Inflation set to soar above 3%

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By
Daily Mail Reporter
Last updated at 9:55 AM on 16th February 2010

The reversal in the VAT reduction last month saw inflation leap to 3.5 per cent in January - its highest level since November 2008.The Office for National Statistics (ONS) said the rise in Consumer Prices Index (CPI) inflation came as the cost of alcohol, tobacco, hotels and restaurants soared after the Government raised VAT tax back up to 17.5 per cent.The 14-month CPI high triggers an open letter from the Governor of the Bank of England Mervyn King to the Chancellor to explain why inflation is more than one per cent above the two per cent target.
The Bank Of England’s reversal in the VAT reduction last month saw inflation leap to 3.5 per cent in January - its highest level in 14 monthsMr King has already indicated he will have to write to Alistair
Darling explaining why inflation has risen by so much again, having already surged by a record rate in
December.
The central bank boss must write to the Chancellor when CPI hits more than one per cent above or below the two per cent target.

Today’s CPI hike comes after an all-time record rise in the rate of
inflation in December, when inflation surged to 2.9 per cent from 1.9
per cent in November.
But the January increase was in line with expectations and the Bank’s own forecast.
The Bank indicated last week that it expected CPI to peak at 3.5 per
cent before falling back below two per cent later this year.
January’s VAT rise was the biggest factor in forcing CPI to 3.5 per cent, according to the ONS.
The Government reduced VAT to 15 per cent on a temporary basis until
last month in a bid to boost consumer spending and ease the recession,
but its reversal back to 17.5 per cent was always expected to have an
impact on inflation.
Letter: Mervyn King, the Governor of the Bank of England, will now write to the Chancellor explaining why inflation has risenThe ONS said that, as a result of VAT, the monthly change in the
all-item CPI index fell by just 0.2 per cent between December and
January - traditionally a time when prices fall.
It was the smallest ever decline since records began in 1996.
Higher fuel and transport costs also sent CPI up, with annual
transport inflation, including the cost of cars, reaching a record 11
per cent.
Last month’s adverse weather also impacted the cost of certain
seasonal vegetable prices, with cauliflowers rising by the highest
amount since at least 1996 and the cost of carrots doubling.
Its figures also showed that the headline rate of Retail Prices
Index (RPI) inflation, which includes the cost of mortgages and
housing, also rocketed in January, to 3.7 per cent from 2.4 per cent.
The ONS said it would publish more details on the impact of VAT on inflation on April 20.
Economists expect CPI to start falling swiftly from the second quarter onwards.
The Bank’s quarterly forecast last week signalled that it would fall
due to the economic slack created by the recession, even with rates
kept at the all time historic low of 0.5 per cent and with its
£200billion Quantitative Easing programme left in place.
Minutes due tomorrow of the Bank’s last rates meeting could show a
split over the decision to pause QE, given the weak recovery in the
economy.
Six quarters of decline came to an end in the final three months of
2009 with an upturn of a meagre 0.1 and the Bank has since reduced its
growth forecasts.

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£22,000 a year to put a child in nursery as fees rocket

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By
Laura Clark
Last updated at 7:58 AM on 10th February 2010

Parents are spending up to £22,000 a year for the best nursery places. (Posed by model)
Working parents are paying up to £22,000 a year for childcare as fees rise faster than inflation, it is revealed today.
Charges for nurseries and childminders in the country’s most expensive areas are now on a par with the cost of prestigious boarding schools.
A survey by the Daycare Trust found that mothers are being forced back to work early by the recession only to find that childcare costs swallow up a ‘ significant proportion’ of their income. Its research revealed that childcare fees have risen faster than inflation for the eighth year in a row. The
cost of a nursery place for a two-year-old has risen 5.1 per cent -
almost twice the rate of inflation - while childminders’ charges for a
two-year-old have increased by 9.2 per cent. The average cost of 25 hours’ nursery care for a child under
the age of two for a week is £88, rising to £109 in London and £108 in
the South East. It means parents in England spend on average £4,576 a
year for 25 hours’ care a week. For a full-time place, requiring 50 hours’ care, parents can expect to pay £176 per week - or £9,152 a year. This is a ’significant’ slice of average gross weekly earnings of £489, the report said.
But some nurseries in the survey charged more than double these rates - up to £22,100.
This compares with average annual day school fees of £10,296 and boarding fees of £23,244.
The average fee for childminders in England is £83 for 25 hours’ care a week for a child under two and £103 for older children.
But the report authors found that growing numbers of parents are accepting the charges as going back to work becomes a ‘financial necessity’ in the recession.
That in turn is leading to a lack of available childcare places in some areas as increasing demand outstrips supply.
Alison Garnham, chief executive of the Daycare Trust, said: ‘Over the last year, families across the UK have been hit hard by the impact of the recession, with parents facing the strain of losing jobs, having their hours cut back, or facing pay cuts - all of which is compounded further by childcare costs shooting up.’
The Trust wants poorer families to be able to claim 100 per cent of their childcare costs through tax credits - up from the current 80 per cent limit.

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Inflation: savers lose out as CPI rises to 2.9pc

By Emma Wall

Published: 11:08AM GMT 19 Jan 2010

Basic rate tax payers will now need an account paying at least 3.63pc to gain
benefit in real terms from their savings, increasing to 4.84pc for higher
rate tax payers

The increase in rate of inflation will deal a blow to savers currently
receiving an average of just 0.75pc interest on their no notice accounts.
But there are currently no variable rate accounts paying an interest rate of
more than 3.63pc- only inflation beating by 0.73 percentage points.

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Soaring petrol prices push inflation to 1.9%… even though food and mobile phone charges are cheaper

By
Daily Mail Reporter
Last updated at 5:49 PM on 15th December 2009

Further sharp increases expected to take inflation above 3%Repossessions rise by 3% - but down on first quarterHouse prices up by 0.5% in October due to lack of properties
Fuel surge: Petrol prices rose by 2.9p to 108.3p a litre in November

Inflation surged to 1.9 per cent last month even though the price of food and non-alcoholic drinks fell along with mobile phone charges.Higher petrol prices were blamed for pushing the Consumer Prices Index (CPI) higher for the second month in a row, the Office for National Statistics (ONS) said.Average fuel prices rose by 2.9p to 108.3p a litre in November, compared with a record 9.3p fall to 95.2p a year earlier.November’s inflation figure is slightly higher than the 1.8 per cent expected by most City economists.Separate figures today showed that the number of repossessions rose by 3 per cent last month.The number of people who were behind with mortgage repayments also dropped to 194,600.CPI is still currently below the Bank of England’s 2 per cent target but could rise to 3 per cent or more early next year when the temporary VAT cut is reversed. This will put up prices - including petrol - across the board.Other factors pushing up inflation in November included rises in second-hand car prices which contrasted with falls a year earlier. Airlines have also cut prices by less than a year ago and clothing prices rose by more than in 2008, the ONS added.Despite the increasing pain at the petrol pumps, there was some relief for hard-pressed households in their shopping bills.The ONS said food and non-alcoholic drink prices edged 0.6 per cent higher over the month but the annual rate of inflation fell to 1.1 per cent - the lowest level since May 2006 - thanks to falling vegetable, meat and dairy product costs.

The broader Retail Prices Index (RPI) - which includes house prices and mortgage interest payments - meanwhile returned to positive territory, with prices 0.3 per cent higher than a year ago.The RPI was last positive in January this year, but has showed negative since March as the impact of house price falls and interest rate cuts last year worked their way through the figures.
House prices fell a year earlier but rose last month, while mortgage interest payments also slid in November last year when lenders passed on the Bank of England’s 0.5 per cent emergency cut in interest rates in the wake of the financial crisis.Daiwa Securities economist Colin Ellis said Bank of England rate-setters should not be deterred from record low interest rates and efforts to boost the money supply by a temporary inflation spike.He said: ‘Policymakers must look through short-term inflation dynamics and relative price shifts such as these, and focus on underlying inflationary pressure.’A temporary rise in inflation, by itself, is not a good reason to raise interest rates.’Jonathan Loynes, chief European economist with Capital Economics, said there will be ‘further sharp increases in the next few months, taking inflation above three per cent.’But the increase is expected to be a ‘temporary spike’, and inflation will drop sharply later in the year.Hetal Mehta, senior economic adviser to the Ernst & Young Item Club, said: ‘The increase in inflation is a continuation of a short-term phenomenon which started last month.’The impact of last December’s VAT cut is expected to push up inflation further, causing a temporary spike in December and January.’Inflation should continue on a downward path well into 2010.’In a welcome move for Britain’s homeowners with large mortgages, economists said the Bank is almost certain to leave interest rates at their historic low of 0.5 per cent.Howard Archer, chief UK economist at the consultancy IHS Global Insight, said: ‘Given that November’s further spike up in inflation was broadly in line with the Bank expectations, it does little to dilute belief that interest rates will stay down at 0.50 per cent until at least the final months of 2010.’The ONS figures also showed the retail prices index of inflation was 0.3 per cent higher in November, compared to the same month last year, the first positive figure since January.

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Eight in 10 savings accounts LOSE cash: Inflation goes up - but banks still pay interest rates just above zero

By
Becky Barrow
Last updated at 10:10 AM on 18th November 2009

More than eight in ten savings accounts are paying such a paltry interest rate that customers are effectively losing money, research revealed yesterday. Financial experts said savers have become the ’sacrificial lambs’ of the Bank of England’s desperate attempts to rescue the economy. Because the Bank has held down interest rates, the value of their savings is not keeping pace with inflation, so savers are losing money in real terms.
Sacrificial lambs: In a desperate attempt to rescue the economy, the Bank of England held down interest rates to the detriment of savers
The situation is worst for higher rate taxpayers for whom more than 90 per cent of deposit accounts give a negative return. Banks which are part-owned by taxpayers, such as Halifax and Lloyds, are among the worst of the ‘savings sinners’, paying rates as low as 0.05 per cent. For a basic rate taxpayer with a £10,000 nest egg, this is worth £4 a year after tax - or £3 for a higher rate taxpayer.

The crisis was highlighted yesterday by figures showing a jump in the annual rate of inflation. It rose from 1.1 per cent in September to 1.5 per cent in October, according to the Office for National Statistics. This was the first increase in the consumer prices index measure of inflation since February, and comes amid warnings that inflation will continue to climb in the coming months.

‘Savings sinners’: Halifax and Lloyds pay rates as low as 0.05 per centAt this level of inflation, Britain’s 2.9million higher rate taxpayers are losing money in real terms if the interest rate paid by their bank or building society is below 2.5 per cent. This calculation takes into account the fact that tax is deducted from interest payments. But 91 per cent of savings accounts pay below this rate, according to research from the comparison website Moneynet.
For basic rate taxpayers, the situation is equally bleak. To beat inflation, they need an interest rate of at least 1.875 per cent. But around 80 per cent of savings accounts are paying less than this. Andrew Hagger, a Moneynet financial expert, said: ‘Savers are the sacrificial lambs of the current economic crisis. They are being virtually ignored.
‘For pensioners who rely on their savings to pay the bills, it is devastating. For younger people who should be saving money, it is taking away the incentive to save.’ The survey, which looked at 744 savings accounts, excludes Individual Savings Accounts and fixed-rate bonds. The average savings account is paying 0.98 per cent to its customers, according to Moneynet’s research. At this interest rate higher rate taxpayers with a £10,000 nest egg, who must pay tax at 40 per cent on their savings, this are getting only £58.80 after tax each year. Basic rate taxpayers, who pay tax at 20 per cent, get only £78.40. Before the Bank started cutting the base rate in October last year, the average savings rate was 3.94 per cent. This paid £236 a year after tax on a higher rate taxpayer’s £10,000 nest egg or £315 on a basic rate taxpayer’s £10,000. The biggest losers are pensioners who rely on investment income to boost their modest pensions. Charities warn that pensioners are being forced to make dramatic cutbacks such as switching off the heating and buying cheaper food. Of all the savings accounts with Britain’s 58 building societies, more than 40 per cent are held by someone over the age of 55. Economists warned yesterday that the situation is likely to get worse, not better, as inflation is expected to keep on climbing for the next few months, possibly hitting 3 per cent or above early next year. But some forecast that the Bank will leave the base rate unchanged at 0.5 per cent until late next year because the rise in inflation will only last a few months. Although inflation is relatively low in historic terms any increase is a blow for workers at a time when many are having their pay cut or frozen, or are losing their jobs.

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Pensions shortfall soars by £15billion over inflation fears

By
Daily Mail Reporter
Last updated at 11:57 AM on 02nd November 2009

Tens of thousands of retiring Brits are reaching pensionable age without enough finances
The funding shortfall faced by the UK’s biggest defined benefit pension schemes soared by £15 billion last month due to fears over higher inflation, research showed today.The 200 biggest defined benefit schemes, including final salary pensions, saw their deficits widen to £77.6 billion during the month, broadly in line with August’s record high of a £78 billion black hole.Aon Consulting said the deterioration, which wiped out nearly all of the gains seen during September, was due to expectations that inflation would increase going forward.The majority of pensions pay benefits that are linked to inflation, so a higher rate of inflation means increased costs for schemes, putting pressure on their finances.The group added that there had also been a small dip in the value of assets held by pension schemes during the month.Sarah Abraham, consultant and actuary at Aon Consulting, said: ‘Currently many investors believe that the Government will be unable to deliver its annual inflation target of 2 per cent.’This increases pension scheme deficits because most pension schemes promise to pay benefits that are linked to inflation.’The position is very volatile because if this lack of confidence in achieving inflation targets worsens, then pension schemes can expect deficits to increase even further.’But she added that if the market thought inflation would remain below 2 per cent, this would knock around £60 billion off pension scheme deficits.The majority of final salary pension schemes have been closed to new members during the past few years, with employers replacing them with less generous defined contribution schemes, under which employees shoulder all the risk.There is also a growing trend among companies to close their final salary schemes to existing members as well, as the pensions become increasingly expensive to offer.Tens of thousands of Brits are being forced to continue working after they reach the retirement age without enough money to support themselves. Millions more younger workers face an even more uncertain future owing to the widespread closure of final salary company pension schemes.

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Factory gate prices rise in September

Prices at the factory gate rose for the first time in five months in
September, with almost all sectors taking part in the unexpected rise,
according to official figures today.

The Office for National Statistics said that non seasonally adjusted output
prices rose 0.5 per cent in September.

It took the annual rate of inflation to 0.4 per cent, the first positive
reading since April. Prices registered a 0.3 per cent fall in August.

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Economy ‘growing again’ says Bank governor Mervyn King as inflation hits five-year low

By
Daily Mail Reporter
Last updated at 11:42 AM on 15th September 2009

Lower energy and food prices push inflation lowerDoubts remain over global recovery, warns KingHouse prices rise 1.4% during JulyRepossessions fell by 9% in second quarter of 2009
Green shoots: Mervyn King says the economy is showing signs of a recoveryThere are signs that the UK economy has returned to growth in the current quarter, the governor of the Bank of England told MPs today.In a Treasury Select Committee hearing, Mervyn King said there were indications of a pick-up in economic activity - both in the UK and overseas.But Mr King warned the effects of the financial crisis sparked by the collapse of US investment banking giant Lehman Brothers - a year ago today - will be ‘pervasive and long-lasting’.He added that there remained doubts over the sustainability of the global economic recovery.
Mr King was speaking just a few hours after the release of inflation figures which suggested that the economy was still relatively bleak. Official figures released by the Official for National Statistics (ONS) today showed inflation fell to its lowest level in almost five years during August.The Consumer Prices Index (CPI) fell from 1.8 per cent to 1.6 per cent over the month, according to the ONS - the lowest rate since November 2004. Unchanged household energy bills this year compared with big hikes 12
months earlier dragged down the rate of inflation, along with falling
food prices, the ONS said.Widespread price falls for products such as cereals, bread and
cakes, helped by a better-than-expected European harvest, brought the
annual rate of food inflation to 1.9 per cent over the month - the
lowest for more than three years. Despite the downward pressure on inflation, the overall CPI measure
did not fall as far as the 1.4 per cent forecast by most City
commentators.

However, the Retail Prices Index (RPI) inflation measure, which includes mortgage
interest payments and housing costs, jumped to -1.3 per cent from -1.4 per cent.Rising house prices also provided positive economic news today with government figures showing a 1.4% increase during July.The annual rate at which prices are falling eased to 8.3%, the lowest
level since November last year and down from 10.7% in June, according
to Communities and Local Government.The Royal Institution of Chartered Surveyors added to the recent run of
positive data on the market, saying 11% more surveyors reported price
rises in August than those who saw price falls - the first time the
balance has been positive since May 2007.The group said a lack of properties being put up for sale was
continuing to underpin the market, although it added that much of the
improvement was being seen in the south of the country.The group said the sharply rising trend in repossessions that had
been evident up to the third quarter of last year had stabilised during
the past nine months.
Stabilising property market: The annual rate at which house prices are falling eased to 8.3%, the lowest
level since November last yearA fall in the number of people who lost their homes also signaled stabilisation in the housing market.
Repossessions fell by 9% during the second quarter of the year with a total of 13,610 properties taken away from owners during the three months to the end of June.
That’s nearly 1,300 fewer than during the previous quarter but still
23% higher than for the same period of 2008, according to the Financial
Services Authority.
The Bank of England aims to maintain inflation at 2 per cent to keep both prices and
the broader economy stable.And many commentators have predicted that Bank of England Governor Mervyn King will soon have to write his first letter to the Chancellor explaining why CPI has undershot the Bank’s 2 per cent inflation target by more than 1 per cent.In 2007 and 2008, when inflation topped 3 per cent Mr King wrote letters to the
government because it was overshooting the target.The smaller-than-expected fall in the CPI was due to soaring petrol prices,  with the average litre of petrol rising 1.1p to 103.8p over the month, compared with a 5.5p fall 12 months earlier.The price of second-hand cars also rose at its fastest ever rate for the month, against falling costs a year earlier, in a sign that Britons are tightening their belts due to the recession.Second-hand car prices rose 2.2 per cent over the month and are now 4.4 per cent higher than a year ago - the highest ever annual increase since ONS records began in 1997.This was partially offset by air fares on European routes, which saw smaller increases than a year earlier.The wider Retail Prices Index, which includes housing costs and mortgage interest rates, edged higher to minus 1.3 per cent from minus 1.4 per cent in July.While food and energy bills also put downward pressure on the RPI, house price rises this year - in contrast to falls in last year’s torrid property market - helped to push the measure back towards positive territory during August.

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Rail users face record ticket price hikes of 143%

By
Daily Mail Reporter
Last updated at 2:32 PM on 04th September 2009

Rail commuters reacted with fury today after train companies
announced record increases in the price of fares with some rising by as
much as 143 per cent.
The inflation-busting price hikes are being allowed after the rail
firms sidestepped Government regulations aimed at keeping prices down.
It is the off-peak fares which are not regulated by Government which
are seeing the big rises as opposed to the peak fares which are bound
to the rate of inflation which has been been falling.

It is feared that thousands of train users already struggling in the recession will be forced to seek other means of transport because of high ticket pricesThe increases make a mockery of the Labour Government’s bid to get more people out of their cars and using public transport in a bid to save the environment.Now it is feared that thousands of train users already crippled by the recession will be forced to seek other means of transport because of the costly new ticket prices.Examples of the price hike, which will come into force from Sunday, have been revealed.

Passengers using a travel card on the 8.16am Market Harborough to St Pancras service will see fares rise from 37.50 to a whopping 92 - the equivalent of 143.5 per cent.Travel card holders using the same train from Kettering will see fares rise this weekend from 36.50 to 82 (124.7 per cent). For those travelling from Wellingborough the cost goes up from 35.50 to 78 (119.7 per cent).Many off-peak fares on routes from the west of the country to and from Paddington increase by up to 20 per cent from Sunday.Industry sources have warned that train companies, which make tens of millions of pounds’ profits a year, are planning further increases in unregulated, off-peak fares.They have been forced to reduce peak ticket prices - which are regulated - from January because of plunging inflation.Passengers face more hefty increases in off-peak fares in January.The biggest increases are on East Midland Trains - owned by rail and coach giant Stagecoach, which made pre-tax profits of 196.4million for the last year.East Midland has forbidden passengers from using the combined rail and Tube travel card on the 8.16am service. They will instead have to buy far more expensive tickets.A spokeswoman said the increases were being made ‘to bring stations south of Leicester into line with other stations on our network’.Ashwin Kumar, director of national rail watchdog Passenger Focus, condemned the increases.He said: ‘This is yet another example of a back door fare increase by tinkering with ticket restrictions.’Passengers will be aghast that a train company can double the cost of these fares in one fell swoop.’He called on the rail industry and the Government to ‘produce a fare system which is affordable and transparent’ if it is to keep passengers using trains.Gerry Doherty, leader of the TSSA transport union, said passengers were being ‘ripped off’ because they were a captive market.’Rather than pass on the January drop in fares they actually want customers to fund it,” he said.Peak fares are restricted to inflation plus one per cent. Inflation is based on the July figure when it fell to minus 1.4 per cent.That means, in real terms, the operators will have to reduce most peak fares in January. Transport Secretary Lord Adonis firmly rejected their appeal to avoid this.First Great Western, which runs trains into Paddington, said: ‘It is a challenge to balance the need to encourage customers to use our services while ensuring we generate enough income.’

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Bailed-out RBS to ‘water down’ pension scheme for 60,000 staff… as shamed boss Sir Fred leaves with £17m payoff

By
Simon Duke
Last updated at 6:28 PM on 25th August 2009

Back in town: Shamed RBS boss Sir Fred Goodwin, pictured in Edinburgh last week, was paid a 17m golden goodbye while long-serving staff will have their pensions cutRoyal Bank of Scotland has slashed pension benefits for more than 60,000 workers just months after ‘rewarding’ its disgraced former boss, Sir Fred Goodwin, with a 17 million retirement pot.In a move that has angered long-serving staff, the bailed-out bank moved to cap pay-outs for members of its final salary pension plan. Following a welter of similar attacks, RBS’s assault on its worker’s retirement plans will intensify fears that the days of the gold-plated retirement scheme are numbered. Under the bank’s current pension deal, employees receive a fixed percentage of their final salary when they retire - depending on how long they have worked at RBS. But the group wants to limit increases worker’s pensionable pay - which determines who much they receive in retirement - to 2 per cent a year or the rate of inflation, whichever is lower. With a 2 per cent cap in place a year, the 62,500 members of the RBS final salary pension will lose out if pension shoots higher in the future, as many economists fear. The move will not affect Goodwin or his henchmen, who steered the once-mighty Edinburgh institution to the bring of collapse last Autumn.While tens of thousands of RBS staff are this morning facing a deeply uncertain future, Goodwin will still receive a staggering 342,500 a year for the rest of his life, rising in line with inflation. Mr Goodwin’s 17million pension award unleashed a storm of controversy when it came to light earlier this year.  The ‘reward for failure’ came to symbolise the culture of greed and excess that Mr Goodwin fostered during his eight years at the helm of RBS, which had to be rescued by taxpayers last October.Rob MacGregor of Unite union said: ‘This is a body blow to tens of thousands of staff working at RBS, which will erode workers’ pensions over time.’

Against the back drop of  Sir Fred Goodwin’s bumper pension these planned changes add insult to injury to workers paying the price for a crisis for which they hold no responsibility.Goodwin, who closed the RBS final salary scheme to new members in 2006, has since ‘given back’ under around half of his original reward.”Experts said that members of the RBS scheme are in line for much more comfortable retirements than many private sector workers in the UK. Ros Altmann, an independent pensions expert, said: ‘Taxpayers are standing behind this bank. The fact that staff are accruing a pension linked to inflation is something they should be thankful for.”They are certainly more fortunate than workers at many companies around Britain which could have been saved by RBS loans but ended up insolvent.’ If the government had allowed RBS to go bust last Autumn, its retirement fund would have been taken over by the Pension Protection Fund.The PPF limits the pensions of workers who have yet to hit retirement age and would have capped Goodwin’s pension at below 30,000 a year, according to experts. By putting a limit on its future pension liabilities, RBS is expected to slice around 100million a year from its pension contributions. There will also be an estimated 500 million one-off saving, said experts. Neil Roden, human resources chief at RBS, said: ‘This is an expensive scheme for our shareholders to fund and a generous one in comparison to the market.’It is a pragmatic and necessary course of action and not a decision the Board have taken lightly.’The cost-cutting measure is bound to alarm the estimated 2.7million British workers who currently pay into final salary pension schemes. Oil giant BP recently closed its final salary scheme to new members, killing off one of the UK’s most generous deals.In an even more brutal move, Barclays recently signalled that it would shut down its final salary plan altogether, moving some 18,000 workers to an inferior scheme. Increasing life expectancy coupled with meagre investment returns have seen the cost of running gold-plated schemes soar over recent years. Many of Britain’s biggest companies are now having to pump billions into their pension funds to plug deepening deficits. Actuarial firm Watson Wyatt recently warned that half of Britain’s final salary schemes would close within three years. RBS, which is 70 per cent owned by the taxpayer, also wants to reduce the size of the lump sum payable to employees who opt for early retirement.The bank opened consultations with Unite on the proposed changes, which are expected to be completed before the end of November.

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