Thanks

‘The Economist’ has suggested that “Some of the benefits now provided look ripe for cutting. Pensioners, for example, get free bus travel and also receive tax-free winter fuel payments on top of their state pension…” I know that economics is called the dismal science, but this is taking it a bit too far.

We really need to make sure that this does not happen. Political parties tend to be pretty much uninterested in the older end of the population, for all kinds of reasons. A journalist at the Conservative conference has commented that the obvious difference between this and the Labour conference is that the Conservatives look much younger. If this is correct, then expect even less interest in older people, and hence a greater risk of this kind of cut, if the Conservatives win the next election.

Free bus travel is one of those benefits which are virtually impossible to quantify. The bus still goes if fewer pensioners get onto it (actually, it is wrong to call them pensioners – free bus travel starts at 60), so the fact that these passengers are not paying a fare has scant impact on the system. Figures show that more elderly people travel because of the free offer – would the country really be better off if they sat at home instead? An awful lot of town centres would be even quieter during the day if this happened, and a rise in daytime TV watching is not going to boost our cultural life too much, and I would suggest will only bring forward the onset of dementia.

While I see nothing wrong with the winter fuel payment, it is a bit arbitrary, and harder to justify. I had no sense of suddenly needing two extra loads of logs when I reached 60, but I’m happy if the government decides to give them to me. The sensible thing might be to raise the qualifying age for this – it does seem a bit odd that while we are talking about making people work for longer in order to collect their state pension, we are also suggesting that six or seven years before they cease work, they need heating up a bit. State-supplied thermal underwear – that’s the kind of forward thinking we need from political parties. Carbon-neutral vests rather than burning more fuel. And we could train the over 65s to make them, thus creating a virtuous circle.

There we are – Invest in Vests. Reduction of the government deficit, keeping the elderly in work, and a solution to global warming all in one go. Let ‘The Economist’ spend its time explaining why bankers desperately need million pound bonuses in order to do their jobs well, and we’ll stick to the knitting.

New Deals

You have probably by now noticed the change in ISA limits for our age group – it has been covered in most of the press, with a lot of advertising as well. It looks a though most of the providers are offering to top up at the same rate as they offered earlier in the year – but do check on this. If they are not offering this, then of course what you can’t do is open another cash ISA somewhere else for the top-up amount. One cash ISA a year is the rule. This isn’t going to make anyone vastly wealthy, but it may be worth doing for a lot of us.

More worthwhile generally is to make sure that you are registered for the winter fuel allowance. We mention this each year, because it is not automatic to start with, unless you are on some kind of government benefit. It starts at 60, and many people are just surprised to know that they qualify at that age – most 60 year-olds just don’t see themselves as frail creatures clustering round any available source of heat. Still, £250 from the state is worth getting, and if you miss it there aren’t any back-dates available.

A useful book has also just been published, by a financial journalist who is very aware of ways to economise and save money. We have had conversations with her in the past, and Oscaruk.co.uk has figured in her articles and in this book. The title is ‘How to get the Best Deal’, by Sue Hayward, £9.99 published by Prentice Hall. There is a lot of useful stuff in this book, not just on senior discounts but across a whole range of consumer rights and other issues. Well worth getting hold of it. You could be sneaky and see if you can get it cheaper on Amazon!

Tried Opening a Bank Account Recently?

I guess that a lot of older people are suffering from the fall in interest rates on bank savings accounts – sensible advice is always to shop around for the best rates, especially when some accounts are offering virtually nil interest. If you can tie money up over a number of years, then slightly better rates are on offer, but for instant access, things are grim.

The concerns about money laundering have made the whole process of shopping around vastly more difficult. I have tried to open accounts with the best rate suppliers twice, and in both cases given up the attempt as, by the time they actually managed to get the account open, they were no longer offering the best rate.

I have made a new attempt to open an account with Alliance & Leicester, who are consistently pretty high on the rates chart for instant access savings. My error, about which I can do little now, is that my wife is Dutch. She has lived in the UK for around 20 years, has had a bank account with another bank in the same group as A & L for 9 years or so, runs a business here, and is even on the parish council of the village where we have lived for 10 years. However, the moment a bank hears that an alien is trying to open an account, shutters go down everywhere.

I filled in the required information on the internet. A letter then came through asking for further confirmation of identity and address for her, with a need to have this countersigned by someone with ‘Status’ – a very odd mix of professions qualifies for this. We pestered our solicitor neighbour for this service. Off this went, and then another letter came through saying that even more information was need – in fact two letters with utterly contradictory requirements came though.

Sensible thinking – we went to a branch of A & L, where they apologised but said it was nothing to do with them, as it was an online account, and they couldn’t understand the two letters either. However, they agreed to copy the pile of documents we carried, and to send them off by internal post.

Now, five weeks after the initial attempt to open the account, I have phoned them to see what is happening. I am told that they often take a long time, and to leave it to the end of the week and check again. Well, thanks, but I had noticed that it takes a long time. During that time, our savings sit in an account with 0.15% interest.

I understand the desire to avoid money laundering, but wonder why it should be assumed that the holder of a Dutch passport is more likely to try this than the holder of a UK one; and why it is assumed that an international drug dealer should be incapable of getting a utility bill in his name, or should not have a passport? Couldn’t the banks agree on one set of proof, and once it is passed, accept it for any new account?

Car Scrappage Scheme - Is it worthwhile?

There is a lot of doubt about the car scrappage scheme, and before using it to buy a new car, people really need to think carefully.

Firstly, most car dealers will offer discounts anyway on a new car purchase, especially under the present market conditions, and it may be simply that the informal discounts is being replaced by the formal scrappage scheme – you end up paying the same price anyway.

More importantly, the scheme only works on the purchase of a new car. If you really want a new car, then that is fine, but it may be a false economy to think that the scheme should push you towards a new car instead of perhaps a one year old model. The biggest cost in car ownership is the depreciation over the first year of the car’s life. Figures vary between makes and models, but the average loss in value in the first year of ownership is around 40%. A mini Cooper will be much better than this, but larger cars such as Jaguars will generally be much worse.

Over 3 years of ownership, you lose on average around 60% of the car’s value.

So, if you are looking at a car of £20,000 or so new, the scrappage scheme will drop it to £18,000, and at the end of a year you have lost £6,000 instead of £8,000. On the other hand, you could have gone for a year old model, and paid £12,000, and lost probably around £2,000. It all depends on what the thrill of owning a new model is worth to you. And remember that when all these discounted cars come onto the second hand market, the dealers will probably knock their offer price down further because the original purchase prices were low.

Another thought is that the most economical way of motoring could be to buy a good 5 year old car, and then when you need something bigger, or more comfortable, rent it. It is hardly worth running around in a big estate car just because you go away on holiday in it once a year. If you live in a city, maybe even do without a car and join a car club scheme instead – you just pay when you want to use the car.