the two brands have. ‘It’s not a number we are sharing at the moment as it could be misleading,’ Santander said.

A side-step of which the late great Welsh rugby international Barry John would have been proud.

But my moles tell me there are 100 locations where Santander and TSB branches are near neighbours. Come this time next year, I would not be surprised if 524 branches had been slimmed down to south of 400. Customer friendly?