TimesOnLine

Banks and building societies have sneakily cut current account rates, while all the attention has been on mortgages and savings.

Six current account providers cut in-credit interest rates by up to 0.99 per cent last week, according to a survey by comparison firm Uswitch.

Intelligent Finance, the online brand owned by Halifax Bank of Scotland (HBOS), was the worst offender, with the rate on its current account chopped by 0.99 per cent to 1.24 per cent on November 3.

Meanwhile, Nationwide, Britain's biggest building society, cut rates on its popular Flex account by up to half a point. Meanwhile, Lloyds, which is bidding to take over HBOS, reduced interest on its Premier Plus, Platinum Plus, Gold Plus and Classic Plus accounts by 0.48 per cent to 3.45 per cent on balances between £1 - £2,500.

Lloyds said the move was in response to October’s half point cut in Bank rate, so accountholders could face even bigger reductions following this month’s 1.5 percentage point move, which took Bank rate to a 53-year low of 3.5 per cent.

Louise Bond at uSwitch.com said: “This revenue-boosting move by six providers to reduce in-credit current account interest rates conveniently came in a week when headlines were focused on mortgage and savings rates. Those cynics among us could be forgiven for thinking that, whilst attention was diverted towards the base rate decision, providers were hoping that these rate reductions would slip unnoticed under the radar.

“Historically, credit current account interest rates have been rather pitiful, and many of the big banks still offer as little as 0.1 per cent. Unfortunately, with increasing consolidation in the banking sector, potentially resulting in a reduction in the number of competitive products available, consumers must act now to seek out the best deals.”

The news on current accounts came as separate research found that card firms have been putting up rates on store cards just in time for Christmas.

Rates climbed by one per cent in the past six months with the most expensive deals now charging more than 30 per cent, according to MoneyExpert.com.

The rate on store cards from both Karen Millen and Oasis have leapt from 24.9 per cent in May to 28.9 per cent this month, it said.

Sean Gardner, Director of MoneyExpert.com, said: “Store cards can be a useful way of qualifying for instant discounts but when it comes to borrowing they are a complete rip-off. The fear must be that with other forms of credit running dry, desperate consumers will be tempted into expensive deals as a last resort for Christmas.

Creation Account Cards, which runs the Clarks, Woolworths, Sainsbury’s, and Millets cards, has the highest APR at 30.9 per cent for payment other than by direct debit, according to Moneyexpert.

TimesoOnLine

Lloyds TSB, the UK's fifth biggest lender, has committed to passing on the full one and a half point cut in interest rates to homeowners on a variable rate deal.

The bank is reducing its standard variable rate (SVR) to 5 per cent because of a clause in its mortgage contracts promising that its SVR will never be more than 2 percentage points above base.

A household with a £150,000 loan will save £187.5 a month on the cost of their interest-only mortgage repayments after the cut in rates.

Lloyds TSB is set to be part-nationalised after agreeing to take around £5.5 billion in Government cash as part of a bail-out of the banking system. Other banks which are taking billions of pounds in Government support, including HBOS, which owns Halifax, the UK's biggest mortgage lender, and Royal Bank of Scotland.

About 4.2 million homeowners on tracker mortgages which are pegged to the base rate will benefit immediately from the 1.5 percentage point cut in the base rate announced today.

Another 800,000 homeowners are on their lenders standard variable rate (SVR), or discounted deal which is pegged to it. Lloyds TSB is the only bank to so far confirm it is passing on the cut to borrwers with SVRs.

Customers with loans from other banks will have to wait to find out whether their lender will pass on the unexpectedly large reduction. Less than half of lenders passed on last month's half-point cut in interest rates.

HSBC, the biggest bank in the UK, said that its SVR was under review and that it may not announce whether it is passing on the 1.5 percentage point cut until next week. On Monday, a senior executive at HSBC warned that borrowers on its variable rates were unlikely to benefit from the full cut in interest rates.

Melanie Bien, of Savills Private Finance, a broker, said: 'Lenders are really going to struggle to pass on the full cut. No one expected the base rate to be cut this far. It should have a massive effect on the mortgage market. This is a historic, dramatic reduction.'

Meanwhile, the Council of Mortgage Lenders (CML), the industry body representing banks and building societies, yesterday gave warning that its members would not automatically pass a base rate reduction on to new customers in the form of cheaper loans.

Woolwich, owned by Barclays, and Abbey have already raised tracker rates this week in expectation of the decision by the Bank of England. Northern Rock, Lloyds TSB, Alliance & Leicester and The Mortgage Works, the buy-to-let arm of Nationwide, have also pulled tracker deals. Other lenders are expected to follow suit.

Peter Rollings, managing director of Marsh & Parsons estate agents, said: 'The MPC has mercifully realised the crucial importance of cutting rates. But: it’s not going to make any difference to the housing market at all if the banks don’t pass this cut on to borrowers. That banks have raised or even scrapped their tracker rates this morning is hugely demoralising for buyers and homeowners.'

Mortgage brokers have also given warning that thousands of borrowers may not benefit from future cuts in the base rate because many lenders have a 'collar' which stops tracker rates falling below a certain level.

Halifax Bank of Scotland (HBOS), the country’s biggest mortgage lender, which is set to be taken over by Lloyds TSB, will not cut tracker rates if the bank rate falls below 3 per cent. Nationwide Building Society, the second-biggest lender, will also refuse to pass on any decreases if the base rate sinks lower than 2.75 per cent.

New York Times

I.B.M.’s chief executive, Samuel J. Palmisano, is proposing a technology-fueled economic recovery plan that calls for public and private investment in more efficient systems for utility grids, traffic management, food distribution, water conservation and health care.

Recent technology advances make this possible, and the need is apparent, Mr. Palmisano will say in a speech he is scheduled to deliver Thursday to the Council on Foreign Relations in New York. Sixty-seven percent of electrical energy, for example, is lost because of inefficient power generation and grid management. Congested highways cost $78 billion a year in squandered working hours and gas burned.

Mr. Palmisano’s speech never mentions I.B.M., but his proposal has a self-serving side. I.B.M. is increasingly playing the role of lead contractor in these so-called smart infrastructure projects around the world, from a traffic management network in Stockholm to electric grids in Texas.

Some economists and policy experts say similar projects are a good way to improve the long-term health of the economy, potentially providing a foundation for innovation and growth across a range of industries.

Applying more computing intelligence to help transform fields like transportation, energy and health care will be “critical to solving an array of pressing public problems,” said Robert Atkinson, president of the Information Technology and Innovation Foundation, a nonpartisan research group.

“The countries that take the lead in this area will be the nations that enact the best public-private partnerships,” said Mr. Atkinson, who has seen the text of the speech.

In an interview, Mr. Palmisano compared today’s economic challenge, in broad strokes, with that faced by the United States as it struggled to emerge from the Depression or after World War II. In the 1930s, he said, the New Deal programs, among other things, brought electrical service to much of country — not only to rural homes, but also to factories, which no longer needed to build their own power plants, as many had previously.

After World War II, Mr. Palmisano said, the government’s construction of a national highway system helped create larger markets for goods.

“We’re at a similar stage now in that these are difficult economic times,” he said. “The right way through it is not to hunker down, but to step up and invest and improve our competitiveness.”

In his speech, Mr. Palmisano points to the technology trends that are beginning to make his proposal possible and affordable. Items ranging from cars, appliances and packaged goods to roadways and utility wires, he says, are increasingly “instrumented” with transistors, sensors and radio frequency ID, or RFID, tags, “interconnected” over the Internet and “intelligent” because of advanced software that communicates with vast supercomputing data centers.

In energy, for example, computerized grids, thermostats and appliances can sense and communicate line failures or automatically turn off air-conditioners during peak load times to save money and fuel.

I.B.M., to be sure, is one of many companies developing smarter grids, roads, food distribution and water conservation systems. In the technology sector, Microsoft, Cisco Systems, Hewlett-Packard, Oracle, SAP, Accenture and others are working on bringing computing intelligence to physical systems, Ted Schadler, an analyst at Forrester Research, said. But no other company, he said, yet has the breadth of hardware, software, services and research scientists to tackle these challenges.

“What seems different and noteworthy about the I.B.M. approach is its sweeping comprehensiveness and message,” said Rosabeth Moss Kanter, a professor at the Harvard Business School. “Putting the pieces together under one inclusive and rather bold label can stimulate discussion and innovation.”