Simon Read: This pensioners' payout is not going far enough to save lives

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The Independent Online

The Department for Work and Pensions has been crowing this week that 250,000 pensioners will start getting £80 off their next electricity bill from this month, thanks to a deal by the Government and leading energy suppliers.

The DWP said that up to £20m will be paid out by the largest energy companies in a one-off rebate to some of the pensioners who need the most help with their fuel costs. So three cheers to the energy companies involved: British Gas, EDF Energy, E.ON, npower, ScottishPower, and Scottish and Southern Energy.

However, while £80 is a lot of money to many pensioners, it will go only a little way to reducing the number of older people living below the poverty line. The fact is that fuel bills remain far too high as a percentage of household bills for many and the Government needs to introduce a more lasting scheme. We shouldn't allow any more winters where older people risk their lives by turning off their heating because they can't afford to pay the bills.

Those people who are eligible for the scheme should be getting a letter about it by the end of the month. To be eligible you need to live in a household where at least one person is aged 70 or over, be receiving the guaranteed element of pension credit but not the savings credit element, be responsible for the electricity account where you live, and don't already benefit from a discounted tariff. If you have any questions about the scheme call 0845 600 0033.

One in three people is borrowing money to pay for this summer's holiday. Research from Bright Grey suggests around 10 million of us will pay for our break by using a credit card, a travel agent payment plan or borrowing cash from friends or family.

Anyone reading this week's feature on cutting back (page 62) will know that I'm a great advocate of sensible spending, and not splashing out on things you can't afford. But I believe a holiday is an exception. It's an essential, rather than an extra, and if you have to borrow money to pay for it, then so be it. We all need a break from work or day-to-day pressures.

Of course, I will temper that with the usual exhortations to plan your spending carefully and not splash out on a dream luxury holiday that really is beyond your means. Also think carefully about how you're going to repay the cash. Bright Grey says that the average holiday costs £1,231. If you put that on the average credit card it could add over £100 to their holiday costs for each month it takes to repay the balance.

If you can't pay off the debt reasonably quickly then the financial hangover and distress could last a lot longer than the holiday happiness. But, let's face it, you can have a great break without breaking the bank. The alternative – going without a holiday – would be costly, not in money terms, maybe, but in peace of mind.

The Bank of England kept interest rates on hold for another month on Thursday. That was not at all unexpected, of course, but it was notable from the point of view of breaking records. The bank base rate has now been left at the same 0.5 per cent level for 16 months.

The last time the bank rate was unchanged for such as length of time was during the period of uncertainty in 1952 when Queen Elizabeth came to the throne. It remained at 4 per cent from 11 March 1952 until 17 September 1953 when it was cut to 3.5 per cent. The bank rate's next change now is almost certainly upwards, but when that may be is still open to some speculation. It seems likely to remain at 0.5 per cent for the summer at least.

More crucially, what will the lack of change do to the mortgage market? "Two year fixed rates offer little value but the gap between the rates payable on a five or 10 year fixed rate and the initial rate on a tracker mortgage has narrowed since the election, as the markets have reassessed the medium to long term outlook for interest rates," says Ray Boulger of the independent mortgage adviser John Charcol.

He says lifetime trackers offer better value for the time being, based on the expectation that interest rates will only rise slowly. "However, anyone on a good long-term tracker mortgage with borrowings in excess of £500,000 who wants some interest rate security should consider buying a five year cap as an alternative to switching to a fixed rate," he advises.

Move away from the North-east if you want to avoid going bankrupt. The best place to move to? London. That's according to a new bankruptcy map produced by the insolvency trade body R3.

The stats make sobering reading. They reveal that the likelihood of becoming insolvent is almost 70 per cent higher in the North-east than in London. However the bankrupt capital is Torbay in Devon, where 46 people per 10,000 went bankrupt in a year, according to the latest figures. In London the bankruptcy level was just 17 per 10,000.

In fact coastal areas across the country predominate in the list of insolvency hotspots, which includes Hastings in the south, to Gateshead in the north. That's not too surprising as seaside areas do tend to rely on tourism and entertainment, both of which industries have suffered dreadfully in the last couple of years with job losses and company collapses.

The insolvency industry estimates that some 500,000 people are currently in informal insolvency procedures, and R3 research shows that nearly 1 million people are struggling with debt and have not yet sought help. As the new austerity hits home, more people will be likely to suffer with financial problems, and making sure they find help is crucial.

A research company asked me questions about a bank this week. After the usual probing about the state of the banking industry and what I thought of savings and borrowing products (my answers weren't complimentary) the last question surprised me. "What can banks do to repair their reputations?" I would have thought the answer was obvious ...

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