A little bit extra, but not for you
Sunday 03 December 1995
That was John Wriglesworth, head of strategy at the less-than-romantic Bradford & Bingley building society, dismissing the Budget cut in tax on savings' interest from 25 to 20 per cent. "No-one will see the benefit," he said.
By which he meant that by the time the tax-cut comes in - in April - savings rates will have already fallen.
The April improvement in net rates - because less tax will be deducted - will not make up for the cuts in rates between now and then. These cuts will follow from the mortage rate cuts made late last week in anticipation of a base-rate cut by the Government.
Savers might well ask why the Chancellor didn't implement the savings tax cut immediately and so put the societies on the spot. They might then be less inclined to cut saving rates.
Alternatively, remember Mr Clarke offering the pools companies a cut in betting tax on condition that they pass the entire cut on (albeit to charity)? Why was something similar not possible with the societies and banks? The Chancellor could have insisted they make a public commitment not to cut their rates unduly. As it stands, when societies cut savings rates how will we know whether the cut is that much bigger because they are trying to take a little extra because we're due a little extra?
After all, societies have got savings coming out of their ears. They've no particular reason to keep rates up. It's mortgage borrowers they're trying to keep happy, as was shown by the mortgage cuts announced in the wake of the Chancellor's lack of action.
The Yorkshire, in cutting its mortgage rate to 7.59 per cent last week - below the new norm of 7.74 per cent - said it was demonstrating the pricing advantage of being with a mutual building society rather than a bank or soon-to-be bank. When I asked, it said there was "no way" savings rates would suffer to take in the tax cut. But savings rates are still pretty certain to be cut.
The tax cut may not be worth that much - around 0.25 per cent on current savings rates. But how about a public commitment from all the societies who profess that they want to stay mutuals that any rate cuts they make will be wholly regardless of the tax change?
- 1 Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
- 2 Prince held a Facebook Q&A and this is the only question he answered
- 3 Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
- 4 Now we know whose fault it is if you end up being murdered in Thailand
- 5 35,000 walrus gather ashore on north-west Alaska beach 'for a rest'
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Should gay sex be illegal? 16% of Britons think so
Mark Reckless becomes second Tory MP to defect to Ukip in a month
Benefits 'smart cards' plan revealed by Iain Duncan Smith to stop claimants spending welfare money on alcohol
- < Previous
- Next >
iJobs Money & Business
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...