Former chancellor Rachel Reeves vowed to turn Britain into a nation of investors, but this week’s Budget U-turn pleased cash-hoarding savers.Next April, the annual allowance on tax-free cash ISA accounts will no longer be slashed from £20,000 to £12,000 for under-65s, as first revealed by the FT.

This was undoubtedly the right call from new chancellor John Healey. However, he shares his predecessor’s aim to get more Britons investing their money for the long term. Sensibly, he thinks that offering the carrot of a small incentive rather than the stick of slashing cash savings allowances is the best way to do this.

An estimated 7mn UK adults have more than £10,000 in cash savings and could potentially benefit from investing their money tax-free for the long term in a stocks-and-shares ISA, yet comparatively few UK adults hold these accounts.

Healey’s Budget speech trailed the concept of a “Starter ISA” to encourage new investors, vaguely promising that details would be developed with industry.

The idea originally came from Martin Lewis, founder of Money Saving Expert, who stressed this week that incentivising people to open stocks-and-shares Isas would be better than creating yet another ISA product. Every investment platform I have spoken to this week agrees. If we want to make investing as easy to do as saving, simplicity must be the watchword.

“ISAs have unfortunately become the plaything of the chancellor of the day,” says Alex Campbell, director of external affairs at Freetrade.

The UK investment landscape is littered with legacy products with different sets of rules, and Reeves’ proposals would have added even more complexity with daft restrictions designed to stop people holding cash within stocks-and-shares ISAs. The Treasury has thankfully confirmed these will be swept away.

Ironically, threatening to slash the cash ISA allowance prompted consumers to stash even more away into savings. Cash ISA balances are approaching £500bn and account numbers are at record levels, according to a CACI analysis this week for Yorkshire Building Society.

So what kinds of behavioural incentives could persuade more Britons to invest?

Lewis suggests a bonus of up to £300 on the first £3,000 invested, the cost of which could be split between providers and the government. Some platforms already offer cashback or free shares worth £100-£300 on new accounts, but having a standard, permanently available incentive gives people something to talk about and acts as a psychological buffer to offset any investment losses (studies show the fear of losing money is the biggest barrier to getting started).

It’s a great idea — but we must not let rules and restrictions blunt the impact of any incentive that is introduced. “I’m already shuddering, thinking about how HMRC and the Treasury will try to define eligibility for a ‘first timer’ product,” says one insider.

Would children whose parents have already opened them a Junior ISA investment account still qualify? There’s also a debate about age limits. I am not in favour of restricting this to the under-40s. Many people in their fifties are not investing and could still have 15 years until retirement.

If new investors are given an upfront incentive to get started, will they be obliged to keep their money locked up for a set period? The more rules there are, the greater the risk of being penalised for being on wrong side of them. Just look at the mess of the Lifetime ISA for the under-40s, where tens of millions of pounds’ worth of penalties have been charged on withdrawals.

However, one of the Lifetime ISA’s most powerful features is immediately receiving a 25 per cent bonus on any money invested, which platforms say encourages younger customers to develop a regular investing habit.

Others stress the benefits of starting small. Moneybox customers have invested nearly £240mn into stocks-and-shares ISAs over the years simply by opting to round up their digital “spare change”. This runs counter to perceptions that investors need to be wealthy and invest bigger lump sums in one go.

Better financial education would improve our chances of making the right long-term financial decisions, though this should not stop at the school gates.

A nationwide campaign backed by a financial incentive would be a powerful way to quell the “manosphere” of TikTokers in rented Lamborghinis who peddle dubious trading courses, claiming they can teach you how to get rich.

Too many people equate investing with gambling, wrongly believing that it’s all about stock picking and market timing, not investing what you can into a cheap index fund every month. Many Britons are scared of short-term losses and not focused on long-term gains. Risk warnings on investments put us off, yet there are no risk warnings about inflation on cash ISAs.

So how could we incentivise investors to learn more?

Regulators take a dim view of the “gamification” of investment apps, but done properly, this could be an effective tool. Some crypto apps have a “learn and earn” programme, where novice investors complete quizzes to earn tokens worth a few pounds that they can then invest.

Moving this concept to a regulated field could reward those who watch educational video content and answer three questions correctly with a small credit for learning about compounding, risk factors, investment choices and tax benefits.

To be really joined up, it could be linked to financial education modules in the new school curriculum that is promised for 2028.

And why not incentivise 17-year-olds with Junior ISAs to complete modules about investing to prepare them for when their account matures into a stocks-and-shares Isa?

Small nudges can have big results. About 25 per cent of new cash ISA savers on the Hargreaves Lansdown platform go on to open an investment account within six months, and the firm believes targeted support can only increase this.

This is a regulator-approved way of nudging certain customer groups. A cash-heavy customer might be told: “People like you tend to invest a higher proportion of their savings. Here’s a range of options you might like to consider.”

With Christmas approaching, there’s nothing to stop FT readers with younger relatives from coming up with an incentive of their own. Offer them £50 paid into a stocks-and-shares ISA on a platform of their choice in return for a simple lesson about how to get started over a glass of something festive. As they get older and build an investing habit, this will be a gift that keeps on giving.