The Government clobbers savers - again A string of providers have made reductions to their savings rates recently, including West Bromwich Building Society, Halifax, Santander, Sainsbury's Bank and Principality Building Society. Meanwhile, the most competitive rate on a five-year fixed-rate bond has fallen to 3.98pc, compared with 6.56pc five years ago, with many market-leading deals being withdrawn soon after launch. Analysts predicted that returns on savings could edge lower now that cheap money is available to banks via the Funding for Lending scheme. The £80bn scheme was launched at the start of August by the Bank of England and the Treasury. It gives banks access to cheap funding to encourage the flow of credit to households and businesses. But one unintended consequence has been further misery for savers. "The Government's Funding for Lending scheme was meant to help borrowers in these tough times but it looks like savers are in fact the ones being sent to the rescue - at their expense," said Susan Hannums of comparison site SavingsChampion.co.uk. Do the banks not want our money? It seems not - today's best buy slips more quickly out of the top account list than it has done in recent years. The average best-buy easy-access account rate in our tables is now 2.79pc, down from a high of 3.22pc in July. Kevin Mountford, head of banking at comparison site Moneysupermarket.com, said: "The main focus of many banks has been attracting retail deposits through competitive higher rates because they have been unable to access wholesale funding given the tough financial conditions and the eurozone crisis. Cheap loans from the Bank of England through Funding for Lending should give them a way to reduce their reliance on deposits. In March, the best three-year fixed-rate savings account paid 4pc from Halifax. Seven months later the best three-year fixed-rate cash bond pays 3.62pc from Britannia Building Society. There has been a similar drop for shorter-duration bonds - in March, Allied Irish Banks would pay you 3.4pc for a one-year bond, but now the best one-year rate is 3.25pc from Cahoot. Sylvia Waycot of Moneyfacts said banks deserved some credit as, historically, rates were still reasonably competitive. It is easy to get frustrated at the fall, as we all know that Bank of England base rate has not moved since 2009. However, in October 2008 Bank Rate was 5pc and the average five-year bond paid only 5.06pc. The difference between today's Bank Rate and the average five-year bond is 3.48 percentage points, a staggering difference by comparison and a clear indication that providers are trying to remain competitive and credible in a difficult market. The fact remains that best-buy products are disappearing off the market at record pace, and, if rates continue to drop at this pace, the margin between Bank Rate and savings rates will be squeezed ever smaller. Lloyds Banking Group, which was one of the first to take advantage of the scheme, denied that Funding for Lending was to blame for rate drops. Savings rates are determined by a number of factors, including market conditions. They are regularly reviewed and subject to change. Any recent changes in savings rates have not been as a result of Funding for Lending," said a spokesman. The group was among the first to take advantage of the Government's Funding for Lending, drawing down an initial £1bn. We have made a commitment to pass on the benefits to our customers through more affordable mortgages and personal lending. Economists disagree about the effectiveness of the scheme. They say that not only has Funding for Lending hit savers but it has also been unsuccessful in its aim to boost the supply of credit to borrowers. In the first full month that the Funding for Lending scheme was operating, households repaid £276m of mortgage debt and cleared another £134m of personal loans. Lending to businesses dropped by £2.2bn, the largest monthly decline since February. The figures, from the Bank of England, also showed that the average fixed mortgage rate rose by 0.03 percentage points in August and is now 0.52 percentage points higher than at the start of the year. Michael Saunders, an economist at Citi, said: "The data suggest that the introduction of the scheme has not produced significant immediate results in improving the growth or price of credit to households and businesses." Not all banks are using the Funding for Lending scheme. HSBC is not taking advantage of the government-provided cash and, as a result, a spokesman said he was unaware of any savings rate decreases at the bank.