Five decades that changed personal finance for ever

When Money Mail began, wages were paid in cash on Fridays and tax was 95pc. And everyone knew their bank manager

IT’S September 1966. In the living room the family squints at a blackand-white television with a screen no bigger than today’s laptops.

Coronation Street is king of the soaps while younger children will have watched The Magic Roundabout before bed.

There’s very little daytime telly. Instead, the transistor radio fills the room with pop music from a pirate radio station (Radio 1 will launch next year).

The Beatles’ recently released album Revolver includes the song Taxman complaining about rates of up to 95pc.

Pounds, shillings and pence are the only way to pay the grocer and milkman — and Britain is yet to join the EU (or EEC as it was), let alone leave it.

And when the paper boy drops your Daily Mail through the letter box on Wednesday September 28, 1966, it contains a new feature called Money Mail.

Our first headline was: ‘You slaved for your savings — now make them do the same for you.’ The aim was to help ordinary families make more of their money — just like it is today.

Patrick Sergeant, Money Mail’s founding editor, wrote: ‘One of the most striking things about the last 30 years has been that the rich have grown richer in spite of all the taxes while the poor and those of the middling sort have grown relatively poorer.

‘The reason is simple. The rich give much time to looking after their money. They buy knowledge and avoid taxes.

‘A great need in Britain is for advice about money, how to save it, how to use it, how to spend it and how to avoid paying too much tax on it. The aim of Money Mail is to fill that gap.’

While 1966 was a rather different world to the one around us today, as 89-year-old Mail reader David Dubery and wife Doreen, 90, recall, taking care of your money was as big a priority.

David, a former marine insurance underwriter and World War II veteran, recently stumbled across a budgeting book listing his outgoings from 1959 to 1969.

‘In those days you had to be so careful, writing all your spending down,’ he says. ‘Every penny counted and foreign holidays were almost unimaginable.’

Today, we are still helping families like David and Doreen Dubery, their son Terry, 57, and his children Charlotte, 28, and Samuel, 25, navigate the modern money minefield.

STAYING ON TOP OF YOUR BILLS

IN SOME ways our financial lives have become more complicated.

In the Sixties, there was no need to switch energy providers — they were all stateowned and run by British Gas, the General Post Office and regional electricity suppliers with one tariff for all.

Like David, who’s been with NatWest since 1948, most people stuck with a bank for life — often the same one their parents used.

But in reality, the challenges have merely changed. In 1966, three years before Neil Armstrong would take the first steps on the moon, families had no internet to search for information, no mobile phones, no online banking or ATMs and no tax-efficient Isas.

Your weekly wage came in cash in a brown envelope — or you were paid monthly into your bank account.

You needed cash for your weekly shop and weekend spending such as the cinema — so you joined the long Friday lunch-time queue at your local bank to get the readies.

Credit cards had only just started to appear. And debit cards hadn’t been rolled out yet.

So a home-made ledger for totting up your income and spending was vital.

USING A BOOK TO BUDGET

AMONG the entries in David’s 1966 budgeting book are £11.19s for car insurance (£208.69 in today’s money), £6.1s (£105.66) for gas and £1 (£17.46) for football boots for his son, Terry.

‘Even new socks had to go into that ledger,’ he says.

His car tax was £6.8s (£111.77). Today the actual cost is £35.75. A pint of milk cost 9.5d (73p). Now you’ll pay 43p. For many, those costs took up most of their weekly wage.

Male manual workers earned an average £20 a week (£349.28) and non-manual full-time employees £27 (£471.52) — against an average £505 before tax today. Women earned around half that at £10 (£174.64)and £14 (£244.49). The basic state pension was £4 a week (£69.86); this year it’s £119.30.

Fifty years ago, taxes were eating far deeper into our take-home pay. With Labour’s Harold Wilson in power, income tax was as high as 96.25 pc for very high earners. The basic rate was 41.25pc, compared to 20pc today.

In 1966, the cost of living was rising by 3.9 pc — well above the 0.6 pc of today.

Then you paid two shillings for a pint of beer (£1.75). Today the average pint costs £3.46.

Inflation now includes the cost of coffee pods, computer software and microwaves — unheard of at the time. In the Sixties, the humble fridge, then a newfangled modern appliance to replace the larder, and blackand-white televisions had only just made it on to the list.

But there was still some room left to choose whether to spend or save. David, from Worthing, West Sussex, says: ‘One thing I did spend money on was my son Terry’s education. We sent him to an independent school that cost £7 a month (£122.25). In those days, that was a lot.

‘For holidays we’d go to Broadstairs on the Kent coast. These days my grandchildren are always off on adventures — our elder, Charlotte, is around the world working as an entertainer.’

WHEN CASH WAS STILL KING

YOUR current account would be held with one of the High Street ‘clearing’ banks. You’d sit with your local branch bank manager in his (not her) office to open it.

You came out with the promise of a cheque book in the post along with slips to complete when you paid in money.

Before plastic became king, you used cash to pay for groceries, keeping your cheque book for more expensive buys.

Once you had written your cheque in the shop, you handed it over with your cheque guarantee card — which typically let you write cheques up to £30 (£524). The cashier wrote the card number on the back of the cheque. But things were starting to change.

Barclays offered the first credit card, called Barclaycard, in June 1966 and sent one million to customers.

At first you could only have a card issued by your bank. Now there are more than 60 million in circulation, on which we make 230 million transactions a month. You can open current accounts online, switch between banks easily and pick a credit card issued by any bank to suit your spending habits.

Instead of a home-made ledger, David’s grandchildren Charlotte and Samuel can track their spending on mobile phone banking apps — now used 11 million times a day — and pay by waving their cards at machines in the shops.

MORTGAGE RATES SET BY A CARTEL

FOR your rainy day savings 50 years ago, you chose between the Post Office Savings Bank (now National Savings) or one of 700-plus building societies in the high street.

Once you opened your account over the counter you got a passbook. Each time you paid in or took cash out, the cashier wrote it down in your book with a date stamp. Some societies still offer the passbook today.

National Savings Certificates paid 7.34pc. Company Bonds at up to 9pc were also on offer. The largest Premium Bond prize was £25,000 (worth £436,000 in today’s money) against £1million today.

But the odds of winning the

jackpot have shrunk from one in 9,600 to one in 30,000. There was little competition. Banks were banned from offering savings accounts and the Building Societies Association trade body operated a cartel. It set the rate and all societies offered that one deal.

It wanted to keep rates low for homebuyers and this meant artificially low rates for savers — 5.8pc when the Bank of England base rate was 7pc. There were no tax-free savings plans like cash Isas today.

Today’s record low interest rates mean savers will struggle to find more than 1pc. A stop was put to this in the Eighties, when banks were given the go-ahead to sell savings, investments, and insurance in what was hailed as a one-shop ‘financial supermarket’.

Many big building societies, such as the Halifax and Abbey National (now Santander), later turned into banks, while smaller ones were gobbled up.

Today, new banks offering top rates online make it harder than ever to find the best deals. Investing in the stock market was trickier 50 years ago because information was scarce.

There was just £582 million invested through funds in the mid-Sixties against £315 billion now. Access to the market was largely restricted to the wealthy, who liaised with the bowler hat-wearing stockbrokers in the City. The popularity of investment funds was beginning to grow and then took off with the arrival of Personal Equity Plans (or Peps) — the forerunner to Isas — in the 1986 Budget. Banks and building societies offered them in branches while stockbrokers and fund managers set up telephone and postal services so ordinary people could make use of the tax breaks. Now funds are readily available through financial advisers and online fund supermarkets.

NO HOME LOANS FOR SINGLE WOMEN

GETTING a mortgage for your home was more difficult back in the Sixties.

A shortage of funds meant you could wait months to get one even though your local building society branch manager knew you were able to pay it back.

And single women would automatically be refused a loan, except with a handful of mainly Londonbased societies. Back in 1966 there was one variable mortgage rate of 7.1 pc set by the old building society cartel. Fixed-rate deals were a thing of the future.

But, crucially, house prices were lower — which meant getting on the ladder was feasible for youngsters.

Alan Hemmings was 26 in 1966 when he and his wife Jackie bought their first house for £4,600 on a new estate in Chinnor, Oxfordshire.

Today a detached house in the same village is worth an average of £507,117, according to property website Rightmove. ‘I was able to buy only because I had a reasonable job as a civil engineer and I sold my car — a Humber Hawk — to raise the deposit,’ he says.

The three-bedroom detached home had no garage or central heating. The mortgage was £29 16s a month — that’s £520.42 in today’s money.

‘Our annual income was about £1,600, so the bills were difficult, but you survived,’ says Alan, who was born in West Bromwich.

Reforms in the early Eighties killed off the mortgage cartel and let banks in on the scene, increasing competition. Now there are more than 5,000 different deals on offer. Rates vary from 1 pc to 6 pc, depending on the fixed or variable deal you get.

Yet soaring house prices are taking home ownership out of reach for many young people. Then, the UK average house price was £3,620 (£63,219). Now the average property costs £216,750.

Alan, who has three children — Ben, 42, Joanne, 46, and Simon, 50 — says: ‘I think it was easier for us to get on the property ladder. We helped Simon and Joanne but the way things are going, my grandchildren, Sam, 16, and David and Matthew, both 22, are going to find it even more difficult.’

SIMPLER PENSIONS ...TIED TO YOUR JOB

BACK then, nine out of ten employees were with companies that ran their own pension schemes giving you a percentage of your final salary as an income at retirement.

But not all workers were allowed to join. Women and part-time workers were often excluded.

Even women who had a pension were often manoeuvred out of the scheme if they got married by being paid a ‘marriage gratuity’, which basically bought out their rights.

In the mid-Sixties just over half — 53pc — of employees were members, up from 33pc ten years earlier.

Alan Hemmings, a lifelong Mail reader like his father before him, says: ‘It was hard to save anything else for the long-term because any income was used to buy the house, run cars and so on.

‘In the late Eighties, matters improved to the point where I had surplus cash to explore investment opportunities.’

That coincided with major changes that made private pensions central to retirement planning.

Margaret Thatcher’s pension reforms led to an army of insurance salesmen selling plans linked to the stock market. Since then, state pensions have become more complicated and — apart from in the public sector — many traditional golden company plans linked to salaries have closed to new members.

Alan’s children Ben, Joanne and Simon will have to wait until age 66 or later to get a state pension. His grandchildren Sam, David and Matthew will be automatically enrolled into a pension by their firms — and may be working until they’re 70.

In 1966, men could retire at 65 and women at 60. From 2018, it will be one rule for both sexes.

David Dubery, who’s followed Money Mail’s pensions campaigns for years, says: ‘My pension became more and more important. That’s what I worked to save into — and we can’t complain now.’