Coventry could buy a stick of Northern Rock

Coventry Building Society has thrown its hat into the ring in the forthcoming sale of Northern Rock.

It says its commitment to mutual ownership "would benefit Northern Rock customers if it were to be remutualised as part of Coventry Building Society".

Such an outcome would see the stricken Northern Rock going full circle. Once a building society itself, owned by its customers, it demutualised and became a bank owned by shareholders. It came a cropper in the financial crisis, suffered the first run on a bank in a century and had to be nationalised.

The government relieved Northern Rock of its problem loans, keeping them in a hived off "bad bank". Now it hopes to sell what remains of the business.

Unions and some MPs have been campaigning for a return to mutual ownership. But UK Financial Investments, which is handling the sale on behalf of the government, has yet to set a timetable or decide how it will be done.

Worrying indicator of more housing misery this year

More mortgage defaults.

Lenders say that more homeowners defaulted on their loans in the first three months of 2011, the first deterioration for nearly two years. And they're worried that the situation will be even worse in April, May and June.

Every three months the Bank of England asks lenders what trends they are seeing in key areas. It's not a survey based on numbers. The Bank asks what the trend is and gives a bigger score where lenders say things have changed a lot.

On balance the percentage reporting that defaults are worse is 11 percentage points higher than those saying the opposite. An even higher share expect an increase in defaults in the next few months.

The Council of Mortgage Lenders has been predicting a harder year for families who are having trouble meeting their mortgage payments.

It is forecasting a rise in repossessions this year to 40,000, from 36,300 last year.

And it says the number of homeowners falling into arrears will increase from 169,600 to 180,000.

Looks like this renewed bout of housing misery may already be with us.

Who is the Junior ISA for?

The government is suggesting that 6 million children will be able to get the new tax-free Junior ISA from the launch expected at the beginning of November, then an extra 800,000 babies will "benefit" each year.

But will they really? It's a great idea to save for the children, particularly with all the worries about paying for university. Hence this replacement for Labour's Child Trust Fund.

However, there are several reasons why take-up could be disappointing.

*Families are struggling to find money to save.

*There is no taxpayer contribution to kick-start the plans.

*The money will still be locked in. Parents won't be able to get it back if they need it.

The first two points are fairly obvious. Whatever you think about the taxpayer stumping up hundreds of pounds for each Child Trust Fund, it did encourage parents to engage with the idea.

Around one in five families added their own contributions. It might be optimistic to think that the same proportion will be tempted by the Junior ISA.

The last point, though, could be very significant. Parents are unlikely to identify any major difference between the Junior ISA and other forms of saving which are open to them, except that they are waving goodbye to their money forever.

Remember that only a third of Britons save regularly, according to the Halifax. And just under a third have no savings at all to fall back on or less than £249 set aside as a financial safety net.

So you are already talking about a minority who might be tempted by the Junior ISA.

Now consider what parents might be doing with their money, after meeting mortgage and other debt repayments and settling the monthly bills.

First up might be pension contributions. We don't want to be a burden on the young later on, do we?

Then there are straightforward ISAs, the parents' own Individual Savings Accounts. Cash ISAs for the short term and, possibly, share ISAs for the longer term.

Parents can keep savings in their own Cash ISAs, up to £5,340 each year for each adult (from 6th April), accumulating year after year. And, crucially, they can take the money out if they need it. Or they can spend it on the kids.

So the Junior ISA may only be attractive once a couple is putting aside more than their joint annual entitlement of £21,360 in their own ISAs -- and that's on top of any pension contributions.

Which feels like a small proportion of the population.

It's true that some parents really do value the fact that the money is locked-in and will be safe for the children. But many could steer clear of Junior ISAs.

Is just beating inflation the best strategy?

It always pays to look ahead when you are choosing a home for your money.

I don't know what inflation will be next year and the year after, or even in five years' time. But that's the crucial consideration if you're thinking of putting savings in the new inflation-proof certificates which the Chancellor has directed National Savings to provide.

Understandably, we're all talking about Index-Linked Certificates selling out when National Savings relaunch them. They were withdrawn last summer for the first time in 35 years, after £5bn flowed in in a mere three months.

And those who have them are congratulating themselves on securing a risk-free return of RPI plus 1%, at a time when RPI inflation is 5.5% and even the best cash ISAs rate is 3.3%.

But will they be worth it? In particular, will we reach a stage soon when inflation is LESS than the better savings rates?

In last week's Budget, RPI was forecast to be lower but still high, at 3.6% next year and 3.5% in 2013. The prediction for 2015 is 3.8%. One reason is that interest rates will start rising and that props up the RPI measure.

So far so good for the certificates.

But one pessimistic member of the Bank of England's Monetary Policy Committee, Adam Posen, believes that inflation will be lower than expected next year as austerity takes hold.

The British Chambers of Commerce and IHS Global Insight suggest RPI will be 2.8% next year. Capital Economics says 2.6% and Cambridge Econometrics 2.5%.

These are the lower end of economists' forecasts, which tend to be a bit more. But it makes you think: Index-Linked Certificates might be very safe, but they won't necessarily give the best result over the fixed period of 3 or 5 years.

Another step to £10,000 allowance...

Look ahead to the election campaign of May 2015. Wouldn't it be nice, thinks Chancellor Osborne - if it's still him - to go into it with a £10,000 personal tax allowance already implemented?

That would mean a £10,000 allowance starting in April 2015.

The 2011-12 allowance is £7,475. To get to £10,000 by the next election requires four steps.

If each step was equal, the annual jump in the allowance would be £631.

What's the rumour about today's Budget announcement? That there will be a £600 rise. No surprises then...

A reminder of what they said in the Coalition Agreement:

"We will further increase the personal allowance to £10,000, making real term steps each year towards meeting this as a longer-term policy objective."

Savings cash for children in care

Thousands of children in care will be given cash to put in tax-free savings accounts.

The Chancellor, George Osborne, said the government would spend around £5m a year on the scheme.

"We are going to provide the funding to make this a reality for looked-after children," he told MPs.

It has been suggested that the children could be given up to £250 in their accounts to start with, topped up with £100 a year thereafter, though the Treasury has yet to say how much would come from the taxpayer.

Charities had pointed out that children in care would be left high and dry by the abolition of Labour's Child Trust Funds, which included a contribution from the government for every child.

Contributions to the Coalition's replacement, the Junior ISA, will have to come entirely from family and friends. So children in care would have struggled to take advantage.

Barnardo's has been campaigning for a solution, along with Action for Children.

"This modest investment into savings accounts for looked after children will help these young people achieve their goals and avoid negative outcomes such as homelessness or falling into cycles of debt," said Barnado's chief executive Anne Marie Carrie.

The full details of the new scheme will be worked out with the help of the charities and other concerned groups.

One possibility is that annual payments into the plans could come from charitable trusts.

"We've already contributed nearly £400,000 to Child Trust Funds for children in care, at an average of £300 a year per child," explained Gavin Oldham from the Share Foundation.

"We want to build a voluntary flow of contributions straight though into these accounts," he added.

There are 64,000 children in care, but it is likely that only those entering care would be eligible for the accounts.

Those who have Child Trust Funds from earlier years could receive extra contributions as part of the new scheme.

Jump in money transfers to Japan

Western Union tells me it is "seeing a significant increase in transactions being sent into Japan since the earthquake and tsunami on March 11".


Traditionally it handles more money being sent out of Japan in the form of remittances from people working in the country to family members elsewhere.

But since the disaster the traffic has gone the other way, as people try to get money into the country to help loved ones who have run out of cash.

Online money transfer companies, like PayPal, have relatively small operations. Their activities are limited by Japanese rules on moving funds.


Western Union uses local agents as pick-up points for cash. Often the money is to help with travel costs as more people try to leave the country.