Pocket money... NS&I raises rates

⬤ Savers got a small boost this week with the news that National Savings & Investments (NS&I) was increasing the interest rate on two of its most popular accounts. The rate on its Direct Saver and Income Bonds has risen from 0.35% to 0.5%. It is a step in the right direction, but not a table-topping rate. Ford Money is offering the best rate on instant access savings at 0.73%.

Money held with NS&I is 100% guaranteed because it is backed by the Treasury, making it a popular home for the nation’s savings – it currently holds £205bn. “The amount of cash NS&I can raise in a year is limited to between £3bn and £9bn because it is not supposed to be competing with commercial banks,” says George Nixon in The Times. The target for this financial year is £6bn, but between April and December it has only raised £2.1bn, “so it has room to raise more by increasing rates”.

⬤ The average rent has risen by 8.3% over the past year to £969 a month, according to data from property website Zoopla.

“It’s the worst possible news for renters at a time when they’re already facing price hikes on all sides,” says Sarah Coles in The Yorkshire Post. “Prices have been pushed up by a toxic combination of booming demand and dwindling supply…It’s not just pushing prices up, it’s also making it incredibly difficult to find somewhere to live.”

To address the shortage of rental properties, supply would need to increase by 227,000 homes a year in order to meet the demand for 1.8 million new households over the next decade, reports Jasper Jolly in The Guardian.

⬤ “Almost half a million working families will have some of their child benefit clawed back in the next four years,” says Rachel Rickard Straus in The Mail on Sunday.

The child benefit cap was brought in in 2013, when it was intended to affect “only the wealthiest families”. Households where one parent or guardian earns over £50,000 a year must pay back some or all of their child benefit.

However, the cap has never risen, meaning “rising numbers of less well- off families have been caught by the £50,000 cap”. If it had gone up in line with wage inflation, the cap would be at more than £60,000 now.

The failure to increase the cap means that 478,000 families will start having to pay back some of their child benefit over the next four years, according to research by Interactive Investor. “It is shameful that the £50,000 cap hasn’t risen in line with inflation,” Myron Jobson, personal finance campaigner at Interactive Investor, told the Mail on Sunday. “Many parents earning around that figure would say that they don’t feel particularly wealthy, especially given the rise in the cost of living, which has put extra pressure on household budgets”.