• Help to Buy scheme could push prices by almost 30 per cent by 2015
• A restrictive market is what is keeping prices down, expert say
• Government scheme will help first-time-buyers get on property ladder

The average home could soon cost £300,000 because of price inflation caused by the Government’s new homebuying scheme, economists warn. George Osborne announced the Help to Buy scheme in this year’s Budget to help struggling buyers get on the housing ladder with just a 5 per cent deposit. But a report by former Bank of England economists says the scheme is ‘reckless’ and could push up prices by almost 30 per cent by 2015.

The Help to Buy scheme recently introduced in the Government’s last Budget could create a dangerous new housing bubble, inflating prices ‘almost 20 per cent within the next two to three years’, a leading economic think-tank warned.

The scheme essentially extends an existing equity loan scheme to help people buy a new-build home with a deposit as low as 5 per cent. But a report by Fathom Consulting – run by former Bank of England economists – called it ‘reckless’, and said it could push average house prices as high as £300,000 by 2016.

Dire warning: ‘Had we been asked to design a policy that would guarantee maximum damage to the UK¿s long-term growth prospects, this would be it,’ said Fathom economist Andrew Brigden

‘Help to Buy uses public money to incentivise the banks to lend precisely to those individuals who, [without] the scheme, would not and should not… Continue reading →

Hundreds of thousands of retirees risk being short-changed if they take a cash lump sum from their final salary pensions.

In many cases, the calculations used to swap a lifetime pension for a lump sum today have failed to keep pace with financial markets. Savers may be getting less than half the ‘market value’ of the lifetime pension they give up.

Rules normally permit up to  25 per cent of the value of a pension to be taken as a lump sum on retirement, free from tax. Some longer-serving workers may have ‘preserved’ entitlements to higher lump sums.

Sitting pretty: Charles Ironside had to make decisions on eight pension schemes

Calculating a lump sum is relatively simple where savers have paid into a defined contribution pension. Each person has a pot of investments that is used to buy their pension and up to 25 per cent is simply hived… Continue reading →

The Post Office is refusing to reveal whether it will offer branch customers a basic bank account as it prepares to launch into the banking market.

Such accounts are taken up by people who otherwise would not get access to a current account because of their failure to pass credit score tests imposed by the banks. The Post Office, with its 11,500 branches, is ideally placed to provide such a banking service and its entry would greatly reduce the number of financially excluded adults.

Demands: Christine Farnish wants banking for all

But last week it declined to say whether its new current account range, managed by controversial partner Bank of Ireland, would include a basic banking package.

‘We can provide no details at the moment,’ said a spokesman.

If the Post Office does not offer basic bank accounts, it is likely to be criticised by MPs across the political… Continue reading →

Almost a third of an average water bill – more than £100 a year – goes on profit, compared with 9 per cent in the energy sector, a new report claimed today.

Water bills have risen more than twice as fast as pay over the past decade in an industry which is now ‘out of control’, a study commissioned by trade union body, Unison found.

Earlier this year, industry regulator Ofwat announced a 3.5 per cent increase in the average annual bill – a hike of £13 bringing the total to £388 a year.

The research, conducted by the New Policy Institute, also found that water firms were making ‘huge profits’.

And it claimed that bills had trebled since the industry was privatised in 1989, well above increases in the… Continue reading →

The UK economy faces a knife-edge verdict tomorrow as to whether it is suffering a triple-dip recession.

It will be a close-run thing as to whether official output data show that the UK economy shrank in January-to-March for a second successive quarter.

Most experts are predicting the initial estimate of gross domestic product from the Office for National Statistics will show growth of 0.1 per cent in the first three months of the year – which would mean the economy narrowly avoided its third recession since 2008.

Bad news comes in threes: Negative GDP growth in Q1 2013 would mean the UK is back in recession for the third time since the start of the financial crisis.

But a volatile start to 2013 following snowstorms in January and March and ongoing pressure in the construction sector have left it hanging in the balance.

Facing mounting pressure to do more to… Continue reading →

5:30pm (CLOSE): Mining stocks helped the London market end a five-day losing streak as bargain-hunters returned to boost the FTSE 100 Index.

The FTSE 100 ended up 42.9 points at 6286.6, as investors shrugged off concerns over weakness in the American and Chinese economies.

Weaker-than-expected Chinese growth this week spooked markets, while soft economic data from the US and further cracks in the eurozone also underlined the fragile global recovery. That has driven commodity prices sharply lower as traders bet on weaker demand.

Rebound: Gold returned about the pyschological threshold of 1,400 dollars an ounce after heavy falls earlier this week.

The International Monetary Fund this week cut its world growth forecast for 2013 to 3.3 per cent from 3.5 per cent and warned that the ‘main challenge is very much in Europe’.

But with officials from the world’s 20 economic powerhouses meeting in Washington to search for ways… Continue reading →