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Show ‘sympathy for savers’, Government told

Show ‘sympathy for savers’, Government told

Category: Savings

Updated: 15/11/2011
First Published: 15/11/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Government has been called to show it has some 'sympathy for the plight of savers' in the face of low interest rates and high inflation.

Figures out earlier today showed that Consumer Prices Index inflation fell from 5.2% to 5.0% in October, but Moneyfacts.co.uk figures show that savers would have to find an account paying 6.25% to beat the effects of inflation.

There are currently no accounts that shield savings from inflation erosion; just a year ago there were 91 that would have done so.

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said the small fall would 'not be enough to curb the woes of the nation's savers'.

Industry expert Dr Ros Altmann has also waded into the debate, labelling the current situation faced by consumers as 'an assault on savers'.

The respected commentator said that the suggestion that high inflation would soon subside represents 'scant comfort' to savers and described the current rates of interest available in the savings market as 'meagre'.

"Savers have been assured, for the past few years, that the high inflation figures were merely 'temporary', yet they have endured," she commented.

To combat the current conditions, the Government is facing calls to increase the amount savers can squirrel away in their ISA accounts.

The limit was recently increased to £10,680 a year, half of which can be placed in a cash account.

But in light of the current financial climate, it should be raised again, said Ms Altmann.

"One thing the Chancellor could do to help here is to announce, in his forthcoming statement, that he is increasing ISA allowances, so that people can hold more money in bank accounts without being subject to tax," she commented.

"For basic rate taxpayers, on a typical 3 year ISA, that would be the equivalent of an interest rate rise of 1%. For top rate taxpayers, it would be like increasing rates by 3%.

"This would at least show that the Chancellor has some sympathy for the plight of savers, who continue to be the innocent victims in this crisis caused by over-borrowing."

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