BOYCOTT THE GREEDY BANKS

With just one in seven accounts passing on rate rise to millions of savers, Bank of England deputy says ...

SAVERS were urged yesterday to boycott banks that have not passed on this month’s rise in interest rates.

A senior Bank of England official said families should shop around for a better deal if they are missing out.

The Bank’s base rate went up by 0.25 percentage points three weeks ago but just one in seven savings accounts has followed suit.

Barclays, Lloyds, Santander, Halifax, NatWest, HSBC and RBS have not passed on the full rate rise to all customers. Banks have been much quicker to raise their mortgage rates.

Sir Jon Cunliffe, who is a deputy governor of the Bank, told MPs yesterday there were often ‘lags’ between its hikes and changes in high street savings rates.

But he said where rates did not move savers should check best-buy tables and say: ‘If I can get a better rate elsewhere I should do that.

‘The Government has put a lot of effort into making it easier for bank accounts to move.’

The Bank raised rates to 0.5 per cent on November 2 – the first rise since July 2007 and a boost for savers hammered ever since the financial crisis. Theresa May’s official spokesman said at the time: ‘We would expect to see

higher interest rates passed on to savers. Some banks have already said they will pass on the increase to savers and we would expect others to follow suit.’

Announcing the rate hike, Bank governor Mark Carney said: ‘We do expect it to be passed on. Obviously we will be watching closely.’

Yet savings rates have gone up on just 15 per cent of accounts, according to the website Savings Champion. Lloyds will increase just nine of its 20 variable savings rates – and not all of these will get the full 0.25 percentage point increase.

Halifax, part of Lloyds, will increase 16 of its 27 variable rates at the start of next month.

But savers in its 60 Day Gold, Bonus Gold Account, Monthly Saver and Passbook accounts will receive an increase of just 0.05 percentage points to 0.1 per cent.

Barclays will increase 12 of its 14 variable accounts by an average of 0.15 percentage points. Just eight accounts will receive the full 0.25 percentage point increase.

Santander is set to increase just a quarter – nine of its 35 variable rate accounts. Customers in its Instant Saver, for example, will see their rates rise from a meagre 0.01 per cent to 0.1 per cent – just 0.09 percentage points.

However 80 per cent of Nationwide’s variable rate accounts have seen an increase.

Mark Rennison, the mutual institution’s finance chief, said: ‘We could have taken a different decision and used this as an opportunity to widen margins, as it appears some of our banking competitors may be doing.

‘But given current performance that was neither necessary nor appropriate for a member-owned society.’

Tory MP Nicky Morgan, who chairs the Commons Treasury committee, said: ‘Many savers are older people. They rely on the interest rates on their savings. They have had almost no interest for a long time now.

‘Expect it to be passed on’

Isn’t it reasonable that when the base rate does change that banks should react to that and treat their savers to that increase?’

Sir Jon, who was giving evidence to the committee, said it was not up to the monetary policy committee, the panel at the Bank of England that sets rates, to force lenders to pass on hikes to savers.

‘As a citizen I might well agree that that is what I would expect to happen but from an MPC point of view we have enough responsibility already without pushing into those areas,’ he said.

Ian McCafferty, who also sits on the nine-strong MPC, said: ‘If there is evidence that the competitive market is not functioning properly such that these changes in Bank rate get passed through over the course of time then I think it’s a recourse to the competition authorities.’

He added: ‘It’s the role of the competitive market to determine what individual banks charge. There are a number of banks – those that are usually branched in the challenger category – where we’re seeing a little bit more reaction.

‘And I would hope and I fully expect that over time, the competitive nature of the market as far as savers are concerned would therefore lead banks who may be a little more slower to react, to have to react to that competitive pressure.’

Anna Bowes of Savings Champion said: ‘Some of those providers who have not passed on the full base rate rise will claim that this is because they

‘Easier to move accounts’

didn’t cut rates by the full amount last August, when the base rate fell to 0.25 per cent.

‘However, when accounts such as the Halifax Liquid Gold were paying just 0.1 per cent at the time, it was impossible to pass on the full drop.

‘Any savers who discover that they are languishing in one of these appalling accounts should look to switch immediately, as there are much better rates available.’

A spokesman for UK Finance, the banking trade body, said: ‘Providers must balance the increased cost of customer borrowing with the savings returns they offer when competing for business, while serving both savers and borrowers in a fair and transparent way.’

The best easy-access account is with Charter Savings Bank. It pays 1.32 per cent, according to Savings Champion.

WHEN the last of their four children moved out of the family home in 2014, Jeremy and Amanda Lucas knew it was time to downsize.

They found a quaint two-bedroom cottage perched on a hill overlooking Hastings, the seaside town where their children had grown up.

No longer running a large five-bed house, they expected cheaper bills. But when Jerermy, 60, and Amanda, 54, received their first council tax letter in 2014, the bill was £1,459 — more than they had paid for their family home.

Worse still, Jeremy spoke to his neighbours and discovered that someone a few doors down was paying just £1,277 a year — £182 less — for an almost identical property.

The English teacher wrote to his council to challenge the rate, providing evidence from neighbours that it was out of step with homes nearby. Officials replied saying he was paying the correct amount according to the tax category that his house fell into — band C.

So Jeremy asked for his band to be reassessed by the Valuation Office Agency (VOA), the government body that works out what properties in England and Wales are worth and into which category they fall.

When he was turned down again, Jeremy took his case to an independent tribunal, a panel of volunteers who operate like magistrates, which finally agreed to move his property down by a tax band, saving him £182 a year.

A Money Mail investigation today reveals how baffling — and inexplicable — quirks in Britain’s council tax system have left homeowners like Jeremy facing a bills lottery.

In some cases, billionaire oligarchs in West London pay less council tax than owners of modest family homes in Wiltshire. Others are hit with higher bills because someone extended their property decades before they moved in.

Houses just feet away from one another are being charged different rates depending on the view from their living room window. Yet Jeremy and Amanda Lucas are among just one in five homeowners to launch successful appeals against these inconsistencies every year.

TAX BANDS MADE UP ON THE HOOF

COUNCIL tax pays for local services such as highway maintenance; the police and fire services; libraries; planning; transport; rubbish collection; and leisure and recreation.

Anyone over 18 has to pay, regardless of whether they own or rent their home, though some are eligible for discounts. If you are the only adult in the house or share your house with people who are exempt, such as a full-time student or someone with a mental disability, you should ask your council for a reduced rate.

How much a household has to pay is mainly determined by the value of the property and where it sits in eight valuation bands, ranging from the lowest, A, to the highest, H. They are calculated so that people on the top rate pay three times as much as those on the bottom.

Much of the inconsistency of the modern council tax system dates back to its birth in 1991. Every property in the UK was supposed to be assessed based on size, layout and location and classified into bands.

But many were subject to so-called ‘second-gear’ valuations instead. This involved estate agents, who were short on time, driving past streets of houses and guessing the properties’ value without stopping for a proper look.

In other words, your current council tax bill could be based on a piece of guesswork done 26 years ago. As a result the bands are often wildly out of kilter with the housing market.

For every house built in the meantime, assessors had to work out what it would have been worth in 1991 and assign a band.

If you suspect you are in too high a council tax band, you can challenge it by contacting the VOA or the Scottish Assessors Association (SAA). They may send someone to assess your property. If the agency won’t budge, you can appeal to the Valuation Appeal Committee and present your argument. There, you can represent yourself against experienced valuations officers who know every nook and cranny of the labyrinthine tax system.

And success is far from guaranteed: of the 42,250 challenges from April 2016 to March 2017 in England, the VOA refused to change the band in 31,550 cases.

Of the 1,400 cases which were taken to the independent tribunal in that time, just one in five were successful.

MANSIONS COST LESS THAN FAMILY HOMES

PICTUrE a £136.4million penthouse apartment in London’s Knightsbridge.

The service fees alone are more than £3,000 a week and it’s no more than a five-minute walk to the famous Harrods department store. Now consider a three-bedroom semi in rural Wiltshire, on the market for £335,000.

Its driveway can accommodate two cars and it boasts a modest garden. It may seem hard to believe, but the owner of the penthouse — rinat Akhmetov, who happens to be Ukraine’s richest man — will pay £344 a year in council tax (at £1,376) than a family moving to Wiltshire (who will pay £1,720). This absurd situation is playing out across the country, where wealthy homeowners are asked to contribute less than those in dire financial situations.

Although the SSA is responsible for working out which council tax band each home should fall into, it does not decide

what those charges should be. That’s up to individual councils. Council tax accounts for around 25 pc of local author ity income; the rest mainly comes from central government grants. so some councils charge households more if their handouts don’t cover their expenditure

despite boasting some of the world’s most expensive homes, London boroughs including westminster and wandsworth impose some of the uK’s lowest council tax bills. No property in westminster can be charged more than £1,376.28 a year.

Cliff dalton, of the Chartered Institute of Public Finance and Accountancy, says: ‘because the value of the housing market has soared and there hasn’t been a revaluation since 1991, the council tax system feels out of sync.

‘This is why you might find someone in central London living in a house worth £1 million but on a banding that seems quite modest.’

A spokesman for wiltshire Council says: ‘It is difficult to compare wiltshire and London as there are many factors to consider, such as the income generated by each authority and its spending power. London would bring in much more money through car parking charges.

‘shire counties’ annual public sector spending is £550 per head compared to more than £1,100 in London. we also face pressures that a city does not due to our rural location which means we have faced council tax rises.’

From April 2018, westminster council will begin asking homeowners with properties worth £10million or more if they want to make an additional, voluntary, council tax contribution.

Councillor Nickie Aiken says: ‘westminster is home to some of the poorest and richest people in the country and some of the most expensive real estate in the world.

‘but while there is a reality to the cost of living in a capital, this is a council and a Government committed to fairness. There is more we can do to help those who are struggling to pay the bills.’

EXTENSION TRAP ON NEW HOMES

uP To 1.6 million homes pose a council tax trap for prospective new buyers in england and wales.

when a homeowner adds an extension to their house, it can push the property into a higher council tax band.

but, bizarrely, the new charges are not applied until the house is sold.

That means you can do up your house and leave the higher council tax bill for the next occupant.

This little-known rule should take effect on the first sale of the property after it’s been improved.

After the sale goes through, the voA judges whether the changes are significant enough to change the property’s banding. estate agents should warn prospective buyers that the house has been marked with an ‘improvement indicator’. but this isn’t always the case.

Pam Allen is paying an extra £30 a month in tax for a loft conversion that was done by a former occupant almost 30 years ago — though the house has passed through several owners since.

Previous occupants had all paid band e rates and Pam had no reason to think her bill would be any different.

but after buying the detached bungalow in stockport in 2014, a valuations officer from the council assessed the property and said the value added by the loft pushed it into band F.

They told Pam she was the first person to buy the house after the improvements had been made.

In fact, the work had been done in 1990 and the house changed hands at least twice before Pam bought it.

The retired teaching assistant, 69, who lives on her own, says if she had known the property was a band F she would not have purchased it.

‘It’s galling to be the only person in a string of owners to be charged extra for work that was done decades ago,’ she says.

Generally, the voA hears about extensions after a resident has applied to their local council for planning permission — but this is not normally required for loft conversions.

If you are considering buying a home and are not sure if it has been extended, the property council band list on voa.

gov.uk shows if improvements have been made to a property.

depending on how the improvements change the value of your home, your council tax banding could change.

when Money Mail put Jeremy, sarah and Pam’s cases to HM revenue & Customs and the department for Communities and Local Government they said they do not comment on individual cases.

The Government adds that in its view a council tax revaluation is unnecessary as it would cost the taxpayer millions and could result in higher bills for some homeowners.

It further adds that council tax is cheaper in real terms today than it was in 2010.