Letter: Few comforts as inflation starts to bite

OUR friends in the south are never very backward to remind us that, as far as the economy is concerned, "we're all in it together".

Well, yesterday's inflation and pay rise figures have nailed that one, haven't they? Although the government's preferred measure of inflation - CPI - sits at 3.7 per cent (already nearly twice the maximum manageable level), the unadjusted - real - level of inflation is nearly 5 per cent. This causes a problem, the economists tell us, because the national average pay rise is only 2.2 per cent: people's incomes are not keeping up.

Hang on a minute… what pay rises? Public sector employees are in the middle of a pay freeze started 18 months ago, and they make up 25 per cent of all workers in the UK… and I'm pretty sure that most of the low-paid workers in large-scale industry won't be on a pay rise this year, so you can count them out.

Somebody, somewhere must be doing a damned sight better than a 2.2 per cent pay rise in order to boost the national average figure to that level. Who, exactly, is getting the lion's share of the wage rises while everyone else tightens their belts?

Would that be the people who work in a square mile of a certain city perhaps? We're all in it together. But some of us, apparently, are deeper in it than others.

David Fiddimore

Calton Road

Edinburgh

YOUR editorial on the housing market and lending (18 January) suggests rates rising would produce "coffers" for lenders in the future. As a mortgage holder, a saver and a construction worker, I fail to see who might support this.

Mortgages are now at around seven times the base rate and any rise would allow banks to increase their margins further without any increase in lending, with no significant or equivalent rise in savings rates, and adding further to the thousands of construction workers presently unemployed.

As we are now witnessing the soft touch of our UK government and its inability to protect the taxpayer from the banks' bonus culture and the notion they are too big to fail, it seems we are all going to be in thrall to these incompetent financial institutions for years to come.

My opinion is that the bailed out banks should be made to pay back all sums, plus "real" interest, borrowed from the taxpayers as they are still bad risks.

These funds should be handed over to a new Post Office bank and used on the same basis as credit unions and under strict regulation.

At the very least, we should be able to see where the money is and, possibly, be able to see published accounts of repayments, investments and any gains to the taxpayer each year rather than waiting for the banks to make minimum repayments less their bonuses and expenses to "manage" our money.

Archie Finlayson

Montgomery Road

Kinross