Your savings are now a major moneymaker for the Treasury – higher rates equals more tax collected
Conservative MPs seem awfully keen to ensure that banks pay better rates on savings. The Treasury Select Committee has not stopped harping on about the need for banks to improve deals and explain why they have been so slow to do so thus far, with the Chancellor also banging the same drum.
The answer, of course, is that big banks pay as little as they have to because they can get away with it. Better savings rates are out there, more fool us if we lack the initiative to shop around.
But here’s perhaps a more sinister reason as to why the Conservatives are so keen on banks to pay more, and that is because your savings are now a major moneymaker for the Treasury. Higher rates paid by banks equals more tax collected.
The Chancellor is demanding the banks raise rates, while at the same time keeping the personal savings allowance frozen. He is able to sit back and count the pounds roll in as inflation remains high and the Bank of England’s Bank Rate hits 5.25pc, a level not seen since February 2008.