Welcome guidance or the savers’ nightmare?

        I can understand why savers are not happy this morning. They heard yesterday from  The Governor of the Bank of England   that Base rates are going to remain nailed to the floor for the time being. There is no relief in sight for savers, who have had a rough deal on savings rates ever since the crash in 2008. It will be the borrowers, including the state, that spend us out of the  crash and slump of the last decade. They will enjoy  more cheap borrowing this decade to spend beyond their means. The savers will not be allowed much return on their money, so they will lack spending power. They indeed will spend much of their time awaiting the knock at the door from the taxman, ever more inventive in finding  ways of parting savers from their money.

         When Mr Carney first thought of offering guidance about interest rates, he probably had in mind the need to tell people interest rates would be low for a long time to try to kick start the UK recovery. The background was worries about triple dip recessions, forecasters revising their growth forecasts down, and general pessimism about the UK’s prospects.
 
             As he was preparing to take up the job, the need for future guidance also seemed to be underlined by the market wobble over the question of when and how Quantitative Easing would be reduced and stopped in the USA. A few words from Mr Bernanke at the Fed caused a sharp fall in markets, as people rushed to the premature conclusion that quantitative easing would stop and interest rates would go up  before the end of this year. Mr Carney probably thought he needed to tell the markets that whatever happened to US rates, UK rates were fixed to the floor for the time being.
 
          So it is one of those ironies of history that by the time Mr Carney came to give us his conclusions on forward guidance the backdrop was transformed. The UK was no longer going sideways, facing treble dip or suffering from an insurmountable  double dip. The outlook as measured by second quarter GDP, forecast third quarter GDP, confidence indicators for manufacturing and services, and retail sales was suddenly bulllish. Forecasters are all busily revising up their 2013 and 2014 forecasts for growth. The OBR had  to correct the misleading impression of double dip that the historic figures showed.
 
             By the time Mr Carney spoke yesterday the question was not could he by his words bring the UK economy to life. It was rather, could he by his words avoid damaging the faster recovery now underway? Could he even satisfy the minority of  his critics who were massing on the other side of the argument, to say that the danger now is too much cash and credit in circulation, too many pressures leading to  asset bubbles and general inflation?
 
             As it turned out Mr Carney’s statement was well judged, and should do no damage. It alters the reality of the position very little if at all. Most of us assumed the UK authorities were aiming to keep Base rate down at 0.5% this year and next to give the recovery a fair wind. Most of us forecast that the authorities will allow some growth in asset values  as part of confidence boosting measures, without it getting out of hand any time soon.
 
              The new Governor has said interest rates will stay down at 0.5% all the time unemployment is above 7%. He has forecast that unemployment will not drop below this figure this year next year or into 2016. The Bank would only reconsider this position if inflationary expectations rise too far too fast, or if there is potential damage to the financial system ahead, or if forecasts of inflation rise too high. These statements are delicately balanced. It means there are several circumstances in which short rates could have to rise earlier than planned. The central case of the Bank’s forecast is that short rates remain at 0.5% for at least two more years. That should not come as surprise to anyone who has been following this debate.
 
          Now all that remains is to worry lest the economy does too well! Only if asset prices take off, activity puts upwards pressure on prices, and inflation expectations surge should borrowers worry about rising short term interest rates. That sounds much like the world we thought we lived in yesterday. It does not change my forecast of a reasonable recovery this year and next. Nor does it lead me to think, as some of the critics suggest, that the Bank is yet taking too much risk with excessive money and credit. It needs to be watched from here, but it is not yet a nasty bubble in the making. Meanwhile , pity the poor savers. They have to sit tight for very little, or take more risk in the hope they win rather than lose.

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151 Comments

  1. Gary
    Posted August 8, 2013 at 5:17 am | Permalink

    Rob the saver to bail out the feckless and the reckless. People who worked their entire lives, sponged off nobody, took care of their own affairs are now being ruined. What kind of criminal policy is that? We are living in a kleptocracy, we are living in Gomorrah.

    • Jerry
      Posted August 8, 2013 at 8:19 am | Permalink

      Gary: “Rob the saver to bail out the feckless and the reckless

      Hardly robbing the saver, or did did I miss Mr Carney lowering rates even further and thus into negative figures were you pay to keep your money safely in the bank?!…

      Oh and I bet many a saver has used credit to spread the payments, perhaps being able to use just the interest for such payments rather than having to touch the capital and as such these people are just as much to blame for the worldwide “credit problems” faced by the banks as anyone else.

      • a-tracy
        Posted August 8, 2013 at 8:51 am | Permalink

        I don’t understand your damning of savers Jerry, do you have a state or large employer guaranteed pension to rely on? Its the only explanation I can find for a person who doesn’t think they need to save for ill health or retirement.

        People with state/large corporate final salary pensions have a massive safety net that the future taxpayer is expected to support their generous pension provision which they can claim at a much younger age than the rest. Therefore, they don’t have to save in the same manner as ‘none-defined benefit pension’ workers do. These people get whacked twice, one in low returns on the money they tie up in their pension and poor annuities with low transfer to spouse, and again in their low returns on their safety net savings.

        The lawmakers and bankers like Mr Carney and his predecessor dont have to worry about this because they’re ‘Alright Jack’.

        • a-tracy
          Posted August 8, 2013 at 8:56 am | Permalink

          By large corporate I mean the ex nationalised industries like BT, British Gas, some private sector contractors to the Councils whose workers are still in the final salary schemes of the Council, The Post Office, plus all of the private sector GP’s who have state pensions.

          • Nina Andreeva
            Posted August 8, 2013 at 10:18 am | Permalink

            Even if he has, he has every thing to worry about. Policy remains to keep buying gilts to keep the yields down, which progressively gets harder. As the more you print it will soon become obvious to some investor somewhere in the world that these government loans are worthless and then there is a mad rush to the door as everybody tries to dump them. How then does the state pay its bills and let alone keep paying the handouts?

            The fun also then spreads to the banks and insurance companies (who build their solvency around gilts) suddenly all finding themselves insolvent. Be warned it will all happen very quickly and out of nowhere before you can even get to the soon to be emptied supermarkets.

            JR I am sad to believe thinks that Osborne & Carney have every thing under control (or at least that something will turn up), the green shoots are poking their way up and the economy is at near escape velocity.

          • a-tracy
            Posted August 8, 2013 at 2:41 pm | Permalink

            Good point, depending on future generations to fund promises made forty or fifty years before is a bit like the rest of the work force who were expecting a decent state pension at 60 and 65 for their national insurance contributions. A great big ponzi scheme that is now called a ‘welfare benefit’.

          • APL
            Posted August 11, 2013 at 9:42 pm | Permalink

            Nina Andreeva: “Be warned it will all happen very quickly and out of nowhere… ”

            This.

        • Jerry
          Posted August 8, 2013 at 1:59 pm | Permalink

          a-tracy: “I don’t understand your damning of savers Jerry

          I’m not damming them, just not placing them on pedestals, and nor should they be exempt from the pain that the majority has been and still is feeling. Oh and I quite expect that I will have to take a hit on my standards of living when I retire -if I ever actually retire- just like the many of ordinary (what used to be called “working class”) people… The country is up to its chin in the water and the level is still rising, what do some not understand?…

          • a-tracy
            Posted August 8, 2013 at 3:27 pm | Permalink

            If it was not for the savers in China we would not be having this conversation as the Country would be well and truly BUST. How do you expect the Governments of the western democracies to fund their excesses? By encouraging consumers to consume at ever greater rates, far in excess of their abilities to repay the debt incurred whilst consuming, we find ourselves in an ever increasing trap. If we don’t stop the rot and encourage people to put by for the future (and that’s why savers should get a respectable interest rate to encourage more of it) what will you do when the Chinese suddenly decide that they will not fund the rest of us and our feckless ways?

            You can only spend your way out of a problem if in the act of spending you produce more than you consume and have a market for the surplus. Spending for spendings sake only puts off the inevitable until the new credit runs out.

          • Jerry
            Posted August 8, 2013 at 6:08 pm | Permalink

            @a-tracy: “By encouraging consumers to consume at ever greater rates, far in excess of their abilities to repay the debt incurred whilst consuming, we find ourselves in an ever increasing trap.

            Oh right, so the debt bubble/crisis has been caused by the “feckless” who spend hard-cash [1] (or do without) and not by the “savers” who have used credit to off-set the payments because they did not want to cut into their capital and thus pay a single lump-sum, wishing only to use the income received from the interest….

            “Spending for spendings sake only puts off the inevitable until the new credit runs out.

            Exactly, but only if credit has been used, spending CASH is not going to cause a credit problem! What we need to do is, yes, carry on spending (and if possible, buy British manufactured goods, if I’m still allowed to suggest such a thing) but spend CASH, not keep buying the next must have item on the “never-never”. Saving and then using credit to fund what could have been bought as a CASH purchase is what has caused the debt crisis, not the CASH buyer who hasn’t saved.

            [1] cash, cheque or debit card (and in some cases, a credit card that is paid off in full, not rolled-over or transferred to another debt account, each and every month

          • Bazman
            Posted August 8, 2013 at 7:41 pm | Permalink

            What you are saying Jerry is that prudence should not be rewarded in any way. Ave’ a fag an think about why they should be rewarded. Plunderers of their own property deserved to be punished which in a nutshell tells us bankers as plunderers of other peoples property need to be doubly punished, but as we live in a society where this is encouraged by such examples as the utilities, especially water, leaveraging debt to pay dividends whilst hiking up bills and causing pollution all at the same time as begging from the taxpayer. This is where we are at. Censor that one John..

          • Bob
            Posted August 9, 2013 at 1:25 pm | Permalink

            @Jerry
            “I’m not damming them, just not placing them on pedestals, “

            Its nothing to do with pedestals, its about the banks borrowing at 0.50% and lending at 8%.

          • Jerry
            Posted August 9, 2013 at 5:01 pm | Permalink

            @Bob: That’s “Capitalism” for you, and market forces, if you don’t like it we could always give socialism a go, or at least mutual banking… 😛

          • Bob
            Posted August 10, 2013 at 7:29 pm | Permalink

            @Jerry

            In a capitalist system the banks wouldn’t be supported by the taxpayer.
            The current banking system in the UK is a cartel and the claimed “independence” of the BoE to set the base rate is a sham, only a politician could conceive a link between employment stats and interest rates.

          • APL
            Posted August 11, 2013 at 9:31 am | Permalink

            a-tracy: “I don’t understand your damning of savers Jerry”

            It’s very simply A-T, Jerry is a socialist, anyone with capital is a wicked evil person and the state is the only legitimate source of wealth.

            Jerry: “That’s “Capitalism” for you, ”

            Neatly illustrating himself to be incapable of distinguishing between Capitalism and Fascism – or the Socialistic command economic model that is currently practiced in the UK, his criticism of any capitalist economic mechanism is utterly worthless and should be discounted accordingly.

          • Jerry
            Posted August 11, 2013 at 9:35 am | Permalink

            Bob: “In a capitalist system the banks wouldn’t be supported by the taxpayer.

            Nor would your deposited money either, so as I said, you only want capitalism when it suites you, when your luck runes out you want the state to safeguard your money, either by bank deposit protection schemes or artificially high interest rates.

            Indeed perhaps we should have just allowed the banks to fail, go bankrupt, poeple like you would then have been complaining that you had lost all your money in the same way as people lost it in the 1920s crash. Nothing worse than the ranting fair-weather capitalist who only wants a fair wind and the “Head I win, Tails I win” casino style gambling…

          • Bob
            Posted August 11, 2013 at 11:14 am | Permalink

            @Jerry
            “perhaps we should have just allowed the banks to fail, go bankrupt, poeple like you would then have been complaining that you had lost all your money in the same way as people lost it in the 1920s crash”

            The deposit protection scheme would have protected small savers. The Brown bailouts protected the wealth of very fat cats indeed.

          • Jerry
            Posted August 11, 2013 at 7:19 pm | Permalink

            @APL: Wrong again… I just have more of a moral compass than unthinking people like you APL.

          • Jerry
            Posted August 12, 2013 at 7:48 am | Permalink

            Bob: “The deposit protection scheme would have protected small savers.

            Thus you are thus a fair weather capitalist, wanting to socialise the debt problem when it is beneficial but not when it isn’t. If you wanted capitalist free market rules to apply then you would have lost all your money, there would have been no deposit protection scheme…

            The Brown bailouts protected the wealth of very fat cats indeed.

            Not quite, it protected the UK banking industry, as many a Tory also wanted at the time, although in doing so it did indeed protect many who should have been made to take a hair cut, if not a head shave.

          • Bob
            Posted August 13, 2013 at 8:55 am | Permalink

            @Jerry
            “wanting to socialise the debt problem when it is beneficial but not when it isn’t.”

            I can see that you’re struggling with the concept of a legal obligation here, so I’ll try to make it easy for you.

            The protection scheme had been in place for decades before the credit crunch.
            Just like when you insure something, you expect the insurance to pay out if a claim arises.

            The Brown bailouts were all done on a knee jerk ex-gratia basis.

            “it protected the UK banking industry”
               Fat cats indeed!

          • APL
            Posted August 14, 2013 at 10:01 pm | Permalink

            Jerry: ” I just have more of a moral compass than unthinking people like you APL. ”

            Those the morals that teach it’s right to penalize self reliance and hard work, and encourage debt slavery disguised as affluence.

            Yea, Jerry! You can keep your morals and your ‘compass’? It’s damaged and worse than useless.

      • oldtimer
        Posted August 8, 2013 at 11:25 am | Permalink

        Savings rates are already negative because inflation is higher than the rate of interest on offer. If you leave cash in the bank its value depreciates by the day. It will buy less the day to take it out to spend than the day you put it into the bank – as many who depend on such savings have discovered to their cost.

        • Jerry
          Posted August 8, 2013 at 2:06 pm | Permalink

          @oldtimer: If you leave cash in a wallet, or in a mattress, the value depreciates by the day, in fact far faster that leaving in the bank as one is not even getting the 0.5% rate, thus you point was what exactly?

          • Bazman
            Posted August 8, 2013 at 7:48 pm | Permalink

            Invest in Vodka. It will never depreciate. You can even get a return immediately by drinking it. Wine is not even in the same league.

          • oldtimer
            Posted August 9, 2013 at 8:23 am | Permalink

            Changing the issue I see.

            You said:
            “Gary: “Rob the saver to bail out the feckless and the reckless”

            Hardly robbing the saver, or did did I miss Mr Carney lowering rates even further and thus into negative figures were you pay to keep your money safely in the bank?!…”

            At 0.5%, or whatever minimal rate offered today by banks, the value of cash on bank deposit depreciates. This is intentional as the Chancellor and the Governor want you to spend that cash. For savers (against a rainy day) and the retired that is very bad news. My point stands.

          • Jerry
            Posted August 9, 2013 at 5:08 pm | Permalink

            @oldtimer: Yes and the value of the cash in your pocket also depreciates, that is what inflation does, the fact that you are to blind to that fact just shows you are more intent on having a rant rather than a debate – good day Sir! Why should “savers” be exempt from the realities of the economic situation?

          • APL
            Posted August 12, 2013 at 6:04 pm | Permalink

            Jerry: “If you leave cash in a wallet, or in a mattress, the value depreciates by the day ..”

            Yes it does! But why ?

            Because the government has as a central tenet of its economic policy, inflation at at least 2% pa.

            This a result of a command economy that we currently enjoy.

            In a true capitalist economy you’d expect gentle deflation, which means your cash holdings would appreciate in value.

      • sm
        Posted August 8, 2013 at 11:44 pm | Permalink

        What happens when the capital has been inflated away in purchasing power?

        Its a scam its akin to a theft. If you want to tax, then tax openly, this is largescale financial repression.

        Tell me who is more likely to be able to arbitrage and benefit from this and who will lose. Probably the same insiders who caused the problems.

        Capitalism this is not. Progressive this is not. I don’t even think its democratic.

        So who voted for this new vague policy and new inflation target at 2.5%.

        How democratic can it be to inflate away the purchasing power of the masses whilst protecting the insiders – who make all the calls or could derail the policy?

        Did the MP’s salary review not have this as a critical FAIL when the payrise question came round?

    • libertarian
      Posted August 8, 2013 at 9:21 am | Permalink

      Totally agree Gary

      What the Tories, Jerry & Mark carney fail to realise is that savers outnumber borrowers 6-1 in the UK. That more than 1 million pensioners relied on interest from their savings to live ( thats who’s being robbed Jerry ).

      All the time our ignorant incompetent politicians have basically one fiscal policy creating housing bubbles. They’re obsessed with housing since way before 2008 labour and Tories have been manipulating base rates to encourage people to borrow vast amounts to invest in housing. They create housing shortage myths to excuse themselves for building all of the green belt and then try to encourage people to take on massive debts.

      The day that base rates are allowed to rise to 5% is the day that economic recovery begins

      • Jerry
        Posted August 8, 2013 at 2:12 pm | Permalink

        @libertarian: No one is being “robbed”.

        • alan jutson
          Posted August 8, 2013 at 4:25 pm | Permalink

          Jerry

          “No one is being robbed”

          Correct, at least not at the point of a gun or unlawfully, but morally and factually they are, by Government policy and desire.

          The prudent are paying for the fecklessness of Government Departments, Banks and a whole host of other organisations through either tax, or added costs to prices (eg: so called green energy rates)

          • Jerry
            Posted August 8, 2013 at 6:29 pm | Permalink

            @alan jutson: These “savers” didn’t complain that the rates were to high when the interest rates were heading skywards and mortgage holders were loosing their homes because they couldn’t even afford to repay the interest alone.

            Just who are the really feckless, those who have “saved” but then use other people money (credit) to fund their lifestyle or those who might not have much savings (meaning a bank current account + the value of their property, if they have one) but who have never used a penny of someone else’s money (credit) to fund their lifestyle and thus have nothing what so ever to do with the credit bubble that has burst over much of the world for which these people are also suffering and are now being called feckless by the true feckless in a peak of spite…

          • alan jutson
            Posted August 9, 2013 at 7:27 am | Permalink

            Jerry

            “these savers did not complain…..”

            No not at the time, because when there were high interest rates, inflation was on occassion even higher, so they were still loosing out.

            What makes you think savers do not also have mortgages and also suffer from high interest rates !

            Whilst I have no figures, what makes you think savers buy everything on credit, and never use ther savings.
            With the example you suggest (other than perhaps a house purchase) why would it be better to borrow money at a higher cost than you get on deposit, so I do not quite understand your argument as they would be financially worse off.

            I would have thought most people save for something they want to purchase in the future, the unexpected, for later life provision, or for perhaps a personal pension (not that recent performance makes that a good or even sensible investment in many cases)

        • libertarian
          Posted August 8, 2013 at 5:32 pm | Permalink

          Jerry

          Yes they are being robbed, they are being robbed by the state. The state have devalued deliberately savings, pensions and annuities . They have done this to pay for their profligate borrowing and money printing. The state has colluded to fix interest rates in EXACTLY the same way the banks colluded to fix LIBOR rates. If LIBOR fixing was a fraud then so is base rate fixing.

          When you take money from someone against their will and under false pretences the law describes that as theft and theft is to be robbed

          • Jerry
            Posted August 10, 2013 at 6:56 pm | Permalink

            libertarian: You are entitled to your opinion but the actual facts do not change, no one is being ribbed.

        • Bazman
          Posted August 8, 2013 at 7:57 pm | Permalink

          By the same logic then neither is any payday loan fool Jerry and why should any absurd law or regulation stop these companies lifedogic?
          They should be avalible to be exploited by employers, bookies, loan companies, house buyers and anyone else should they not? Shoddy goods and dodgy flats are theirs to buy and rent too. Get out of the way we need your less than minimum wages!
          No reply lifelogic? BBC think or absurd piffle or wot?

    • wab
      Posted August 8, 2013 at 7:34 pm | Permalink

      “Rob the saver to bail out the feckless and the reckless.”

      Who exactly is “feckless and reckless”? Borrowers? So nobody should be able to buy a house or start a business unless they have a large trust fund?

      One problem with current government policy is that they are creating yet another house price bubble, and by pushing house prices up they are creating a large problem in the future when interest rates (eventually) go up.

      But Cameron and Osborne are only thinking about the election in 2015. They are happy to create a house-price driven economic bubble now, which will have bad consequences in 2016 and 2017, as long as it allows them to win the election in 2015. And even if they lose, they will force Labour to clean up the mess in 2016 and 2017 in the same way that Labour forced the LibCons to clean up the mess in the last few years.

      In theory banks should not be giving mortgages to people who cannot afford the mortgage if rates go up a few percent. The small print on a mortgage always says “interest rates might go up”. The fact that Carney was happy that “only” 40% of current mortgages have high loan to value is worrying.

      Are people “reckless” for getting mortgages which stretch their finances at the current interest rates, because they want to get on the housing ladder?

      Savers also need to be aware that “interest rates might go down”. Anyone who was assuming that interest rates would always stay high or would never remain low for a long period, and who was relying on this idea for their income, could equally be deemed to be “reckless”.

    • margaret brandreth-j
      Posted August 10, 2013 at 7:10 am | Permalink

      We can’t even say Sodom

  2. Gary
    Posted August 8, 2013 at 5:31 am | Permalink

    Steve Baker MP, on The World at One, makes sense when apparently all around him are making none :

    http://www.bbc.co.uk/programmes/b037v4fr#programme-broadcasts

    • stred
      Posted August 9, 2013 at 1:45 pm | Permalink

      He went to an excellent sixth form college, is young was an engineer and software specialist opposes HS2 and is in the top 10 rebellious new intake. Under the current leadership he’s doomed- until after the election.

  3. colliemum
    Posted August 8, 2013 at 5:32 am | Permalink

    Linking BoE interest rates to the percentage of employment is certainly novel. In my naivety I always thought interest rates are used by Central Banks to deal with inflation. Well, learn something new every day …
    However, this novel link of interest rates to unemployment is rather like ‘jam tomorrow, never today’, because I do not see this government doing so very much to get unemployment down, certainly not in view of the looming immigration of workers we’re facing from January 2014.
    I hope I may be wrong, but this decision makes for a gloomy outlook, because it looks like another ‘nudge’ especially for those with savings, to spend-spend-spend and forget to make provisions for accidents or even old age.

    • wab
      Posted August 8, 2013 at 11:42 am | Permalink

      “Linking BoE interest rates to the percentage of employment is certainly novel. In my naivety I always thought interest rates are used by Central Banks to deal with inflation.”

      That is perhaps because that is the idiotic one-track policy Central Banks have been following for decades. But there is no good reason why this should be the only thing that Central Banks consider when setting interest rates. Inflation is only one aspect of the economy, there are plenty of others, such as unemployment, so why consider only one indicator when setting interest rates.

    • Leslie Singleton
      Posted August 8, 2013 at 4:03 pm | Permalink

      colliemum–Bet my naivety is larger than yours. I don’t even understand by what right the new Governor has been able to issue his guidance, meaning (Has a change gone right by me?) is there not still an MPC who I thought made the decisions–Mervyn King was overruled many times best I remember? In any event saying rates will stay low if the economy behaves as we expect (intrinsically unlikely if you ask me) isn’t saying much.

      Reply The Governor got the agreement of the MPC to say what he said

      • Leslie Singleton
        Posted August 9, 2013 at 1:43 pm | Permalink

        Of course, Carney has now shown himself to be a buffoon by squawking about the necessity for a Governess–Right up Cameron’s street I guess but otherwise daft as a goal in itself. Is female Economics any different??

    • Winston Smith
      Posted August 8, 2013 at 8:24 pm | Permalink

      Unemployment will never go below 7% whilst we continue with EU open door migration. The majority of new jobs created will go to new arrivals. The political elite are happy to sustain 5-6m people on out of work benefits.

      We now have another housing bubble, personal and State debt combined is the highest in the World and unsustainable long-term. Carney is no independent voice, he is just following the political elite’s policies; just look at his focus on sexual discrimmination to ensure more women become economists and onto the Bank’s board. He’s putting pseudo-marxism before the health of the economy.

    • sm
      Posted August 8, 2013 at 11:50 pm | Permalink

      Define unemployment? Zero hours contracts. Then its a review and if maybe and perhaps the BOE forecasts in 2 years time..blah blah blah. Oh whens the next inconvenient/unavoidable election to fudge.

  4. Nina Andreeva
    Posted August 8, 2013 at 5:42 am | Permalink

    I bet Dr Gono from the Reserve Bank of Zimbabwe would have taken the job for a smaller pay packet than Carney’s if it had been offered to him. After all there is no difference it what Dr Gono would likely have prescribed i.e. more money printing with the absurd situation of one part of the state lending money to the other (the BoE buys HMG gilts) and then the lender returns the interest payment back to the borrower. Its only a matter of time …

  5. lifelogic
    Posted August 8, 2013 at 5:47 am | Permalink

    Well base rates may stay at 1/2% but banks trying to charge SME’s 5% t0 20%+ above this for perfectly safe secured loans if they lend at all, so what is the relevance of the base rate? It only really applies to some old loans (and the banks are doing their best to escape from those often by dubious methods I understand). The base rate is now largely irrelevant to actual market lending rates. It is SME that need cheap money and cheap energy for any real & sustainable recovery not subsidies for residential mortgages.

    Savers meanwhile just need to cut out the rip off middle men (the banks) with their huge margins and fees just trying to fill in their self inflicted black holes. Real competition is what is needed.

    Meanwhile I see that average electricity in the USA is only about 7p a KWH, and yet this coalition is happy with 43P per KWH feed in tariffs. Is anyone in this government sane or numerate at all? How on earth is UK industry expected to compete?

    I see Justine Greening is telling charities to give good value for money, I agree but is this the same Justine Greening who was in favour of the economically idiotic HS2?

    Then we have make do and mend from in the Telegraph today from Lord de Mauley, the environment minister. Well should the government allow the sale of products that are clearly designed to fail or be redundant in 1 to 3 years? Tablets with batteries built in that have a very limited life or plastics that go brittle and break on fridge doors for example?

    Anyway are there not some silly laws/regulations virtually preventing the sale of second hand electrical goods at most charity shops?

    • lifelogic
      Posted August 8, 2013 at 5:53 am | Permalink

      I wonder how much time Lord de Mauley spends fixing his cars, fridges and washing machine(s) and similar, about as much as Prince Charles does I imagine.

      • Hope
        Posted August 8, 2013 at 8:40 am | Permalink

        Life logic, do not forget this fix and mend idea comes from an EU directive , the same EU that Cameron will not leave under any circumstance and will fight heart and soul to stay in. The same EU creating our idiotic energy policy at DECC. Not a surprise really.

        The Carney policy shows me that the government makes it clear that it does not pay to work and be prudent. Welfare and incentives to have many illegimate children is the key to success in this country. The LibLabcon is the same theme with slightly different options on it.

        • stred
          Posted August 9, 2013 at 2:00 pm | Permalink

          The same EU that has caused the new MOT test to include warning dash lights to be included, which do not warn about danger but emissions, are difficult and expensive to fix, sometimes have to be fixed by main dealers, often false and will result in many newer cars being scrapped.

      • Nina Andreeva
        Posted August 8, 2013 at 8:00 pm | Permalink

        JR the next time you bump into Dave ask him for me how the modernisation of the party is going and how many new party members are being signed up in the North? Last week it was Howell and now his fellow old Etonian, somebody called Lord de Mauley (aka Rupert Ponsonby), comes out with a load of patronising drivel.

    • lifelogic
      Posted August 8, 2013 at 1:26 pm | Permalink

      Now I see Carney is on about the number of woman on the rate setting committee, it has not taken long for lefty “Cameron equality think” to infect him. Surely we just need the best people and insisting on an equal number of women will clearly discriminate against men and result in a worse pool of talent.

      May I suggest Ruth Lea if they really need a woman. I cannot think of any other suitable women. Anyway why have a committee just one (or two at most) sensible people would do fine. Just Ruth Lea perhaps?

      • Leslie Singleton
        Posted August 8, 2013 at 4:17 pm | Permalink

        lifelogic–What with men and women being identical these days, why does it make any difference anyway? It must be agony for Cameron and Osborne and Clegg to have to accept, which they surely must, that God or Mother Nature or both ordained the difference, else why the two sexes? Artificial wombs for men is next and down with Motherhood and Apple Pie.

        • lifelogic
          Posted August 8, 2013 at 5:05 pm | Permalink

          Well evolution clearly made them different on average all all measures show. As it inevitably would do and does in all the other animals.

          The lefty/BBC/Guardian view on the other hand is that they are basically the same at birth and it is only environment and nurture that make men and women different. The opposite of reality.

          Though they always insist that women are better at multi-tasking and communication. Anyway Ruth Lea is fine by me.

      • Bob
        Posted August 9, 2013 at 10:47 am | Permalink

        @lifelogic
        “Carney is on about the number of woman on the rate setting committee”

        Gender reassignment is what they need.

    • Bazman
      Posted August 8, 2013 at 5:23 pm | Permalink

      Here’s the average price of electricity in the USA lifogic. Not &p by any means.
      http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a
      As for being stopped from taking old electrical goods to charity shops by absurd regulations. It is because of the lack of regulation on the quality of products you
      claim is why they are so shoddy. Do you ever think about what you write or is it all just after dinner/closing time drivel?
      The manufactures need to be forced to take back old products for disposal at their expense. This would increase the reliability, recyclability and life of the products which at the moment are very cheap. A fridge can cost less than a car tyre. I myself are practising what I preach and have bought a washing machine called ISE 10. 10 year parts and labour warranty and easy to fix with cost price parts after the warranty. Get one.

      • Bazman
        Posted August 9, 2013 at 8:06 pm | Permalink

        No reply Life lologic and you dare to tell us of the BBC?

      • lifelogic
        Posted August 9, 2013 at 9:45 pm | Permalink

        How much are they then?

        • Bazman
          Posted August 11, 2013 at 9:47 am | Permalink

          If you look at the link you will find the price can vary from 7 to 37 cents in Hawaii and the price can also vary at certain times of the day in various states. An ISE 10 washing machine will cost you a £1000 you can also buy a washing machine for less than £170. Of course you want the £1000 for £170 Not real. Most of the price of the £180 will be sales tax, 20 VAT . Transport, warehouse, warranty claims, profit for the retailer and a little bit of profit for the manufacturer. Not much left for the cost of the machine. A bit naive to complain about the quality and longevity of such a machine. £500+ is realistic, but the customer gets what they pay for in this free market washing machine paradise. An ‘absurd’ lack of regulation and ‘pointless’ cost onto society as the consumer and manufactures are subsidised by the state in the disposal of such equipment. Backed by fatalistic right wing anti green tosh promoted by anti intellectual right wing groups spreading propaganda via the BBC… Ad libitum.

      • lifelogic
        Posted August 9, 2013 at 10:09 pm | Permalink

        You link broadly agreed with my figure of 7P per KWH in the USA average, so what are you on about? Have you actually looked at your link?

  6. Brian Tomkinson
    Posted August 8, 2013 at 6:56 am | Permalink

    JR : ” They (savers) indeed will spend much of their time awaiting the knock at the door from the taxman, ever more inventive in finding ways of parting savers from their money…………Only if asset prices take off, activity puts upwards pressure on prices, and inflation expectations surge should borrowers worry about rising short term interest rates. ”
    Thanks for confirming that “borrowers” are the only ones government care about. The prudent have been having their wealth transferred to the profligate and often reckless for 5 years and it is set to continue – presumably until it has effectively all been confiscated or rendered worthless by the government. I say the government because there can be no doubt that this has been the policy of Labour and the coalition. Still no news about the government deficit, but as you know the debt is still increasing. You and your colleagues might like to ignore Osborne’s abysmal failure to do as he promised and eliminate the deficit by 2015 and then start paying down the debt but I and many others will not.

  7. David Hope
    Posted August 8, 2013 at 7:04 am | Permalink

    Forward guidance is just marketing to make it sound like he is doing something exciting.

    The current policy continues to be bad. We were promised that these rates were emergency and yet they’ll have lasted nearly a decade.

    Our “recovery” is a mirage. It is no different to the preceding boom. How many times does it need saying – an economy is rebalanced by having savings, that over time can buy new plants equipment, warehouses etc. This takes a prolonged period of time. Not by encouraging consumption with no new means to pay. Talk of escape velocity is as credible as witchdoctory.

    What Osborne and Carney are doing will further inflate property, meaning more people are spending an ever greater proportion of their income on mortgages. And even more people will find themselves in a situation whereby, if rates rise, they can’t afford them. The longer this goes on, the worse the problem when rates do rise. If they ever do again….

  8. margaret brandreth-j
    Posted August 8, 2013 at 7:17 am | Permalink

    The problem is if the savers are not getting returns , then they will remove their savings and put into property or other which won’t devalue to the extent they have in the last 10 years (and I do not quote anyone else here, there is no evidence as it is in the future)..
    Then the banks will also suffer.
    We in the NHS are seeing the real changes which seem to point to the whole structure of finances in the future UK, fiscal and otherwise. e.g Primary Health Care Trusts are now being named ‘Clinical Commissioning groups,’ Health Centres are being named ‘Medical centres’ GP practices are buying each other out . GP’s are voting to have a service which is paid for.. The manoeuvre is excluding the skills of nurses in the terminology ..It doesn’t need much insight to see private money in the pockets of doctors in the future does it?
    This will affect the national bank balance in the future with an even greater plagiarisation of others skills and an ownership ethos.

    • a-tracy
      Posted August 8, 2013 at 9:08 am | Permalink

      I can see a future where you are seen only by nurses first in the Medical Centres and they will triage you in the same way that GPs triage for Consultations at the hospital.

      I think nurses will get a more key role not an excluded role, I think the name of a Medical Centre nurse will change to reflect the changing role and that more young men will be attracted into the first line positions to cover the extra hours that will be required to cut down on the problems at A&E when GP surgeries close for appointment at 5 pm other than one night to 6 pm.

      I believe that GP’s of the future will have to perform more and more minor techniques/surgery in their local medical centres and will be fewer in number than present because they are too expensive to be seen to prescribe for arthritis, diabetes, high blood pressure as our local current GP s still do.

      • margaret brandreth-j
        Posted August 8, 2013 at 10:10 am | Permalink

        I hope that is so Tracy ,yet nurses names are being taken down from surgery signs , parking spaces are for Drs only and we know as Nurse Practitioners and Prescribers
        that we have worked hard for many years to acquire knoweldge. A conference I had
        this week underlined my fears , but perhaps this is just a isolated case.

        • margaret brandreth-j
          Posted August 8, 2013 at 10:11 am | Permalink

          an isolated case not ‘a’

        • a-tracy
          Posted August 8, 2013 at 3:06 pm | Permalink

          Well GPs handed over virtually all maternity care to midwives, even in the hospital, I saw a consultant one time with my first child and then never with subsequent, even though I had serious problems. There were no GP visits until after the birth and then only one check up. I do think that is way primary local care will go with most services, with staff trained in specialities rather than the very big wide knowledge (is it seven years training?) a GP has to have.

          They’ve handed over the majority of the out of hours care (to hospital emergency centres in the main).

          In many clinics you can never see your named GP and see so many different GPs they hardly know you so have to rely on brief notes from previous visits that can be incorrect.

          We had all better save because when the middle-agers get into retirement age the money won’t be there for the care our grandparents enjoyed.

          • alan jutson
            Posted August 8, 2013 at 4:38 pm | Permalink

            a-tracy

            Our local GP already has already moved to a telephone diagnosis service.

            You ring up to see the Doctor, and you speak to a receptionist and describe your problem, that receptionist then passes the info to the Doctor ,who rings you back within an hour to discuss more fully.
            The Doctor then decides if he can treat you by simply writing out a prescription or by you seeing a specialist, or, indeed may decide to see you and give you an examination to confirm their original thoughts and diagnosis for treatment.

            No longer do we have a hands on service.
            Perhaps this is more efficient than the old appointment system, I am not sure, perhaps it avoids wasted time when people fail to turn up, but one wonders how long it will be before we have an almost self diagnosis system in operation !.

            Seems to me we are gradually moving away from a personal contact service, to a sort of dial up consultation.

          • a-tracy
            Posted August 9, 2013 at 8:01 am | Permalink

            Yes Alan, I can see a time when sufficient numbers of the population have computer access that your appointment will be over Skype or Facetime with a Nurse Practitioner. I watched Embarrassing Bodies recently, I usually try to avoid that program, and they did consultations on screen. People like my Mum won’t like the idea of that but I’m not sure my children’s generation will even mind, they will just see it as a convenient way to get medical opinion and prescription without taking a morning off work and not think of the potential implications.

            I got into plenty of arguments on blogs in 2004 when the poorly constructed GP contract came into being, I knew that the money it would take just to stand still in staff numbers required to cover on-call would eventually reduce the services available to patients. Not obliging GPs to open surgeries on Saturday mornings and Sunday or a couple of hours would obviously put grave pressure on A&E departments, MPs like Reid, Hewitt, etc they all knew the implications of their decision.

    • stred
      Posted August 9, 2013 at 2:13 pm | Permalink

      Margaret. How is it possible that GPs can ‘buy each other out’ when their expensive, often large health- sorry medical- centre has been set up and paid for by the taxpayer?

      • margaret brandreth-j
        Posted August 9, 2013 at 5:05 pm | Permalink

        They buy them as businesses. Individual GP’s also buy their own properties and set up practice. Local medical centres can buy practices and buildings, the business side of it is also taken into account and money is exchanged. The patients though are still NHS. The Drs who buy buildings/practices also employ others and are often in a position to buy other practices and employ. I for example have treated NHS patients for 10 years, but am paid privately by the GP , therefore am not classed as an NHS worker. You wouldn’t believe it!

        • stred
          Posted August 11, 2013 at 3:06 pm | Permalink

          So they can operate as a business from sometimes spacious taxpayer subsidised premises. I have a friend who’s son was my excellent dentist. He tried to open up a private/ NHS surgery but could not because this had to be approved by the local trust, who determine need. He opened a private only practice but this failed as they also need NHS as a base. The existing practices are protected. Would this be allowed in any other occupation?

          • margaret brandreth-j
            Posted August 11, 2013 at 7:42 pm | Permalink

            But the buildings can change hands and be bought out.

  9. Boudicca
    Posted August 8, 2013 at 7:21 am | Permalink

    the most obvious problem with Mr Carney linking interest rates to 7% unemployment, is that with completely open borders to the EU and Mr Cameron inviting every Indian student with an ICT degree to come and work in the UK, it could be decades before we officially hit 7% unemployment.

    In recent years, 3 out of every 4 new jobs created has gone to an immigrant, which British unemployed are left either unable or unwilling to get a job.

    There is no indication that that’s going to change any time soon as Call Me Dave is determined to keep us IN the EU with hundreds of thousands of immigrants (coming ed) in from the PIGS and Eastern Europe every year.

    As a saver, I am disgusted that I am effectively being made to pay for other peoples’ oversized mortgages and a Government which has failed to cut spending and wastes our money at every possible opportunity.

    We might just as well have Gordon Brown back in The Treasury!

    • Jerry
      Posted August 8, 2013 at 8:28 am | Permalink

      @Boudicca: How is Cameron going to keep the UK in the EU when everyone will be free to vote for the UKIP in June 2015? As for Brown in the Treasury, well again Labour did win three successive elections we him at the Treasury…

    • Hope
      Posted August 8, 2013 at 8:47 am | Permalink

      Actually Osborne makes looks Gordon Brown look good. At least we all knew what Gordon brown stood for. Osborne promised an 80/20 per cent split to help the economy.. As JR has demonstrated many times over on this site he has not made any real spending cuts ,but in contrast over 299 tax rises. This week we learn the net figure to the EU is over£20 billion and overseas aid is somewhere between £12-13 billion. The timid alterations to welfare has not made any inroad to the deficit whatsoever. Real spending cuts are required, but that would take courage and that is a quality lacking in the current government. Labour present no fear to the shambling mess as the coalition as continued with their plans including wretched wind farms!

      • JimF
        Posted August 8, 2013 at 11:28 am | Permalink

        The only real difference I see is that Brown used to call all this spending “investment” when anyone with any sense could see most of it was p— into a drain, whereas Osborne at least concedes that it is a current spend, and pokes around for ways to trim it back. That, I guess, is 1 position ahead of Brown.

        • Hope
          Posted August 8, 2013 at 10:28 pm | Permalink

          Osborne derided Brown for funny money policies. Osborne continued with funny money. He also wants to be judged on his success. We do not need to wait to 2015 because Osborne has conceded he has failed to achieve his goal. Add all the failures, U turns and broken promises and there is nothing for them to crow about. I can’t wait to cast my vote against them. Oh, and now Tories are using smear campaigns at their opponents-sound similar to Brown regime?

  10. Gary
    Posted August 8, 2013 at 7:29 am | Permalink

    Why a 2% inflation target, why not 0% ?

    Why should the bankers help themselves to 2% of savings per annum ? Because that is what it is.

    Inflation is a devaluation of the currency by oversupplying the currency above that which is required by the economy. It is a demand and supply issue. If the economy grows at 2% and the money supply grows at 2% then there is no inflation. Demand for money increased by 2% and supply increased by 2% , the value/price of the money stays the same, all else equal, and savings are preserved. To get 2% inflation in an economy that is growing at 2% then you have 4% growth in the money supply.

    There is no rational reason to target anything above 0% inflation , unless the bank wants to confiscate savings.

    • Mike Wilson
      Posted August 8, 2013 at 2:51 pm | Permalink

      @Gary ‘ …Why a 2% inflation target, why not 0% ?…’

      Because a 0% inflation target is too close to deflation. Once you get deflation, you get stagnation as people put off buying discretionary items in the hope they will be cheaper if they wait.

      Politicians are terrified of deflation. Not least because tax revenues go down.

      What you need to ask yourself is why, between about 2001 and 2007, M4 money supply grew at FOURTEEN PERCENT A YEAR – yet we, apparently, had inflation on target at about 2%.

      Because, of course, all that new printed money was going into the housing market causing prices to at least double everywhere (who was the Chancellor then? Not the bloke who said ‘I will not allow a house price boom to put at risk the sustainability of the recovery’ by any chance? No, it couldn’t have been him.) while the price of imported goods like DVD players in the ‘inflation basket’ was going down.

      Truly we have been governed by complete, bloody fools.

      • sm
        Posted August 9, 2013 at 12:07 am | Permalink

        People buy deflating in price consumer goods and goods all the time? in the real economy.

        The politicians are specifically worried about housing assets and our protected banking species.

        If housing prices corrected quickly , people would start purchasing them. Only problem possibly insolvent banks. Is that any different to now?

  11. lifelogic
    Posted August 8, 2013 at 7:33 am | Permalink

    Just now Cameron on BBC1 says that we need the overseas aid program to reduce immigration to the UK by tackling the problems at source. What total drivel, how many countless £millions would need to be spent around the world for any individual to be deterred from moving to the UK? Is he going to send sufficient aid to lift all these countries and take them to UK levels of development, health and wealth?

    Does he ever think, just for a few seconds, before opening his mouth? Some aid may well be sensible but as a realistic way to reduce immigration to the UK it is simply bonkers. T

    • Iain Gill
      Posted August 8, 2013 at 10:57 am | Permalink

      Correct its a disgrace.

      • Leslie Singleton
        Posted August 8, 2013 at 4:20 pm | Permalink

        Is it possible Cameron could really believe this? On the other hand having heard the other things he believes in there may be no limits.

      • Nina Andreeva
        Posted August 8, 2013 at 4:32 pm | Permalink

        Why does he not take a leaf out of Kevin Rudd’s book and do as Australia now does i.e. asylum seekers end up in Papua New Guinea and have no right of residence in Australia? Or better still announce to the world that there is no free money unless you have a complete NI record. The system as it stands is completely bonkers and its not racist to criticise it, as “The Guardian” points out we are now receiving applications from US and Canadian passport holders, so there must be something wrong with it.

        http://www.theguardian.com/uk/2010/jan/25/americans-claim-asylum-britain

        • sjb
          Posted August 8, 2013 at 8:40 pm | Permalink

          From Nina’s link: The Home Office refused to reveal the rationale behind the claims [made between 2004 and 2008 by 45 US citizens & 15 Canadians] or why they were refused, saying a manual search of the records would be required, exceeding the time limit for Freedom of Information requests.

          Does anyone else find it odd that a manual search is apparently required?

        • sm
          Posted August 9, 2013 at 12:11 am | Permalink

          Was one Edward Snowden?

    • alan jutson
      Posted August 8, 2013 at 4:44 pm | Permalink

      Lifelogic

      Afraid the man is deluded if he thinks foreign aid will reduce immigration, all aid has ever done is extend the claim culture.

      We have had more than 50 years of foreign aid, has it actually improved anything ?

      Given our new man at the Bank of England is suggesting that he is going to fix the base rate to unemployment levels, is he going to suggest we control immigration ?
      If not then he is in for a big surprise, does he realise we cannot control who enters the UK under freedom of entry, thus he will not be in actuial control of one element of his policy.

      • stred
        Posted August 9, 2013 at 2:25 pm | Permalink

        Did you know that fear of mass immigration from hot countries to the US and EU is one of the reasons given for action on global warming? Usually by the same people who thought mass immigration would be ‘socially useful’.

  12. John Eustace
    Posted August 8, 2013 at 7:44 am | Permalink

    Of course it is a fundamental fallacy to think we can restore our prosperity by keeping interest rates low. We are robbing the prudent and giving their money to borrowers to inflate house prices even further. The stock markets are based on forecasting government and central bank interference as opposed to fundamentals. That will not end well.
    There is a massive deficit that goes unremarked these days and that is the balance of trade. Until we are making goods or providing services that are exported to pay for our imports we will not have a stable sustainable economy. We will have a debasing currency and internal conflict as we look round to see who has any money left that the state can grab.

    • Iain Gill
      Posted August 8, 2013 at 10:59 am | Permalink

      If they genuinely thought they were not stoking inflation they would have index linked savings certificates on sale. As they dont it can only be concluded that they are engineering on purpose the destruction of savings.

      • alan jutson
        Posted August 8, 2013 at 4:45 pm | Permalink

        Iian

        A very good and simple point.

      • Winston Smith
        Posted August 8, 2013 at 8:31 pm | Permalink

        Plus, The Bank of England switched its pension fund to majority index-linked investments at the same time as they sought to maintain high inflation and low interest rates.

      • libertarian
        Posted August 9, 2013 at 10:12 pm | Permalink

        Iain Gill

        Exactly right !

  13. alan jutson
    Posted August 8, 2013 at 7:54 am | Permalink

    John I do not have a problem with low interest rates, if they are low, but are they really?.

    Historically perhaps yes, but in practice who can borrow at or near the official base rate.

    The fact of the matter is the Banks are making an absolute killing on the margins between the rates paid on deposits, and the rates charged for borrowing.

    No wonder tha Banks are building up reserves when their margins are so high, and on top of that government is now guaranteeing to underwrite some high loan to value mortgages.

    If only Banking was as competitive as other forms of business.

    • DrJohnGalan
      Posted August 8, 2013 at 9:43 am | Permalink

      Agree. One small example of the effect of so-called low interest rates on the part of economy that actually employs over 50% of those in the private sector:

      I am a (non-exec) director of an SME. About a year ago we enquired of our bank the borrowing terms for a possible acquisition. We have no overdraft and have paid off the mortgage on our premises. We have been trading for 14 years. The answer came back: 8% (+charges). Needless to say, the business case did not stack up. Our very good, young CEO has now decided to up sticks and move abroad – his vision of building a bigger business is not going to be realised in the UK.

  14. Mike Stallard
    Posted August 8, 2013 at 7:57 am | Permalink

    Now let me see…
    In order to meet the soaring bills in the NHS, Welfare and EU, the interest rates are kept low.
    And the national debt and deficit are running fast out towards national bankruptcy.
    Meanwhile, like a worm that still wriggles when cut in half, the economy is very active.
    So that’s all right then.

  15. Javelin
    Posted August 8, 2013 at 7:57 am | Permalink

    What is the purpose of the MPC now that they are not going to set interest rates for the next three years?

    Do you know if the tax payer is going to continue to fund the MPC and if so how much it costs them ?

  16. Javelin
    Posted August 8, 2013 at 8:00 am | Permalink

    Just a follow on thought – is the MPC an example of Government getting bigger and never smaller – even though it is now redundant?

    Is the Treasury going to find an excuse to keep the MPC on or just so they don’t lose their budget or are they going to set an example about wastefulness?

    • Mike Wilson
      Posted August 8, 2013 at 8:26 am | Permalink

      @Javelin – Now hold on a minute. Once you start suggesting that people employed by the rest of us on high salaries and pensions should be made redundant if they don’t actually have anything productive to do … you are suggesting getting rid of a complete layer of middle management throughout the public sector.

      Turkeys never vote for Christmas.

      We are in an impossible position. We have given governments the power to tax and employ. They will never make themselves smaller and less important.

  17. Iain Gill
    Posted August 8, 2013 at 8:04 am | Permalink

    I am afraid it is a bubble.

    It is state sanctioned robbery from anyone with savings, anyone living in the private rental sector. All to prop up an already over inflated house price bubble, to pay for more tat from China, to pay for more imported workers from around the world, to subsidise more rubbish state sponsored housing stock. All the while the national debt keeps steaming upwards.

    This is not something you would support with your sensible head on… I take it the sun is getting to you. We are doing our best to end up like Greece and Spain, it is madness sheer madness.

  18. Mike Wilson
    Posted August 8, 2013 at 8:05 am | Permalink

    It is all part of the madness.

    Hey! Savers! You are going to lose money if you leave it in the bank. Inflation will be 4% and you’ll be lucky to get 2% (on which we’ll TAX you! Of course!) interest. Best thing you can do is buy a house and rent it out!

    I do wish the government would start to tax Buy To Let. Not being to offset the mortgage against the rental income would be a start. If I own a house outright and rent it out, the rent is regarded as income – and I am taxed on it. Why should the government care if I have a mortgage or not. That is my choice.

    The current situation encourages people to build Buy to Let portfolios – all on borrowed money – so that the renters end up paying their mortgages and, effectively, buying their houses for them! Instead of buying one for themselves.

    So, stop allowing mortgage interest to be set against rent for tax purposes. That would stop the Buy to Let madness in its tracks and people who do have money to save would be encouraged to invest it in something a little more productive that a chunk of bricks and mortar.

    • Gary
      Posted August 8, 2013 at 10:18 am | Permalink

      Mike Wilson: “buy to let, ie. mortgaged property rental income is not taxed.”

      You have just explained why some people have good reason to suspect that govt policy is bank friendly and not necessarily good for the country. Did party funding sources influence this?

    • Edward2
      Posted August 8, 2013 at 1:00 pm | Permalink

      Mike
      You could stop buy to let landlords from being able to offset the costs of their loans, but I think the effect would be that landlords would have to find this extra cost from somewhere and they would aim to do this by increasing their rents to their already hard pressed tenants.
      All businesses can offset their costs against their income for tax purposes (subject to various HRMC rules) and landlords are no different to other small businesses, so it may prove difficult to legislate and just single out this group and not any other type of business.

      • Mike Wilson
        Posted August 8, 2013 at 2:57 pm | Permalink

        @Edward2 – Since when did buying a property with borrowed money and renting it out become a business?

        Especially a house. A house is not like a warehouse. The supply of housing is strictly regulated by the government by virtue of the planning system. Everyone must have a roof over their head or they will die in the winter.

        Why should Jim be able to borrow from the bank to ‘buy’ a house, rent it to Pete and get Pete to pay his mortgage off for him? Why won’t the bank lend direct to Pete and cut out the middle man?

        As for them having to find the cost from somewhere …. if the rent would not cover their mortgage payments as a result of them not being able to offset the mortgage payments against the rent as income – well, yes, they could try putting the rents up (£800 a month round here for a 2 bed flat) but who could afford it?

        No, at a stroke, it would make Buy to Let impossible for the army of recent BTL landlords, house prices would fall, rents would become more affordable, everyone would have more money in their pockets to spend, the economy would grow, tax revenues would rise etc. etc.

        • Edward2
          Posted August 8, 2013 at 6:39 pm | Permalink

          Being a landlord is a business that has been going on for centuries Mike
          It is even spoken about in the Bible
          Is it very different from making money from having a lodger or running a b and b or a guest house or a small hotel?
          Presumably if anyone takes a risk and borrows money to finance such an enterprise you feel it is morally wrong
          If you don’t have a loan is it then OK?

          • Mike Wilson
            Posted August 9, 2013 at 7:29 am | Permalink

            @Edward2 ‘ … if you don’t have a loan is it then OK? …’

            Well, impossible to answer really. Is it okay that one bloke has 5 houses that he rents out? Is property theft? Why can’t we share out the resources equally?

            But, given the world is not a perfect place, given there have always been haves and have-nots … it just galls me to see the rise of a new wave of BTL landlord who courtesy of companies like Inside Track (now broke) were encouraged to build a portfolio of 50 houses – as if they, somehow, had a right to own 50 houses, price others out of the market and demand high rents to cover their mortgages.

            If you take this to its logical conclusion, it would mean only 1 person in 50 could ever own property.

            As it is, 1 in 5 properties is now ‘owned’ by a BTL landlord (i.e. owned by the banks). How long before it is 2 in 5? Then 3 in 5? Then we have a real property owning aristocracy with the rest of us as serfs. You up for this?

          • stred
            Posted August 9, 2013 at 2:41 pm | Permalink

            As someone who has invested in rental property for a pension-thank God- and has been working full time for 6 weeks renovating a property last renovated 8 years ago, I can assure you and MW that rental property is just as much a business as others, though taxed differently for CGT. Most of the other landlords working near mine were also well over retirement age and lugging out rubble bags, discarded belongings or, in my case erecting andclimbing up scaffolding towers. Cheaper than enrolling at a sports centre though.

          • Edward2
            Posted August 9, 2013 at 3:02 pm | Permalink

            Mike
            Your scenario rests on assuming no new properties ever being built.
            This is very unlikely and the answer is in building many more homes both for sale and for rent to meet the demands of our rapidly growing population.

    • lifelogic
      Posted August 9, 2013 at 9:43 am | Permalink

      Well you are taxed, rightly, on profits (and gains) on buy to let rents, clearly you can offset interest, but then who ever gets the interest (the banks or their depositors) then pay the tax on this. Otherwise you would have double taxation and taxes on non existent profits which would make no sense at all.

  19. Mike Wilson
    Posted August 8, 2013 at 8:23 am | Permalink

    If you are unhappy with the returns from the bank, and you don’t want to be a (word left out ed) Buy to Let landlord – use ZOPA or FundingCircle.

    A mate of mine uses FundingCircle. He invests money in chunks of £100 (so not much risk) and he is currently getting an average return of 8%. It takes a bit of time and effort (half an hour a week, he says) but if you have a chunk of money and you are relying on interest from it to live on in retirement, you’ll have the time to keep an eye on your money.

    • lifelogic
      Posted August 9, 2013 at 9:47 am | Permalink

      Certainly cut out the huge margin banks if you can, but I would lend directly and take good security and get the legals right. Lost of sound people and businesses are struggling for funding.

  20. Richard1
    Posted August 8, 2013 at 8:33 am | Permalink

    Mr Carney seems a smart guy. However I wonder whether he doesn’t have an unduly bank-friendly perspective (as the govt in reality also does given its post-Brown exposure)? An environment of artificially low interest rates above all postpones the day of reckoning on banks’ balance sheets. If interest rates went to say 5%, there would be a huge need for new capital as a result of losses which would need to be recognized. This would now mean a hit to creditors and in particular shareholders of banks. There are bound to be powerful voices arguing against that.

    • JimF
      Posted August 8, 2013 at 11:50 am | Permalink

      Oh, and all sort of other things.
      Our Company was cautious in comparison with UK and US competitors/hedge funds who went round paying silly prices and loading Company balance sheets with debt. They got it right – when the mess hit the fan, they were cushioned from the higher rates by the Bank and FED which would in normal circumstances have destroyed them whilst we would have been there to pick up the pieces. And it still continues….

      • Richard1
        Posted August 8, 2013 at 4:58 pm | Permalink

        Interesting. There was of course an excellent time for going around picking up pieces – during 1st half of 2009, but it was very difficult to get funding. Those that did have done very well. You are right however, there are an awful lot of people who really don’t want to recognize the losses implied by higher interest rates.

  21. Denis Cooper
    Posted August 8, 2013 at 8:37 am | Permalink

    The law is clear and has not been changed: it remains the case that the statutory duty of the MPC is to meet the inflation target set by the Chancellor, and only subject to that to support the economic policies of the government.

    Section 11 of the Bank of England Act 1998:

    http://www.legislation.gov.uk/ukpga/1998/11/section/11

    “11 Objectives.

    In relation to monetary policy, the objectives of the Bank of England shall be –

    (a) to maintain price stability, and

    (b) subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment.”

  22. Lindsay McDougall
    Posted August 8, 2013 at 9:13 am | Permalink

    We seem to be following the ruinous path of the mid-naughties. The Governor will continue to target (this time loosely) a measure of inflation that deliberately excludes asset prices, particularly house prices.

    The only safeguard against a repeat bubble is that monetary policy will tighten when the unemployment rate dips to 7%. For ‘when’ read ‘if”. We simply do not know the future path of the unemployment rate – for example, we do not know the level of immigration and its impact. From 1st January 2014, many more EU immigrants will have the right to come here.

    Why don’t we do the sensible thing, which is to target an inflation index that INCLUDES house prices and EXCLUDES indirect taxes? Surely the Governor has enough bright young men on his books to come up with a suitable index and to check out what would have happened in the mid-naughties had it been targeted. Having got the right inflation index, he could then start off with a target of 2.5% pa inflation, progressively reducing it to zero.

  23. Lindsay McDougall
    Posted August 8, 2013 at 9:31 am | Permalink

    CHANGE OF SUBJECT

    In the ‘i’ newspaper of Wednesday 7 August, the following appeared under the heading “Cameron picks ‘Europhile’ for Brussels role:

    “Ivan Rogers, the Prime Minister’s adviser on Europe, is expected to be confirmed within weeks as the UK’s next ambassador to the EU in Brussels. His appointment will be highly significant as he will lead efforts to claw back powers to Britain ahead of a 2017 referendum promised by Mr Cameron on EU membership.

    [Bill Cash wants a veto by MPs.]

    Some Conservatives will be alarmed by Mr Rogers’ apparently Europhile background – he has worked closely with Kenneth Clarke and the vice-president of the European Commission, Lord Brittan.”

    Well, what do we make of that? What does Mr Redwood make of that?

    (A couple of clues (1) When John Major and Norman Lamont got into a spat over Europe, Mr Cameron sided with the former (2) Mr Cameron’s famous Bloomberg speech of January 2013 contains many fine sentiments but no ‘red lines’.)

    The claws will be fairly short and blunt, methinks.

    • lifelogic
      Posted August 9, 2013 at 9:52 am | Permalink

      The appointment of Ivan Rogers would surely be the final confirmation that Cameron is a Ted Heath, John Major, pro EU socialist. As if we needed any more confirmation.

      Just a 20% chance of a Tory Majority according to the odds in 2015. Even that looks optimistic. Clearly Cameron has given up.

  24. English Pensioner
    Posted August 8, 2013 at 9:31 am | Permalink

    There is a connection between interest rates and the rush to the shops that you discussed yesterday. Surely this rush is because people are spending their savings rather than see them depreciate at an alarming rate, and once this has been done, the economy could start to slow down once again. Those of us pensioners who have a reasonable pension are now starting to spend their savings and enjoy our purchases rather than save for some undefined future use. Let’s live for today, seems to be the motto of many of our friends, with cruises and other foreign holidays being high on the agenda.
    So, whilst mortgage rates may be at an all time low, one wonders where the banks and building societies are going to find the money to lend once the erstwhile savers have spent their cash.

  25. Atlas
    Posted August 8, 2013 at 10:00 am | Permalink

    John, as you say – but perhaps not in exactly these words – state sanctioned theft from savers.

    Since there are far more savers than borrowers, and since most savers are older, and it seems that older people are more inclined to vote, I wonder how much this will affect the Conservative Party’s support, especially with UKIP now on the scene as a serious alternative?

  26. Bert Young
    Posted August 8, 2013 at 10:09 am | Permalink

    I class myself a “saver” because I have a young child and I need to plan for her future when “I am gone” . I cannot invest in high risk situations and I must avoid undue expenditure . What do I do ? . Investment advisers do their best to steer me on a safety course and I seek views from a whole variety of other well – informed sources to try to get the best possible returns .I suspect I represent a considerable chunk of the retired population who try to stay safe and reasonably independent . The latest suggestion is ” Off-shore Bonds ” ; the rates are higher , up to 5% of the sum invested can be taken tax free per annum ; they seem relatively low risk . If I follow this course , what benefit is it to the UK economy that wants me to spend spend spend ? All advice will be welcomed .

    • margaret brandreth-j
      Posted August 11, 2013 at 6:51 pm | Permalink

      Bert I must be one of those nasty people who won’t take out a loan also, (had a bad experience in business ed) became a single parent and suffered inordinately whilst the boom was on. As a child I saved sixpence a month then a shilling a month in the TSB and didn’t get out of the habit , but was drained of every single asset I had and thrown out to the lions in bad health with 2 young children. I wouldn’t take a loan out for anything or anybody being so selfish.!

  27. Robert Taggart
    Posted August 8, 2013 at 11:05 am | Permalink

    Blighty does appear to ‘have it in’ for us savers – even more so for us saver scroungers !…
    Pitiful interest rates – 2.2% the best one can find for ‘conventional savings’.
    Fiscal creep – the lower limit for scroungers with capital remains at £6K – this only serves to make our mattress that bit more comfortable !

  28. Paul H
    Posted August 8, 2013 at 11:05 am | Permalink

    Oh yes it is a nasty bubble in the making, at least in respect of asset (especially house) prices. Over at CityAM Allister Heath sums it all up brilliantly and succintly.

    I realise you have to be a loyal conservative, but I am really disappointed that you are being so sanguine. Osborne is proving more useless than Brown, trying to buy the next election and hang the economic consequences. And I thought you were more fair-minded than to overlook the impact on a generation trying to house itself under its own roof, the moral hazard in the subsidy to borrowers, and the message that there is no point in trying to save for your old age.

    It is quite simply disgusting.

  29. Neil Craig
    Posted August 8, 2013 at 11:07 am | Permalink

    Low interest rates must mean that the smart money is invested abroad where higher returns are possible. If this is not a problem it can only mean there are a lack of good investment opportunities here anyway. Which in turn suggests that our bureaucracy and its stifling of new technologies like shale, GM and nuclear plants and presumably many less known ones, is the real problem.

    The good news being that in turn, as soon as we had a government committed to allowing progress and growth there would be enough investment money available to grow the economy spectacularly quickly.

  30. forthurst
    Posted August 8, 2013 at 11:36 am | Permalink

    We have a Chancellor who believes that by creating a property owning democracy by putting taxpayers at risk of the consequences of an asset bubble collapse, he can win the next election in emulation of the feelgood factor created by Mrs Thatcher’s council house sales. It is not a good idea to combine the functions of managing the economy reponsibility with that of winning the next election at all costs.

    How will maintaining low interest rates reverse the structural unemployment caused by allowing accountants running engineering businesses to conspire with banksters to sell them off to foreign companies which will then inevitably close factories and move production abroad?

    Should not the MPC be mandated also to set the wholesale electricity price, striking a nice balance between saving the planet and saving the economy: the MPC could study each month the number of jobs lost and export sales lost directly as a consequence of deliberately suicidal energy prices and adjust accordingly. Perhaps the MPC could also control the unemployment rate by regulating the number of EU and third world immigrants etc ed.

  31. JimF
    Posted August 8, 2013 at 11:42 am | Permalink

    How about some forward guidance on house prices? Something like:

    “Houses are most peoples’ largest asset and servicing their debt is their largest single cost. We wish to maintain house price stability to ensure future affordability. Our route to doing this is to maintain long-term interest rates at a level which ensures zero percent house price inflation during my term as Governor of the BOE. We will increase or decrease interest rates in response to house price movements to reach our goal. This will in turn provide a stable asset structure and future cost structure to UK owner occupiers, as well as securing a reasonable balance for those who rent against those who buy. This in turn will provide people with more certainty against which to move house, plan their families and careers.”

    • Mike Wilson
      Posted August 8, 2013 at 2:59 pm | Permalink

      We need fixed rate mortgages for 25 years.

      You used to be able to get them.

      • Edward2
        Posted August 10, 2013 at 9:11 am | Permalink

        They were offered by several lenders in response to people saying they wanted them, but as the average time people stay put before moving on is approximately 7 years and to cover the risk of guessing 25 years into the future they were more expensive than variable rate or short term fixed rate loans and therefore very few were ever sold

  32. miami.mode
    Posted August 8, 2013 at 1:25 pm | Permalink

    You mention treble dip recession on 2 occasions but I thought the double dip had been disproved.

    I’m not sure whether I detect a note of sarcasm when you state that borrowers “will enjoy more cheap borrowing this decade to spend beyond their means” but I would have thought that sensible mortgage holders, where possible, will be paying down their debt and the majority of other borrowers are so stretched that they can only just about manage their existing debts or will default. Where will this extra spending come from?

    Reply There was no double dip – I referred to both the claimed double and the fabled treble.

  33. lojolondon
    Posted August 8, 2013 at 2:02 pm | Permalink

    “Cut your suit according to the cloth”.

    I think Mr Carney has set out the stall for the next while, if you are a smart saver you will become an investor. (ie. buy shares). A great opportunity for those lucky enough to have savings!

    Reply This site does not give investment advice. Shares can go down as well as up.

    • Mike Wilson
      Posted August 8, 2013 at 3:03 pm | Permalink

      @logolondon Buy shares! I don’t think so! FTSE has been flat for 15 years now.

      The days of buying shares in big companies and watching them grow and grow and the dividends go up and up are long behind us.

      If you can spot the Apples and the Googles – great – but that is just pot luck. Haven’t you noticed – endowment policies (share based to a considerable extent) aren’t paying out and pension returns are abysmal (although, of course, the fund managers still take their cut even when they are useless).

      • Edward2
        Posted August 8, 2013 at 9:12 pm | Permalink

        Maybe based on your 15 year comparison Mike, which has the biggest crash in a century in its period, but taken from 1985 shares have gone from 1413 to 5898 (FTSE 100 index) and from 682 to 3093 (all share FTSE index) and the average annual dividends in that period are well above what you would have got in a bank deposit account.

        • Mike Wilson
          Posted August 9, 2013 at 7:32 am | Permalink

          @Edward2 – But the world has changed – forever. Globalization has taken place. Technology is on the march.

          How many companies in the 1985 FTSE are still in it?

  34. waramess
    Posted August 8, 2013 at 3:16 pm | Permalink

    You may see growth and no bubble but that is exactly what Blair and Brown said about their bubble, and I don’t remember many dissenters.

    It’s not stastistics that show when a bubble is being blown nor when growth is commencing; it’s common sense.

    When the cost of housing becomes such a huge multiple of salary that few can afford to buy, this is not high prices resulting from a high demand; it is a bubble.

    When the government step in to further distort the market by guaranteeing repayment of part of the mortgage this is not asssistance this is encouraging those that otherwise are unable to afford to buy and those that would otherwise be unwilling to lend to commit to irresponsible behaviour.

    When interest rates are set at such low levels that they will inevitably fuel asset prices and money printing that will have exactly the same effect this is a bubble forming.

    It is true that much will come out of increased house building such as the manufacture of building materials but this will not be a normal and sustainable growth; this is all a part of the bubble.

    Having singularly failed in the aim to cut government spending the heir to Blair has finally decided to take up the same sport of bubble blowing.

  35. Acorn
    Posted August 8, 2013 at 3:36 pm | Permalink

    Apparently, somebody has changed the BoE single mandate into a double mandate, that is, price stability and now, employment. Just like the FED. Except the FED gets its mandate from an elected Congress. The Governor appointment has to be approved by the elected Senate Banking Committee as a proper person, suitable to pursue the mandate.

    Not in the UK. The Chancellor may have changed the mandate, perhaps. Mr Carney said he would change it, in his answers to the Treasury Select Committee. The Treasury Select Committee can’t change anything except the level of government embarrassment via the media, but Mr Tyrie, conservative, can’t do what Mrs Hodge and Mr Vass are very good at doing (and, frankly are effectively The Opposition). What we can be sure of is paying 650 MPs £140 million a year, to take part in a debating club that added nothing to the above; needs a rethink.

    BTW. You will NOT be able to substitute the word “Parliament” for “Congress” in the following.

    FED Chairman Ben Bernanke at a Senate Committee hearing: “Well first let me say, of course, Congress sets the mandate for the Federal Reserve and so Congress has the right, of course, to set the mandate any way it likes. The Fed is doing what Congress told it to do, which is doing our best to promote maximum employment and price stability”.

    Anyway the second coming in the shape of Mr Carney has to stop dodging, and find an answer to the UK’s number one “Elephant in the Room” problem WHY IS INFLATION PERMANENTLY SO HIGH. We are running 8% budget deficit,and the economy is bumping along the bottom. Labour had to run 11% to get the economy to lift of the runway.

    We are supposed to have unused production capacity, but import substitution is negligible. The numbers on unemployment and labour force participation (which hides some of the unemployment rate as the participation rate drops); are at odds with net immigration averaging circa 385,000 a year for the last ten years. Something ain’t right!

    “Mark Carney can look in the mirror to see one example of British exceptionalism. No other major economy’s government would let a foreigner run its central bank. But in his first major policy announcement, the Canadian governor of the Bank of England studiously ignored a more relevant national exception: the inflation rate.” http://blogs.reuters.com/breakingviews/2013/08/08/carney-should-worry-about-why-britain-is-different/ .

    Reply The Chancellor on behalf of Parliament has approved the choice of Governor and approved the latest policy.

    • sm
      Posted August 10, 2013 at 12:21 pm | Permalink

      Where was the vote in our version of a so called democratic parliament.

      Its hardly a small issue.

      Getting an MP to vote is the only oblique way we can hold them to account. It at least has the advantage of ensuring less evasion of responsibility and very partial accountability.

      Perhaps we could combine it with recall?

      The technology exists to do this.

  36. Peter
    Posted August 8, 2013 at 4:19 pm | Permalink

    Sadly, there are already bubbles in bonds, shares and property.

    These are going to burst again before too long.

    When they do, we will have a re-run of 2008 – but worse.

    The coalition had a chance to sort out the mess left by Blair/Brown. Instead they have just repeated the same silly errors.

  37. Iain Gill
    Posted August 8, 2013 at 4:30 pm | Permalink

    not much support for your post here then john?

    pretty much everyone can replying can see the obvious

    • Winston Smith
      Posted August 8, 2013 at 8:36 pm | Permalink

      I no longer read this blog regularly, since JR, so evidently, retreated to tribal politics and abandoned independence and principle.

      Repkly Shame on you – I still give my view and criticise where criticism is needed.

  38. Atlas
    Posted August 8, 2013 at 4:56 pm | Permalink

    Presumably Mr Carney is just mouthing the latest fashion in Central Banking ?

  39. JimF
    Posted August 8, 2013 at 5:10 pm | Permalink

    You do need to respond to the points made above with a serious, logical thesis as to why holding interest rates at rock bottom and subsidising borrowers leveraged 20 times at these levels is such a good plan. Would you also like to guarantee borrowers who would buy stocks, bonds or other assets at this leverage? Wouldn’t it be better for the Country to focus, if anything, on guaranteeing loans to young qualified folk looking to buy or start a proper business and leave property prices to the market?

    People posting on this site don’t have political axes to grind, aren’t for the most part either daft or particularly atypical of middle England. Shouldn’t you be listening to us and responding????

  40. Nash Point
    Posted August 8, 2013 at 10:10 pm | Permalink

    My advice to anybody who thinks property is in a bubble, is to think again.
    The robbery of miniscule interest rates on savings is to force people with cash into real assets such as property, which they will then rent out.
    The days of the average home costing 3 to 4 times average salary will never return.
    The shortage of housing supply will exacerbate this trend.
    Basically, we’re moving to the continental system where renting is the norm.
    Personally, I’m not the type to buy and rent houses – I’m far too soft, and tenants walk all over me. If you’re hard enough, do it. It’ll work out fine.
    My choice was to buy a run-down rural property. I live in it, will renovate it, put all my savings into it, and if the time is right, sell it on. I am confident that house prices will continue to rise, and that it will return a profit on my investment. That profit (as things stand) will be tax free as it is my main residence.
    Low interest rates will kill an economy, and people know it. In times like this, you have to think outside the box and adapt.

  41. formula57
    Posted August 9, 2013 at 5:27 am | Permalink

    You say “Now all that remains is to worry lest the economy does too well! ”

    That is my constant source of concern! Well that and the prospect that we are in a Minsky bubble.

    Mr Carney’s words serve to show his central bank (like most others) has no shots left in its locker beyond optimistic talk (now done for too long and wearing very thin). What he and others fail to appreciate is that as a saver, I can remain abstemious for longer than he can rig the interest rate market. lol

  42. Gareth Davies
    Posted August 9, 2013 at 8:16 pm | Permalink

    John I am surprised at the tone of your article – you appear to have only crocodile tears for savers. What have they done that is so wrong? Why are they seemingly so despised by society? Why is their plight given so little coverage in the media? Why are they given so little support by the MP’s that are supposed to represent their interests? I am a life long cautious saver. Can’t help it – I was bought up this way by my parents that lived through the 30’s and WW2 – taught not to buy what I could not afford, to make do, to budget, to live within your means. All these values now seem worthless. In the new normal saving is for mugs – apparently.

  43. Vanessa
    Posted August 9, 2013 at 10:58 pm | Permalink

    There has never been a connection between interest rates and unemployment so Carney’s promise to wait until unemployment reaches 7% before interest rates go up is utterly ludicrous.

    He is only doing this so as to keep government borrowing cheap and for no other reason. Some say the health of the US economy could scupper his plans – bring on America.

  44. helen jones
    Posted August 13, 2013 at 8:13 pm | Permalink

    Theres millions of us who do not have any form of pension beyond miserly state pension which you simply cannot live on
    Hence our savings are our pension and Funding for Lending has totally ruined everything

    Its clear that Osbourne is the architect of wrecking the lives of pensioners and that Carney is complicit in his deceit
    Cameron , Clegg and Osbourne. ALL PROMISED to help savers
    Instead every single policy has robbed us blind

    Pensioners are now faced with selling their homes because they can no longer afford to pay the bills
    This is the result of such hypocritical actions from this government

  45. gareth davies
    Posted August 14, 2013 at 4:44 pm | Permalink

    Regarding Guy Opperman MP plans for regional banks and how to fix the banking industry – Yes very good and long overdue – I hope its not another politician’s empty promise (anyone remember David Cameron’s promise in opposition to stop taxing saver’s interest?) Peer to peer lending – not covered by the £85000 protection – as soon as it is I’m in. Credit Unions – are covered by the £85000 protection but it seems that they are not run as efficiently as the peer to peer groups and as a result seem to pay no or very small dividends to investors. In summary I agree with the MP that we need new banks. In fact I still do not understand why we bailed out the existing banks rather than let them fail and in their place set up new traditional banks that were forbidden from investment/casino banking using tax payers money – or knowing that heads we win and tails we win – we keep the profits and any losses are covered by the taxpayer – good game eh? Anyway we cannot change what has gone or be thrown away already. I have been watching the progress of some of the new banks – Metro, Shawbrook – and they have so far not offered savers and interest bearing accounts that are significantly better than the existing banks – but I live in hope. Its a strange world at the moment – people without money (mortgage/credit card holders and of course HM Government) telling those that have money (savers) that money has no value and deserves to earn only paltry interest. I would so love a time when new banks are established that do pay reasonable interest to savers – I for one will be withdrawing my funds from the existing institutions (banks and most building societies including (named institution ed) that has always pretended to reward its customers (savers) loyalty) and placing my savings with these new style banks. Bring on the day!

    Reply An individual MP or an opposition party can float an idea and try to persuade government to adopt it, but is not in a position to make and deliver a promise like that, nor I suspect has Guy “promised” – he is trying to generate change.

  46. gareth
    Posted August 30, 2013 at 4:56 pm | Permalink

    “It is a rather low number (the membership of Save Our Savers at some 3800) considering how many savers there are. Why do they not take greater notice of this mess forced upon them?” YES I have been pondering this question for many years now and still do not have the answer. I think its to do with the age profile of savers, their old-fashioned and principled values of not making a fuss, getting by, getting on with things – I include myself here. A playground analogy is that we (savers) are as a group like the class weakling, constantly being picked on by the class bully (the government) – in my dreams I hope in true Hollywood style that the weakling will eventually rise and give the bully a bloody nose and thus set him right! Well I can dream anyway.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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