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Begbies Traynor boss Ric Traynor: Why we should let zombie firms die

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begbies traynor boss ric traynor why we should let zombie firms die

‘The right thing might be to let the weak go to the wall.’ 

That’s what Ric Traynor thinks should happen to debt-ravaged businesses, many of which are now surviving only due to taxpayer-backed life support.

Traynor is the executive chairman and founder of Begbies Traynor, one of Britain’s largest corporate insolvency companies for smaller firms that run into trouble.

Entrepreneur: Traynor founded his own insolvency firm aged just 29

Entrepreneur: Traynor founded his own insolvency firm aged just 29

Entrepreneur: Traynor founded his own insolvency firm aged just 29

Cynics might argue that he would want ‘weak’ companies to fail, given it will result in substantially more business for his £121million firm, which is listed on the junior AIM stock market. But there aren’t too many bosses of publicly listed firms who have been willing to make politically controversial points during the Covid pandemic.

And at the age of 60, Traynor has been around long enough – running an insolvency firm through several boom and busts – to know what he’s talking about.

‘The last recession [in the aftermath of the 2009 financial crisis] was suppressed by very low interest rates and creditor support,’ he says. ‘Some of this was encouraged by the Government and some of it driven by self-interest from lenders.’

But, Traynor says, that support led to the creation of what he dubs ‘zombie’ companies – firms that were allowed to potter through the past decade by paying very low rates of interest on huge debts, with no money available for expansion and growth.

It is those firms – many of which are still living off the taxpayer-funded furlough scheme and state-backed loans – that Traynor wants to see disappear.

His core point is that if those weaker businesses were allowed ‘go to the wall’, as he puts it, then stronger rivals will take over their share of the market.

Yes, jobs would be lost in the short term, but the better capitalised rival will ultimately end up employing more people than the ‘zombie’ would have done.

‘Americans are much more red- blooded about how their capitalist economy works,’ says Traynor. ‘That means they get deeper recessions but faster grow-backs. The new shoots come more quickly and grow more effectively.’

As Traynor knows only too well, it will be extremely hard for Chancellor Rishi Sunak to withdraw taxpayer support from the companies that don’t deserve to survive, while leaving it in place for those he wants to see survive and keep the economy growing.

Traynor’s solution is much longer-term.

‘To reduce the number of businesses that fail, [we need] a better system of education for people setting up businesses, which we don’t have in this country,’ he says.

‘Anybody can set up a company and off you go with no knowledge of employment law. A basic level of understanding would help significantly.

‘Most people don’t have a business plan and don’t have anything documented which has shown a thought process of why the business is in existence and what the future is for it.’

That sort of training and mentoring of business owners would make a big difference and lead to fewer insolvencies, he adds.

Ric Traynor, 60: One of the train gang

Lives: South Manchester.

Family: Married with three children.

Television programme Great British Railway Journeys hosted by Michael Portillo

Television programme Great British Railway Journeys hosted by Michael Portillo

Television programme Great British Railway Journeys hosted by Michael Portillo

Education: A dentist’s son, he went to comprehensive school in Thorne, ten miles from Doncaster. Spent his gap year at a brickworks and in a foundry, then went to Birmingham University.

Hobbies: Going to the gym, walking, reading and documentaries and crime dramas. Recent favourites include Great Continental Railway Journeys and Great British Railway Journeys, hosted by Michael Portillo, above, on BBC Two.

Traynor isn’t your typical obsequious City banker. He worked as a bricklayer on a building site during his gap year between school and university. Afterwards, he qualified as an accountant with Arthur Andersen’s Manchester office in 1984.

Five years later at the tender age of 29, he struck out on his own, founding Traynor & Co, an accountancy firm specialising in insolvency and restructuring.

Dealing with companies in trouble was more appealing to the Yorkshireman than standard accountancy work. Eventually, his firm merged with London-based Begbies and floated on the AIM market in 2004.

For Traynor, the early 1990s recession was worse than the fallout from 2009 because there was a lot less state support but the country subsequently saw huge levels of growth in the mid to late-1990s. Growth since the financial crisis has been lower, accompanied by a rise in asset prices but also inequality, which has led to populism in politics.

Traynor says: ‘Short term [allowing zombie companies to fail] means more insolvencies.

podcast

‘Look, I’m not arguing this to get more work as we are busy enough anyway, and in the short term it will lead to more unemployment and clearly that’s a headline the politicians don’t like.

‘But in the medium term that probably [allowing zombie companies to fail] is the right thing to do.’ 

So will this recession be worse than in 2009, when there were 26,000 insolvencies?

The entrepreneur won’t be drawn on specifics. So far, he reckons the Government has done a fairly good job of stabilising the economy.

‘All they could do was throw cash at it,’ he says.

‘In March, nobody knew how the pandemic was going to impact the economy so a blanket solution of the loans and the furlough scheme was probably the right thing to do.’

Retail, hospitality and aviation companies are bearing the brunt of corporate pain triggered by the Covid-19 crisis. But Traynor is now just as concerned about Britain’s engineering and manufacturing industries, particularly suppliers to the car makers in Europe.

Surely allowing the ‘weak’ to fail across so many sectors would cause more problems than it would solve?

‘Ultimately, it’s better for the economy in the longer term for businesses to survive and grow,’ Traynor acknowledges.

‘Nobody likes unemployment so there needs to be proper structure in place to cater for people while they are transitioning jobs.

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The City of London’s glory days recalled as streets stay empty

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the city of londons glory days recalled as streets stay empty

David Buik has worked in the City of London since the 1960s and continues to do so, having worked with many of its famous brokers. He is currently a consultant for Aquis Exchange PLC.

In 1962 I started my career in the City of London as a trainee at Philip Hill Higginson Erlangers, a leading merchant bank of the day (to become Hill Samuel), having failed to trouble the examiners at A level twice, which precluded me from becoming a corporate lawyer, much to the chagrin of my impecunious father, who had sweated blood to send me to a decent school.

Samuel Montagu, J Henry Schroder Wagg, SG Warburg, Morgan Grenfell, Barings, and Lazard Brothers numbered amongst the dominant merchant banks at that time.

At that time there were about 400 stockbrokers – most of whom had five to ten employees.

The City of London in the 1960s looking west over Tower Bridge, centre, with the Tower of London to its right

The City of London in the 1960s looking west over Tower Bridge, centre, with the Tower of London to its right

The City of London in the 1960s looking west over Tower Bridge, centre, with the Tower of London to its right

A modern day view of London looking west over Tower Bridge. Skyscrapers and office buildings on both sides of the Thames have changed the skyline dramatically over recent decades

A modern day view of London looking west over Tower Bridge. Skyscrapers and office buildings on both sides of the Thames have changed the skyline dramatically over recent decades

A modern day view of London looking west over Tower Bridge. Skyscrapers and office buildings on both sides of the Thames have changed the skyline dramatically over recent decades

Even in those days, Cazenove & Co and Joseph Sebag were the most revered. Mullens & Co, Pember & Boyle, Phillips & Drew and W Greenwell & Co were the most celebrated gilt brokers and the two main jobbers were Ackroyd & Smithers and Wedd Durlacher.

There were about 75 trading banks in London. The main US banks with a presence were First National City Bank, Morgan Guaranty Trust, Continental Illinois, Manufacturers Hanover, Chemical Bank & First Chicago.

US investment banks had no presence and Deutsche Bank had not reached these shores.

The main European banks were Societe Generale, Comptoir Nationale D’Escompte de Paris and BW Blydenstein (ABN AMRO).

A rooftop view of London in the 1960s with the Houses of Parliament at the rear

A rooftop view of London in the 1960s with the Houses of Parliament at the rear

 A rooftop view of London in the 1960s with the Houses of Parliament at the rear

The global economy was just starting to get its act together; just 17 years after World War 11. In ’62, the Barbican was still a bombed site.

Construction on one of the towers of the Barbican Estate, in 1970, built on land cleared for development after World War 2 bombing

Construction on one of the towers of the Barbican Estate, in 1970, built on land cleared for development after World War 2 bombing

Construction on one of the towers of the Barbican Estate, in 1970, built on land cleared for development after World War 2 bombing

The FT, The Times and Telegraph printed ‘offer for sale’ pages, day after day for an exciting and varied array of new issues. It was money for old rope.

Stock markets started to boom so did the foreign exchange and money markets. 

An explosion of activity in the Euro Dollar deposit markets and foreign exchange trading triggered the explosion of close to three hundred trading banks having a presence in London by the end of the ‘70s, notwithstanding the influence of the London discount market and the growing presence of insurance and corporate law and accountancy.

It came as no surprise that entertaining and socialising, especially at lunch time with clients and colleagues was the staple daily diet, with serious drinking thrown in, in the evening, but there were very few dinners.

The main hostelries were the Jam Pot (Jamaica Coffee House), Simpson’s in Cornhill – what stewed cheese on rubbery toast, but it did not matter – The George & Vulture, again in Cornhill, the Green Man, off Cheapside), The Golden Fleece, in Queen Street, which served the best egg & anchovy sandwiches in the world, The Grill & Cheese, in Throgmorton Avenue. 

The City Circle, in Moorgate, and The Red Lion, in Watling Court, were very popular watering holes.

The Baron of Beef in Gutter Lane was an upmarket establishment, full of Slaughter & May, Linklaters, Cooper Bros, Warburg and Montagu attempting to put deals together.

My favourite lunchtime hostelry was Birch’s, in Angel Court (near the Stock Exchange), owned by the irascible but delightful Philip Putnam, an Old Harrovian who kept the happiest ship of inebriated stockbrokers and money brokers imaginable.

Traffic on Fleet Street in the 1970s with St Paul's Cathedral dominating the background

Traffic on Fleet Street in the 1970s with St Paul's Cathedral dominating the background

Traffic on Fleet Street in the 1970s with St Paul’s Cathedral dominating the background

At rush hour on  Tuesday morning, Liverpool Street station would usually be packed - but in recent weeks the concourse has been all but empty

At rush hour on  Tuesday morning, Liverpool Street station would usually be packed - but in recent weeks the concourse has been all but empty

At rush hour on  Tuesday morning, Liverpool Street station would usually be packed – but in recent weeks the concourse has been all but empty

For many years I remember Raymond Grumbar, of Grumbar and See, with his splendid RAF moustache (well waxed) coming to Birch’s at 12.15pm on the dot for two swift pink gins, before lunch.

An average lunch was two swift G&Ts, a prawn cocktail, rump steak chips and mushrooms, washed down with a bottle of Mouton Cadet, then a Grand Marnier – £5 for two people! Then toddle back to the office at about 3.45pm.

City veteran David Buik laments the quiet that has descended on London in lockdown

City veteran David Buik laments the quiet that has descended on London in lockdown

City veteran David Buik laments the quiet that has descended on London in lockdown

By that time, there was no such thing as a free meal. If a broker took you to lunch, you said thank you with a respectable sized deal

No one drank wine, unless eating. Too expensive! Large gins or pints of wallop. That was most people’s tipple.

My net take-home pay in the early ‘60s was £39.19s.6d. 

I lived at home and enjoyed a good life. The friends that were made in these social establishments were life-long. 

The camaraderie was deep. The alcohol consumed was excessive.  

It is a tragedy to see the City looking like a western movie with all roads leading to Boot Hill in Tombstone, Arizona.

I do not care how good technology is today. A return to work is surely essential. 

The City owes society some help as well as a debt of thanks. It needs to support the entertainment and food sector, or the economy could fall off a cliff.

Working from home has much to commend it with a better quality of family life, less stress from travel and the expense of it… however, it also has major disadvantages

I never thought I would ever experience such an astonishing change in culture. 

Learning to work from home for a significant majority of people in non-manufacturing business is a new lifestyle that is here to stay.

 It has much to commend it with a better quality of family life, less stress from travel and the expense of it.

However, it also has major disadvantages. It threatens to destroy a major part of the entertainment and hospitality sectors, conceivably putting as many as 2million people on the dole queue by the end of the year. 

Many of the hostelries in the City would go to the wall.

The view from the dome of St Paul's cathedral in the 1960s looking west along Ludgate Hill

The view from the dome of St Paul's cathedral in the 1960s looking west along Ludgate Hill

The view from the dome of St Paul’s cathedral in the 1960s looking west along Ludgate Hill

London's skyscrapers can be seen from high points in and outside the city, with the conical Gherkin one of the most eye-catching

London's skyscrapers can be seen from high points in and outside the city, with the conical Gherkin one of the most eye-catching

London’s skyscrapers can be seen from high points in and outside the city, with the conical Gherkin one of the most eye-catching

Social contact and interpersonal skills are greatly underrated attributes.

Schools can contribute to developing these skills. However, there is no substitute for gaining experience by dealing with people on a day-to-day basis, from assisting with their problems, negotiating deals and contracts to enjoying their successes.

Social contact and interpersonal skills are greatly underrated attributes… there is no substitute for gaining experience by dealing with people on a day-to-day basis

I have spent most of the last 58 years working in an environment that was Elysium to me – warts and all.

I so treasure those experiences and relationships, which I have always tried to nurture. I certainly would not trade them in for today’s agenda.

I am all for change, but these special nuggets of joy should continue to prevail. Society would be all the better for it. 

THIS IS MONEY PODCAST

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Debenhams will slash 2,500 store and warehouse jobs to cut costs

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debenhams will slash 2500 store and warehouse jobs to cut costs

Debenhams is to axe 2,500 jobs across its stores and warehouses in an attempt to cut costs after sales plummeted during the coronavirus lockdown.

The department store is scrapping the roles of sales manager, visual merchandise manager and selling support manager as part of a management restructuring process.

The move, which was first reported by RetailWeek, comes four months after Debenhams collapsed into administration.

Debenhams said it has no plans to shut more stores as part of the restructure, having closed seven after announcing administration. 

It comes as shocking new data revealed that the number of people on company payrolls in the UK has fallen by 730,000 since lockdown –  the biggest drop in employment a decade.

Dire figures have started to show the huge impact of coronavirus on the labour market, with a wave of jobs being axed.

In the three months to June, the number in work decreased by 220,000 – the largest quarterly slump since 2009. Total hours worked slumped by a fifth over the quarter to the lowest level since 1994.

Debenhams has axed 2,500 jobs across its stores and warehouses to costs after sales plummeted during lockdown

Debenhams has axed 2,500 jobs across its stores and warehouses to costs after sales plummeted during lockdown

Debenhams has axed 2,500 jobs across its stores and warehouses to costs after sales plummeted during lockdown

It comes four months after Debenhams collapsed into administration, thought it says it will not be closing any stores

It comes four months after Debenhams collapsed into administration, thought it says it will not be closing any stores

It comes four months after Debenhams collapsed into administration, thought it says it will not be closing any stores

Meanwhile, the numbers on payroll tumbled another 114,000 in July, as the claimant count – which includes some people who are in work – increased again to reach 2.7million. 

Underlining the misery, Debenhams announced it is cutting 2,500 roles. 

A Debenhams spokesman said: ‘We have successfully reopened 124 stores, post-lockdown, and these are currently trading ahead of management expectations.

‘At the same time, the trading environment is clearly a long way from returning to normal and we have to ensure our store costs are aligned with realistic expectations.

Biggest fall in employment for a decade as impact of Covid is felt 

Employment saw the biggest fall in a decade in the three months to June as coronavirus hit.

Official figures showed the number in work decreased by 220,000 – the largest quarterly decrease since 2009. 

The 0.2 per cent drop comes after a long period after the credit crunch in which employment levels have hit repeated highs. 

The employment figures are still up 0.3 per cent year on year. And unemployment stayed flat, as the government’s support schemes and a rise in inactivity masked the true effects of lockdown.

Workers aged under 24 and those over 50 were the worst hit by the fall.   

The total hours worked slumped by a fifth over the quarter to the lowest level since 1994. 

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‘Those colleagues affected by redundancy have been informed and we are very grateful to them for their service and commitment to Debenhams.

‘Such difficult decisions are being taken by many retailers right now, and we will continue to take all necessary steps to give Debenhams every chance of a viable future.’

Analysts have warned the grim news is the tip of the iceberg, as the full effects of lockdown have so far been masked by the government’s massive support schemes. 

The latest figures today showed that 9.6million jobs have been furloughed, with the Treasury paying out £33.8billion in subisidies. 

Many people appear to have chosen to stay economically ‘inactive’ rather than hunt for work – meaning they remain outside the headline unemployment figures.

Figures released tomorrow are due to confirm that the UK has formally entered a recession – with a second consecutive quarter of GDP contracting.  

ONS economist Jonathan Athow said: ‘The labour market continues recent trends, with a fall in employment and significantly reduced hours of work as many people are furloughed. 

‘Figures from our main survey show there has been a rise in people without a job and not looking for one, though wanting to work. 

‘In addition, there are still a large number of people who say they are working no hours and getting zero pay.

‘The falls in employment are greatest among the youngest and oldest workers, along with those in lower-skilled jobs.

31809240 8614679 image m 10 1597127237144

31809240 8614679 image m 10 1597127237144

Some 730,000 fewer people are now on the payroll than in March before the country went into lockdown to combat the killer disease

The latest ONS figures showed the average number of hours worked per week has stayed flat overall - although there was a slight bump for the self-employed

The latest ONS figures showed the average number of hours worked per week has stayed flat overall - although there was a slight bump for the self-employed

The latest ONS figures showed the average number of hours worked per week has stayed flat overall – although there was a slight bump for the self-employed

Job vacancies showed slight signs of recovery in July - but are still far lower than during the credit crunch

Job vacancies showed slight signs of recovery in July - but are still far lower than during the credit crunch

Job vacancies showed slight signs of recovery in July – but are still far lower than during the credit crunch

Latest figures show that 9.6million jobs have been covered by the government's furlough scheme since the crisis began

Latest figures show that 9.6million jobs have been covered by the government's furlough scheme since the crisis began

Latest figures show that 9.6million jobs have been covered by the government’s furlough scheme since the crisis began

‘Vacancies numbers began to recover in July, especially in small businesses and sectors such as hospitality, but demand for workers remains depressed.’  

The ONS said that around 7.5million people were temporarily away from work in June this year, most of them on the Government’s furlough scheme.

Some 9.6million jobs have been furloughed costing £33.8billion  

Some 9.6million jobs have been propped up by the government’s furlough scheme during the coronavirus crisis, figures showed today.

Treasury data showed the scale of the support being given by the state, with 1.2million firms putting in claims worth £33.8billion since March.

Another 2.7million claims have been filed for self-employed grants, totalling £7.8billion.  

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Around three million of these had been away for three months or more.

Some 300,000 people in the UK were away from work because of the pandemic but getting no pay last month. However, that figure had been over half a million in April and May.

Redundancies were up by 27,000 quarter on quarter to 134,000, in another sign of what is to come. 

The claimant count – which includes people receiving in-work benefits – increased by 94,400 to 2.7million last month. It is up 117 per cent, or 1.4 million, since March. 

Total weekly hours worked in the UK decreased by a record 191.3million, or 18.4 per cent, in the quarter to June compared to the previous three months.

It was the largest quarterly decrease since estimates began in 1971, with total hours hitting the lowest level since 1994. 

Chancellor of the Exchequer Rishi Sunak said of the latest figures: ‘Today’s labour market stats make it clear that our unprecedented support measures, including the furlough and self-employed support schemes, are working to safeguard millions of jobs and livelihoods that could otherwise have been lost.

‘I’ve always been clear that we can’t protect every job, but through our Plan For Jobs we have a clear plan to protect, support and create jobs to ensure that nobody is left without hope.’

Fears are mounting of a ‘bonfire of jobs’ amid warnings a third of firms are planning to lay off staff this autumn.

Many of the cuts are set to come from hospitality businesses such as hotels, restaurants and cafes, as well as shops that were already on the brink before the pandemic.

The Bank of England predicted last week that unemployment will rise by a million by the end of the year. 

Labour has been demanding the government ditches plans to scrap the furlough scheme entirely from October, forcing employers to take on the full costs of staff wages again. 

Shadow work and pensions secretary Jonathan Reynolds said: ‘Labour has repeatedly warned the Government their one-size-fits-all approach will lead to job losses. These figures confirm what we feared – Britain is in the midst of a jobs crisis.

‘It is extremely worrying that this increase in unemployment has hit older workers, the self-employed and part-time workers hardest.

‘The Government must wake up to the scale of this crisis and put an end to this jobs crisis, and adopt a more flexible approach targeted at the sectors who need it most.’

Debenhams to axe 2,500 jobs 

Debenhams is cutting 2,500 jobs as the high street bloodbath continues.

A spokesman for the store chain said its trading was ‘ahead of expectations’ and had successfully reopened 124 stores post-lockdown.

‘At the same time, the trading environment is clearly a long way from returning to normal and we have to ensure our store costs are aligned with realistic expectations,’ the spokesman said.

‘Those colleagues affected by redundancy have been informed and we are very grateful to them for their service and commitment to Debenhams.

‘Such difficult decisions are being taken by many retailers right now, and we will continue to take all necessary steps to give Debenhams every chance of a viable future.’

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Rebecca McDonald, senior economist at the Joseph Rowntree Foundation, said: ‘Preventing falling levels of employment turning into a surge in poverty must be a national priority.’

Federation of Small Businesses national chairman Mike Cherry said: ‘The success of the job retention scheme has kept our employment figures healthy over the past few months but reality is now starting to hit home.

‘As our economy unlocks, many thousands of people will be looking for work over the next year. That’s why a focus on job creation – not just retention – is so critical.

‘In light of today’s figures, the future of the job retention scheme will need to be reviewed closely. The option of a meaningful extension to the furloughing initiative should be kept open, especially now local lockdowns are a fact of life and a meaningful second spike in coronavirus infections is possible.’

Yael Selfin, chief economist at KPMG UK, said: ‘As the Job Retention Scheme unwinds, we expect unemployment to rise quickly in the fourth quarter. That could see unemployment average over 6 per cent this year compared to only 3.9 per cent at present.

‘Government needs to step in and help those who are likely to lose their job retrain for new openings in different sectors. It is an opportunity to upskill a large section of the UK labour market, providing better prospects for the future.’ 

The Bank of England’s latest forecast says the economy will shrink by 9.5 per cent this year, making it the worst downturn in a century. 

GDP figures due to be released this week are set to show that the UK has entered a technical recession - with two consecutive quarters of contraction. The Bank of England predicts that the downturn will be the worst in a hundred years (chart pictured)

GDP figures due to be released this week are set to show that the UK has entered a technical recession - with two consecutive quarters of contraction. The Bank of England predicts that the downturn will be the worst in a hundred years (chart pictured)

GDP figures due to be released this week are set to show that the UK has entered a technical recession – with two consecutive quarters of contraction. The Bank of England predicts that the downturn will be the worst in a hundred years (chart pictured)

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New short-term best buy fixed-rate savings deals and cash Isas

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new short term best buy fixed rate savings deals and cash isas

More green shoots have appeared in the savings market as the recent revival in fixed-term savings rates has continued over the last week.

Challenger banks have continued to increase their rates on short-term fixed-rate deals while best buy tax-free Isas have also been launched.

Experts said the presence of Treasury-backed National Savings & Investments at the top of the best buy savings tables was driving the revival, with banks forced to increase rates to attract savers away from NS&I, which has hoovered up billions of pounds over the last few months.

There have been signs of slight green shoots in the savings market in recent weeks, with challenger banks increasing the rates they pay on fixed-rate bonds and Isas

There have been signs of slight green shoots in the savings market in recent weeks, with challenger banks increasing the rates they pay on fixed-rate bonds and Isas

There have been signs of slight green shoots in the savings market in recent weeks, with challenger banks increasing the rates they pay on fixed-rate bonds and Isas

But savers must move fast if they spot an attractive deal, with savings rates having hit record lows this year and the market still fragile due to the impact of the coronavirus on the economy and bank lending.

The best rates usually come from smaller banks and may not be around for long if large numbers of savers deposit their cash with them.

Over the last week several have increased the rates they pay on one and two-year fixed-rate bonds.

Secure Trust Bank launched a one-year bond paying 0.95 per cent on £1,000 or more on Thursday, and then upped its rate to 1.16 per cent just two days later.

This is the second-best rate available on the market, after the 1.2 per cent offered by Sharia bank QIB UK, available through savings platform Raisin. Challenger bank Oaknorth increased the rate on its one-year bond from 0.74 per cent to 1.11 per cent on Monday, edging out United Trust Bank paying 1.1 per cent.

And Charter Savings Bank increased the rate it pays on its bonds, which can be opened with £5,000, with its one-year bond paying 1.05 per cent and its two-year 1.16 per cent, the fifth and fourth-best rates available on the market, respectively.

These bonds can all be opened online, while Charter Savings Bank also accepts postal applications.

While there seems very little reason for savers to fix for longer than 24 months – with longer fixes paying no better rates than shorter deals – the recent rise in short-term fixed rates is a rare bit of good news for savers in what has otherwise been a miserable year.

‘National Savings & Investments propping up the market means some of the banks which need funding are having to break out, which forces others to follow’, James Blower, founder of The Savings Guru, said.

‘Those who need it are finding they can’t raise any serious volume being priced below NS&I so are having to pay up now.’

And although rates on fixed cash Isas continue to lag regular accounts, tax-free savers have not been left out of the recent rates revival.

Coventry Building Society launched a best buy 16-month fixed-rate Isa paying 0.77 per cent, and two and three-year Isas paying 0.85 per cent and 0.9 per cent, which require customers to fix their rate until November 2022 and 2023, respectively.

All three Isas can be opened with £1 online, by phone or by post, and accept previous years’ Isa transfers.

The moves came just a day after Charter Savings Bank upped the rate on its own two-year fixed-rate Isa, from 0.85 per cent to 0.92 per cent, the best rate in our tables. It also cut its one-year rate from 0.76 per cent to 0.71 per cent, but this is still enough to leave it in second place.

Both Isas, plus its best buy three-year fixed-rate paying 0.95 per cent, can be opened with £5,000 online, accept previous years’ transfers and savers can choose to have interest paid monthly.

However, savers should be slightly warier of fixing their Isa for longer than a year because they can earn up to 0.95 per cent interest on easy-access accounts, although many may wish to hedge against easy-access Isa rates falling further.

The top tax-free Isa is offered by Skipton Building Society and pays 0.95 per cent for six months, at which point the rate falls to 0.45 per cent. Savers can open the account online and it accepts transfers.

After Skipton, the best rate is offered by NS&I and Cynergy Bank, both of which pay 0.9 per cent, although NS&I’s Isa does not accept transfers. Both can be applied for online, while NS&I’s can also be applied for by phone, although the bank recommends savers use its website wherever possible.

But despite this, the average closed easy-access Isa pays a higher rate than the average Isa available to savers on the market, meaning savers may actually be better off sticking with their current Isa provider at the moment.

Up to £20,000 can be saved tax-free each year in an Isa.

Moneyfacts’ Rachel Springall said: ‘It is vital that savers act quickly to take advantage of the top rate deals and also to switch if they find they are earning a poor return, especially if they have their cash in an easy access account with a high street bank.

‘The next 12 months look uncertain for the savings market and any positive changes now could be fleeting. Consumers would be wise to remain vigilant and consider the more unfamiliar challenger banks if they hope to secure a lucrative return on their cash during this time.’


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#bcaTable a.mainLink {display:block; float:left; width:100%}
#bcaTable a.mainLink:hover {background-color:#E6E6E6; border-top:1px solid #e3e3e3; position:relative; top:-1px; margin-bottom:-1px}
#bcaTable a.mainLink:first-child:hover {border-top:1px solid #58004c;}
#bcaTable a .copy {text-decoration:none; color:#000; font-weight:normal}
#bcaTable .copy .red {text-decoration:none; color:#de2148; font-weight:bold}
#bcaTable .copy strong, #bcaTable .copy bold {font-weight:bold}
#bcaTable .footer {display:block; float:left; width:100%; background-color:#e3e3e3; margin-bottom:0}
#bcaTable .footer a {float:right; color:#58004c; font-weight:bold; text-decoration:none; margin:10px 18px 10px 10px}
#bcaTable .mainLink p {float:left; width:524px}
#bcaTable .mainLink .thumb span {display:block; float: left; padding:0; line-height:0}
#bcaTable .mainLink .thumb {float:left; width:112px }
#bcaTable .mainLink img {width:100%; height:auto; float;left} #bcaTable .article-text h3 {background-color:none; background:none; padding:0; margin-bottom: 0}
#bcaTable .footer span {display:inline-block!important;} @media (max-width: 670px) {
#bcaTable {width:100%}
#bcaTable .footer a {float:left; font-size:12px; }
#bcaTable .mainLink p {float:left; display:inline-block; width:85%}
#bcaTable .mainLink .thumb {width:15%} #bcaTable .mainLink .thumb span {padding:10px; display:block; float:left}
#bcaTable .mainLink .thumb img {display:block; float:left; }
#bcaTable .footer span img {width:6px!important; max-width:6px!important; height:auto; position: relative; top:4px; left:4px}
#bcaTable .footer span {display:inline-block!important; float:left} } @media (max-width: 425px) {
#bcaTable .mainLink {}
#bcaTable .mainLink p {float:left; display:inline-block; width:75%}
#bcaTable .mainLink .thumb {width:25%; display:block; float:left} }

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