Why savers deserve some autumn cheer

WE DO all we possibly can, week in and week out, to encourage you wonderful readers to save and invest for the future. But with the Bank of England adamant that low interest rates are the only way for the UK economy to stay on track, it is a message that is becoming increasingly difficult to transmit with any semblance of confidence.

Rate cuts are not only decimating most savings accounts but they are savaging pension annuity rates, widening company pension scheme deficits and now threaten the dividends which some pension deficit-plagued companies have been paying income-hungry shareholders. Saving is no longer de rigueur.

It would be nice – indeed heartwarming – if someone among the political elite acknowledged the pain that savers are going through.

One solution would be for the Government to warm the cockles of savers’ hearts by instructing National Savings & Investments to come up with a peace offering. After all, such a ploy has been used before and it is the Government’s savings bank.

In March 2014, the then Chancellor of the Exchequer George Osborne announced the launch of National Savings pensioner bonds with Treasury minions declaring they would help those who have seen their savings ‘eroded by the low interest rates that have been an absolutely necessary part of this Government’s economic plan’.

The bonds, launched nine months later, proved a hit, attracting £15billion from the over-65s.

If Philip Hammond were to repeat such an initiative (he could announce it in his debut Autumn Statement on November 25), he would be loved straightaway by savers, that’s for sure. He would also not face the criticism that was heaped on Osborne.

He couldn’t be accused of buying votes given the next scheduled Election is not until May 2020. When Osborne unveiled pensioner bonds, the Election was 14 months away – just three months away when he extended the offering so more pensioners could get a slice of the action.

Nor would he incur the wrath of banks and building societies which at the time of the launch of pensioner bonds pilloried Osborne for distorting competition in the savings market.

Given the glee with which they have recently cut savings rates, they no longer hold the moral high ground. Most are not competing but simply profiteering at savers’ expense.

So, over to you Mr Hammond. Give savers – all of them, not just the over-65s – a little autumn cheer. Please. We need to keep the savings habit alive. OF ALL the rate cut announcements that have come across my desk in recent days, none has shocked me (and readers) more than that received from NatWest, part of Royal Bank of Scotland which is majority owned by taxpayers.

At the end of next month, NatWest will reduce savings rates on its instant access cash Isa to a pittance. On balances up to £25,000, the rate will come down from 0.25 to 0.01 per cent. Yes, 0.01 per cent, 1p of annual interest for every £100 squirrelled away.

Although rates on bigger balances will be higher, ranging from 0.05 per cent on sums between £25,000 and £49,999 and 0.5 per cent on any balance over £100,000, the bank is taking the biscuit.

Yes, other cash Isa providers such as Hanley Economic Building Society and Santander are pruning rates aggressively – but not as close to the bone as NatWest.

Royal Bank of Scotland is also adopting a discriminatory saving policy, hitting NatWest’s instant access cash Isa savers harder than those with equivalent RBS accounts. Although RBS instant access Isa savers are also seeing rates come down from the end of next month, they will ‘only’ drop to 0.05 per cent on balances below £25,000 and 0.5 per cent on anything above.

Indeed, such discrimination extends to instant access savings accounts. While the rate on NatWest Instant Saver is dropping from 0.25 per cent to 0.01 per cent, the equivalent RBS account will pay a higher rate (0.05 per cent) on balances of £50,000 and more.

The bank’s savaging of savers, described last week by one irate reader as ‘disgusting’, makes a mockery of the words it uses on its websites to promote its wares, most notably: ‘Cash Isas are taxfree savings accounts that can help you reach your savings goals more quickly’ and ‘give your savings a tax-free lift’.

It also makes you wonder why we, as taxpayers, continue to support a bank which offers its savers such a pitiful proposition.

The Chancellor would be loved straightaway if he repeated the bonds initiative