12 The Sunday Times February 6, 2022MONEY
T
he typical household is now
£1,000 a year worse off.
In one hour on Thursday,
the Bank of England put up its
base rate and Ofgem
increased the energy price
cap by 54 per cent.
This leaves anyone with a
tracker mortgage on a rate of
1.8 per cent on the average
£200,000 loan paying an extra £300,
while from April anyone with a variable
rate energy deal will have to find an aver-
age of £700 a year more to pay their bills.
In a bleak assessment of the year
ahead, the Bank of England’s monetary
policy committee warned that take-home
pay would fall five times more than it did
during the 2008 financial crisis.
So what steps are people taking to
counteract these increase?
“We are lucky to still be
able to afford our bills”
Beth Greer, 34, has installed a smart
meter so that she and her husband, Carl,
44, can track their energy usage more
efficiently.
The couple own a three-bedroom
detached house in Cheshire and their
energy bills have increased from about
£100 to £212 a month since October.
“I was shocked,” said Beth, who runs a
sustainable homeware shop called Ivy
and Bee Interiors as well as working full-
time as an assistant operations manager.
“I’m now not leaving things on
standby and have halved the amount we
use the heating. When I’m working from
home now, I’ll get a hot water bottle and
stick an extra jumper on instead.
“The meter has made me more aware
of my energy use, you turn something on
and it will suddenly jump up.”
Beth and Carl, an IT engineer, remort-
gaged in November because their two-
year fix was coming to an end. They
secured a five-year rate that costs them
£20 more a month than their previous
mortgage because they were conscious
rates were only going to go up.
She said: “I was keeping an eye on
rates in the news and figured we could
secure one similar to our previous deal
before the increases came into place. We
pay about £680 a month now, up from
about £660.
“The fixed deal helps us plan. We
know what it’s going to be for the next five
years, which is really helpful when we
have no control over other costs, like
energy prices going up.
“I feel very fortunate to be able to still
afford my bills, and I’m aware there are
many people in this country who are not
in this position.
“With all these increases, and no wage
rise, you just end up spending your hard-
earned money on bills when it could have
been saved or be a nice meal out.”
”We’re delaying our
first family holiday”
Caroline and Richard Jacobs, from
Dorset, have both switched careers
recently and had only just sorted out
their finances when prices began tothe oil giant Exxon Mobil, and eight-year-
old daughter, and keep her staff working
remotely.
“I have an employee working from
home and I have outsourced our logistics
operation. Having my own space would
enable me to employ someone to do
logistics for me in-house and free me up
to employ three extra people, which is
what the business needs.
“But I am concerned about the over-
heads associated with the move, and with
prices rising again how much we will
have to pay for lighting and heating. It’s
just too much of a risk at the moment.”
Bell has noticed their energy bills ris-
ing, despite the fact that her daughter,
Lauren, 20, and her boyfriend moved out
in December, so fewer rooms are now
being heated.
Bell is on a variable tariff with British
Gas, which is limited by the energy price
cap, and says she was paying £120 a
month in September. Her January bill
was £165, which could mean that her
annual costs are almost £2,000.
“We fixed our mortgage
for five years”
Rachel and Sam Evenden from Kent are
working from home so their household
energy bills are higher than if they were
back in the office.
Unfortunately they won’t be entitled
to the £150 council tax rebate announced
on Thursday, which is available for bands
A to D, because there house is in band E.
They are going to try to spend less on
energy while they are home.
The Evendens, who have a three-year-
old son, Kit, bought their three-bedroom
house in Sevenoaks in September before
the Bank of England started to increase
the base rate, which had been at a rock
bottom 0.1 per cent since March 2020
and has been less than 1 per cent since
March 2009.
Fixed mortgage rates are influenced by
the bank rate (though never as low as it)
and the Evendens have fixed their 1.19 per
cent loan for five years. This means they
won’t have to worry that the Bank of
England is expected to raise the base rate
to 1 per cent this year.
“At the time we felt it was inevitable
that interest rates would rise because it
didn’t seem sustainable for them to
remain that low for that long,” said
Rachel, who works for a children’s news-
paper, First News.
They have a combined income of
£80,000 and are renovating their new
home, which they expect to cost about
£80,000. They have a 10 per cent contin-
gency fund and are also conscious that
rising inflation, caused by labour and
supply chain squeezes, could make the
renovation yet more expensive.
“If costs keep rising it will affect the
furnishings we decide to buy,” Rachel
said. “When I looked at our budget I
made sure we allocated extra money
because I expect the costs of things like
white goods to increase, but there is only
so much you can plan.”
More inflation-busting tips on
thetimes.co.uk/money-mentorplanning meals to save money on food.
The price of diesel has also affected
their ability to travel by car. A full tank
used to cost £55; now it is closer to £90.
“I’ve never really worried about the
cost of going to see people by car, but now
I’ve really cut back, and haven’t really
even visited my parents, who live three
hours away,” she said.
“I’m putting off renting an office”
Kate Bell says that the energy crisis is
preventing her from expanding her
business.
Bell, 42, says Zip Us In, which sells
zip-in jacket extender panels for preg-
nant women, is growing quickly and she
was hoping to rent an office and hire
more staff. Instead she will continue to
work from her five-bedroom house in
Fordingbridge, Hampshire, which she
shares with her husband, who works forincrease. In November 2019 Caroline, 48,
left her job as a teacher to begin working
as a wellbeing coach while Richard, 58,
previously a high school head teacher,
started a new job with the Land Registry
in 2021. Their combined monthly income
decreased significantly at first and
Caroline’s new business has only just
started to bring in enough cash to cover
the bills comfortably.
The family’s energy bills went up from
£85 to £112 a month in September when
their supplier, Green Energy, went bust
and they were automatically moved to
Shell, which this week told them they
should increase their monthly payment
to £171. The couple and two of their four
children, aged 8 and 18, live in a three-
bedroom detached 1960s house.
“We had only just got to the point
where we felt settled financially,” Caro-
line said. “We’re going to have to put a lot
of things on hold. We were going to go on
our first holiday as a family this year, just
a UK-based city break, but we probably
won’t be able to now. My 18-year-old son
is going to university in September, and
the rising costs will probably affect how
much we are able to support him too.”
Caroline has bought a gas radiator to
keep her warm while she is working from
home, so she does not have to heat the
whole house, and the family has startedThursday’s double announcement of a rise in the
energy cap and the Bank base rate is about to hit
all our pockets. Imogen Tew and David Byers
find out how some families are planning to copeSixty
minutes
that cost us
£1,000
The price war to woo young investors
accounts in the past year”.
NatWest said its
restrictions allowed it to
“provide continued free
banking to existing clubs and
societies customers”.
Two weeks after NatWest
shut its doors to groups
wishing to switch, it started
offering £150 to ordinary new
current account customers.
That offer ran from October
until December 2, and it
launched another £150
switch bonus last week.
James Daley from the
consumer group Fairer
Finance said: “I thinkNatWest and Barclays’s
decision to shut their doors
to switchers is as bad as
HSBC’s decision to raise
charges. This was an
opportunity to take the high
ground and do the right
thing. Instead, they are
implicitly supporting HSBC’s
decision and hanging these
groups out to dry.”
Lloyds said it opened
9,000 new accounts for
community groups last year.
Santander said it classed
charity accounts as business
accounts because they had
a more complex application
process, including an
in-branch appointment,
and tougher regulatory
requirements. Lloyds said
community accounts
required additional checks.
Both said they would reopen
to switchers this year.
The only banks that offer
free banking to those wanting
to switch are Metro Bank and
the Co-operative.‘No, you can’t switch from HSBC’
Banks are closing their doors
to charities and community
groups wishing to switch to
free accounts after HSBC
started charging them for
banking services.
Barclays, Lloyds, NatWest
and Santander have
conditions on who can open
free accounts for community
groups and classify smaller
charities as businesses for
banking purposes. Barclays
and NatWest shut their doors
to community groups that
wanted to switch accounts a
month after HSBC said in
August that it would be
charging them £60 a year for
their accounts.
Santander and Lloyds
have not accepted switching
applications from
community groups since the
start of the pandemic. All
four banks will accept groups
that do not currently have an
account, however. Dozens ofgroups have contacted The
Sunday Times to say that they
are under financial pressure
because they can no longer
get free banking. These are
small clubs or voluntary
organisations that are also
now being charged to deposit
cash and cheques on top of
the new fees.
HSBC’s social
responsibility report talks
about how it wants to do
business in a responsible
way. NatWest’s 2020
Environmental Social and
Governance report devotes
three pages to “supporting
our communities.”
NatWest has said it will
accept applicants who hold a
NatWest personal or business
bank account. Santander
accepts anyone that has a
Santander product.
Barclays has been closed to
all switchers since
September 30, but said that it
had supported “hundreds of
charities with opening newGeorge NixonL
ike many small communitygroups, Concordia StringOrchestra from Stockport hashad a lot to deal with over thepast 18 months. After the firstnational lockdown, in 2020, the
council. The secretary bought a 2m poleto ensure that there was enough distancegroup of about 30 musicianshad to work out how many ofthem could safely play togetherin the hall they rent from the
between chairs.months before more lockdowns came,and finally in May last year they returnedto real-life rehearsals and thought thingswould be normal again. That’s whenThey were able to play for about two
HSBC, the bank they had been with since1989, decided that their free bankaccount for community groups shouldnow cost £5 a month.paying-in book and chequebook and no“It was a very simple account with a
charges,” said Jane Halliday, a viola playerwho has been the treasurer since 2007.members’ £60-a-year subscriptions,which are used to pay for coffee, hall hireand sheet music. The account is mostly used to hold
icy of giving free accounts to all non-profit community groups with incomesof less than £100,000 was ending. Of theThe letter from HSBC said that its pol-played its last tune with the bank. “Themonthly £5 charge alone would haveamounted to one person’s subscription —a significant amount, quite apart from allthe other charges,” Halliday said. Yet even closing the account proved to
be a burden. which does not charge clubs and socie-ties that have a turnover of less thanHalliday opened one with NatWest, YOUR STORYHas your community group or charity been affected?Email [email protected]
2 million trees — while at the same timecharging an Enfield community groupthat raises money for the NationalTrust between £150 and £170 a year inbank fees. This is because of the £5-a-month
charge and because most of the group’s250 members pay their £15 membership
Jane Halliday with the Concordia String Orchestra‘HSBC’s charges will be the end of us’ Community groups are
feeling under siege after reports banks put an end to their free accounts, George Nixon funding and receive donations.” Bankssaid that community, charity or treasureraccounts are classed as small businessaccounts — services that have comeunder immense pressure in the pan-demic. Most high street banks stoppedtaking applications for new businessbank accounts as they dealt with the
thousands of customers applying forgovernment-backed pandemic loans. account switchers since late 2020, butsaid it opened 9,000 accounts last yearfor groups that didn’t have a bankLloyds has been closed to community
account. It said it could reopen to switch-ers in the next few months. cant to be an existing Santander cus-tomer. Nationwide closed its accounts forcommunity group treasurers.Santander requires at least one appli-
this day and age without a bank account. Ican understand why banks are doingthis, but it’s just frustrating. We’ve sur-vived two world wars and the 1918 flupandemic. HSBC might be the end of us.”McGarrity said: “We can’t operate in
for Community bank accounts, havingkept them at the same level for ten-plusyears, to more accurately reflect the costsassociated with improving and maintain-ing a business bank account. HSBC said: “We increased our charges
charities and are confident our offerremains competitive.”“We are committed to supporting UKJON SUPER FOR THE SUNDAY TIMES fees by cheque. Roger Moore, the trea-surer of the Enfield National Trust Associ-ation in north London, said: “Come Octo-ber 2022 a large number of cheques comein for membership payments. It is going
to cause us problems. I have spoken toHSBC about it and it’s like speaking to abrick wall.”HSBC and factor the charges into thecosts of running events.The group has decided to stick with
old literary and debating society inBirkenhead, Merseyside, and has beentrying to move banks to avoid HSBC’scharges, but found that other banks havechanged their rules too. Lesley McGarrity belongs to a 131-year-
imposed restrictions a month after HSBCintroduced charges last year. Barclayswill only consider applications for freecommunity accounts from those withoutbank accounts, not those switching toSome, such as Barclays and NatWest,
avoid charges. This is “due to highdemand”, it said. applications only if one named personinvolved holds a NatWest, Royal Bank ofScotland or Ulster Bank account. NatWest accepts community group
account with HSBC usually holds about£250 for hiring meeting rooms “and theodd evening of entertaining”, McGarritysaid. “Short of stuffing it under the mat-tress I’m not sure what else we can do.”The literary and debating society’s
Council of Voluntary Organisations said:“Banking charges and barriers to settingup accounts prevent small charities andgroups from supporting their communi-ties. Access to banking is essential toRebecca Young from the National
ensure good governance, to apply forL
phadngroups, Concorationae manOrchestra ast 18 months. After ik^ at t loloyloc smafd^ own, in 2020, trom Stockport hakdealll communit withdia String^ othe firstver tyehhes
to ensure tcouncil. Thhad to work out how many oroup them could sahe secretarn the hall they rent from thigat tofere was enough about 30 musicia^ yelbfougy plat ahd2m po hy togetheristancelneesfbwoumonths beetween cantoldeal-life rehearsals and thought thingsinally in May last year they returnedThey (^) rdf by were able to play for about twoe normafairshore more lockdowns came.l again.That’s wenh,
HSBC, taccount nopaying-in 1989, decided that their “It was a very simpw cst £5 ohoobor community groups shouldfbe ankka m anont thh c.dhey e account witequelahd been witfboo anree bankkh sincd ahe no
canemmwhhwhich are used to pay arges,” saihe account is mosthbTo h sdeet music. ers’ £60-a-year suas een tb Jane Hade treasurer shior cofllday, a vioy uselffnce 200ee, hall hirebscriptionsi to lda phlayerld. (^7) o,
of less than £100,000 was endinpicy orofit community groups with incomesThe letter f giving rom HSBC said ffree accounts to all nonthat its pog. Of thel-he-
plamountea significant amount, quite apart from alontmthayeYe otet er cdhly £5 cven c its ehlast tune witdh to one person’s sulosing targes,” Haarge ahhione woullle account proveh tday saihbscription —be kand. ld. “Thhaved telo
bties that have a turnover of lesshwe a Habihcur llddiden.ay openeoes not charg one witdecluhbs an NatWest,ssd socie-t th thanthanha oEmaiYHas your communUR Or charity been a money@sunlSOTRYffdected?ty groupiaytimes.co.uk
T2 million trees — brust that raises money for the Nationacharging an Enank This is because ofbees. etween £150 anfield community grouwihfd the £5-a-monte at tlh £170 a year ie same timenphl
charge and because most o250 members pay their £15 mem the group’fberships
thtring OrcSe Concorane HaJllay witdihdia estra h^
‘HSBC’s charges will be the end oCommunity groups are f us’
feeling under siegetbanks put an end to heir free accountsreportsGeorge Nixo, after n saibaking applications for new businestdemic. Most high street fccnuccaaanunding and receive donationund accounts as tduno ter immense pressure in tkohatstt s re cacommunity, c— (^) services tlassedhahayarity or treasurer (^) es smhb deat ankhaalllt witve c business.”s stoppehe pan-o Banh tksdmeehss
taovernment-r foccount switchousands of customers applaisgld it openeLgroups tos ydas hh 9,000bdbhacat ekeen cers since lddid pann’t oseccounts a to communitlemic hddate 2020, ave a last oans. ing forylybeautbyankr
cacomer. Nationwitant to ccount. It saiers in the next ommunSantanty group treasurersbe an existing Santander idequires at rf it couew months.edldosecld reopen to switc itseast onel accounts .der cus-appfohil--r
vived two world wars and the 1918 is isthcan understand why banks are doinpanthd, but it’s just emicdMcGarritay an Hyd. saiS age witBC might be the end of us.”d: “We can’t operate ifrustrating. We’ve sur-hout a bank account. fulngI
kaears, to more accurately reying a ept them at the same level or Community bank accounts, havinfssociatebBC sSHusiness witddaihb: “ improving anWeank account.ncreaseid our cffdorlect the ten-p maintain-cosargeshgltuss
chemararities i“We are committecompetns an are diitve.confident”d to supporting Uour oerKff
JON SUPER FOR THE SUNDAY TIMES bees by cheque. Roger Moore, the trea-urer ifsation in nortn for membership payments. It is goinger 2022 a large number of cheques comeof the Enfield Nh Londaon, saiotiand: “Come Octol Trust Asscio--
to cause us procosts of running events.ricbHSBC aHSBC and factor the charges into thee group Tk whball”out it an.hblas ems. I decid it’s likdeave spoe speahd to sticing to akk witken toh
cBircargeshangeoldyitrhiterarLes^ enklnghea tdey McGarrity , t^ lo muteir rud, Merseysibyh anfound that other banks havove dlbaes too.^ nbkdes tating societe, anelongs to a 131-yearbd^ aodov^ idh Has bySBC’sen ieen-
banwill onlimposed restrictions a month aintrocommunSome accounts, not tkducey, sucdty accounts consider applications for frei chharges as Barchlast year. lfrom those withouose switcays andBarc NatWest,fter hHSBCing toesaylt
appavoinvoiemandScot clllications danatNved”, it saidesthd Wo or Uarges. Thlds laccepts communonly if one named personster Banda NatWest, Royal Bank o. is is “h account. kdue to ty grouihphigf
£2tress I’m not sure wsodd evening of entertaining”, 5 account witaid. “Short oTe 0 h^ lor hiring meeting rooms “and thfiterary anh HSBC usua stufdat ehing it under the matff^ ledbse we can ating society’llyho (^) McGarrs aldo.”bdtyisoute-
up accounts prevent smaouncil of Voluntary Organisation“Banties. Access to Cgroups kRebecca Young rom supporting their communi-fing charges ananbfkdbrom the Nationalgin^ arriers to s essentia c illarities anhsaiettsstoddilng:
ensure good governance, to apply for
Our report from January 23
Kate Bell is
scaling back
her plans to
expand her
business
Rachel and Sam Evenden, with
their son, Kit, will miss out on
the £150 council tax rebate
Beth Greer
says her
monthly
energy bills
have
increased
more than
£100 since
October
Caroline and
Richard
Jacobs are
driving less
because of
the rising
cost of diesel
0.5%
The Bank of England base rate
since Thursday, up from 0.25%
5 per cent on any new money
you want to invest.
Last week Hargreaves
Lansdown published its value
assessment report, which
analyses the performance
and charges of its funds. It
found eight out of ten of its
multi-manager funds did not
represent value or needed
“additional focus to improve
the delivery of value”. It also
confirmed a cut in charges
for its multi-manager funds of
up to 0.09 percentage points.
On Friday AJ Bell said it
will cut its nine multi-
manager fund charges from
up to 0.69 per cent to a flat
0.31 per cent for all of them
Holly Mackay, from the
investment website Boring
Money, said: “For years there
has been a gulf between full
service advice and DIY. It’s
been like a food industry
where the only choices were
hiring a chef or buying seeds.
Affordable advice will help
get people on the right path.”
customer risk profiles.
The changes come after
AJ Bell said it would launch a
service called Dodl this year.
This will have a platform
charge of 0.15 per cent a year,
undercutting its existing DIY
service, Youinvest, which
charges up to 0.25 per cent.
Bestinvest is also
launching a cut-price advice
service. It will charge £295 for
an advice session and £495
for a portfolio review.
Traditional advice firms
like St James Place, Britain’s
largest advice network,
automatically charge for
advice, with an annual fee of
about 0.5 per cent and up to
Investment firms are slashing
costs and launching low-cost,
ready-made portfolios as
competition heats up.
A new generation of
investors, typically in their
thirties and sensitive to costs,
started investing for the first
time during the pandemic.
Many flocked to relatively
new, app-based investment
platforms like Freetrade and
eToro, or cut-price services
offered by the US funds giant
Vanguard, which is rapidly
gaining customers in the UK.
Established platforms such
as Hargreaves Lansdown,
AJ Bell, Interactive Investor
and Fidelity have also cut
some charges in recent years.
Last month Bestinvest,
the DIY arm of the wealth
manager Tilney, announced
five ready-made portfolios
that will cost a fraction of its
existing range of actively
managed funds.
The Bestinvest Smart
range will cost between
0.34 per cent and 0.37 per
cent. Its existing ten actively
managed Expert portfolios
cost between 1.47 per cent
and 1.55 per cent a year. From
February, ready-made funds
will have a platform charge of
0.2 per cent for the first
£250,000 invested, down
from the usual 0.4 per cent.
For other investments the
charge drops to 0.2 per cent
only above £250,000.
Historically low savings
rates and rising inflation
mean people are increasingly
looking to invest for a decent
return, but many do not want
to have to pick their own
funds or shares as this can be
time consuming and risky.
The Bestinvest changes are
a direct challenge to the
automated advice firms like
Nutmeg, Moneyfarm and
Wealthify, which also create
ready-made, passively
invested portfolios based on
Ali Hussain
£495
Charge for a
portfolio review
by Bestinvest