The Funding for Lending scheme is the latest government policy blamed for crushing savings rates.
There is plenty of evidence to back up those assertions. Just compare any best buy table now with that six months ago – and look particularly closely at the fixed rates.
This coming after £375bn of quantitative easing was really the ultimate insult to those trying to earn a few quid a year from their money. So what can realistically be done to help savers?
I have seen lots of calls to raise the overall Isa limit, but I think these miss the point.
It is the overall structure of the Isa that needs to be changed. I can think of no sensible reason why savers should only be allowed to put half their allowance into a cash Isa.
Does anyone seriously believe that most of those who prefer cash Isas are topping up with a stock market Isa? The evidence suggests not.
And this certainly is not going to be a good option for pensioners and others with modest amounts of savings who need extra interest the most.
So why not allow everyone to choose to put their whole allowance into cash or shares? And to swap back and forth between the two?
Again, there is no sensible argument for allowing only a one-way switch to shares. This directly impedes investors from taking the sensible action of removing the risk from their portfolio as they grow older.
I am also hoping the new Financial Conduct Authority, when it launches, will get to grips with banks and building societies who steal their savers’ tax breaks by paying less on cash Isas than on taxable accounts.
The FCA may not be able to interfere with interest rate setting but it can look at whether customers are being fairly treated.
I would argue that there is a very strong case that a bank or society that pays less on a two-year fixed-rate cash Isa than on a taxable account is behaving anything but fairly.
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Index move
We are all used to becoming mugged by the government as it seeks to raise money from every possible avenue.
But a gradual move from using the retail price index to the consumer price index might just prove to be the most insidious change of all.
The state pension has already been locked to CPI and many company pensions have done that.
Now we await the results of a consultation from the Office for National Statistics on possible changes to RPI to bring it closer to CPI.
It is more than a year since the Office for Budget Responsibility forecast the difference between the two measures was likely to average 1.4 percentage points in the coming decade.
This could have a huge cumulative effect, not just on existing pensioners but on those who leave schemes and have their benefits uprated with inflation.
A £10,000 a year pension would grow to £19,898 a year after 20 years with 3.5 per cent inflation. Cut the inflation rate to 2.1 per cent and it grows to £15,154.
When Gordon Brown made his tax raid on pensions few outside the personal finance world understood the consequences. And it was many years before their voices were heard.
This is an issue on which we should all be shouting much much louder.
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History lesson
While I am on the subject of savers, I sometimes wonder whether competition has left them any better off.
Cast your mind back, if you are old enough, to the good old days when the building societies ran a de facto cartel when setting savings rates.
Throughout the 1960s with the bank rate running between 4 per cent and 8 per cent savers in an ordinary shares account could count on earning 3.5 per cent to 5 per cent after tax.
The mortgage rate meanwhile was between 6 per cent and 8.5 per cent.
A similar pattern continued through the 1970s. Interest rates were higher but savers all received a similar return, albeit one ravaged by inflation.
The BSA Council stopped recommending rates in October 1983.
In April 1986 the collective discussion and statement on interest rates ceased as it was deemed inappropriate. And where are savers today?
Those prepared to trawl the internet and constantly move their money to earn bonuses may be doing all right.
But far too many who do not have access to the internet or simply do not have the understanding or time to move their money are Patsies for the banks.
They are paid a pittance and have no protection against daily exploitation.
I know we cannot go back, and we are told that competition is best. And for some it may be. But I think this may be one time when it is right to yearn for the good old days.
I know we cannot go back, and we are told that competition is best. And for some it may be. But I think this may be one time when it is right to yearn for the good old days.Tony Hazell writes for the Daily Mail’s Money Mail section t.hazell@gmail.com
