Before you get the pitchforks and torches ...

Don't be too hard on the bankers over interest rate cuts; it's the money market rate that counts

The world and his wife are all in agreement that banks are pure evil. They have had our money, but they dither when it comes to rate cuts. And boy are we desperate for it. Repossessions are soaring and unemployment is rising; just think what a fillip a 1.5 per cent cut could provide. But before sharpening those pitch forks, lighting the torches and chasing the local banker off the nearest cliff, we must recognise that in the new post-credit crunch world the Bank of England base rate is nowhere near as important as it used to be. Put simply, it's the money market rate that counts and it is moving lower but not as far or quite so fast.

No lender is going to slash all its new mortgage rates willy-nilly and identify itself as a best buy because it would be hit with a demand for remortgage business that it couldn't possibly meet by raising cash on the money markets.

Some will cut their standard variable rates by a big amount – between 1 and 1.5 per cent. But so few customers these days are on SVR that cuts won't make all that much of a difference. The real winners will be existing tracker rate mortgage holders – roughly 30 per cent of the market – who will see their repayments slashed. But fixed rate customers – around 58 per cent of the market – will see little or no benefit, but that's what they signed up for.

The upshot is that, regardless of the furious headlines and the bandwagon jumping politicians, most of us will have to wait for our rate cut jam and although banks – through their lax lending – are in large part responsible for this grim new world we live in, this isn't a case of collective maliciousness on their part.

Saving pensions

The introduction of personal accounts from 2012 looks increasingly as if it may be botched. At present, the Government is reviewing how personal accounts – which will see millions of workers auto-enrolled into a pension scheme – should work and crucially, we hope, how it interacts with the state benefits currently available.

I have always been in favour of personal accounts. Put simply, we must get people saving more and paying for their own retirement. But I have put a big caveat on my support for these accounts, and that: means-tested state benefits need to be reformed at the same time. The danger we face is that millions will save in the accounts only to get to retirement and find that their savings bar them from state benefits, especially pension credit. It's simply not fair that workers make sacrifices and do the right thing and end up with the same amount of money as someone who has saved nothing. It has the potential to be the mis-selling scandal to end all mis-selling scandals. The only way to avoid this is to reduce the benefits paid by the state – which at present are designed to grow markedly over the next few decades.

Following the Pensions Commission report compiled by Lord Turner and the subsequent Pensions Act there were some fine words spoken by politicians of every hue that they recognised that the long-term health of the retirement savings system was crucial to the country and that short-term political considerations would not distract them from doing what was right.

Now politicians think they have bigger fish to fry, and their pledge to do what is right come what may is being forgotten. Sad to say, from the soundings I am getting, we could be returning to the same old short-term approach to pensions, a subject on which we need to take a generational view. It looks as if ministers may back away from reform of the means-tested benefits needed to make personal accounts credible. The emerging attitude is: let's get the accounts up and running and look after the means-tested benefits mess later. However, if they do that, they will find that a lot of the support for personal accounts will disappear overnight.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Alan Bennett has criticised the “repellent” reality shows which dominate our screens
tvBut he does like Stewart Lee
Life and Style
The Google Doodle celebrating the start of the first day of autumn, 2014.
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
David Moyes and Louis van Gaal
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
Former Governor of Alaska Sarah Palin, left, with her daughter, Bristol
newsShe's 'proud' of eldest daughter, who 'punched host in the face'
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
Arts and Entertainment
Salmond told a Scottish television chat show in 2001that he would also sit in front of a mirror and say things like,
tvCelebrity Trekkies from Alex Salmond to Barack Obama
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
Life and Style
food + drink
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
A cabin crew member photographed the devastation after one flight
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee / Experienced Recruitment Consultants

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

    Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Quantitative Risk Manager

    Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

    Day In a Page

    Secret politics of the weekly shop

    The politics of the weekly shop

    New app reveals political leanings of food companies
    Beam me up, Scottie!

    Beam me up, Scottie!

    Celebrity Trekkies from Alex Salmond to Barack Obama
    Beware Wet Paint: The ICA's latest ambitious exhibition

    Beware Wet Paint

    The ICA's latest ambitious exhibition
    Pink Floyd have produced some of rock's greatest ever album covers

    Pink Floyd have produced some of rock's greatest ever album covers

    Can 'The Endless River' carry on the tradition?
    Sanctuary for the suicidal

    Sanctuary for the suicidal

    One mother's story of how London charity Maytree helped her son with his depression
    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits