How the state has cost savers £1,000 a year Remember, during this period the Bank of England's Bank Rate has not budged an inch. It remained at the rock-bottom rate of 0.5pc for three years before the introduction of the FLS, and for the two years after it. It is this scheme and the Government's attempts to manipulate the money markets, rather than underlying interest rates, that have caused savers such grief. It isn't just instant-access rates that have been hit. The best cash Isa rates have fallen from 3.3pc to 1.55pc, while rates on a three-year fixed-rate bond have tumbled from 4pc before the FLS to just 2.55pc today. This has had a huge impact on the returns people get from their savings. According to SavingsChampion.co.uk, a savings advice website, someone with £50,000 on deposit would have earned annual interest of £1,625 if their money was in the best-buy easy-access account in 2012. Today, in Saga's online account they are earning just £775 a year in interest - a loss of £850 a year at a time when energy bills and food costs have continued to rise. According to the Bank of England, there is almost £555bn of savings on deposit in Britain. This means savers have collectively lost out on about £9.4bn in interest payments since the introduction of the Funding for Lending Scheme. Those who haven't been switching their money to ensure it is always in a best-buy account have potentially lost even more. Interest rate cuts have been even more swinging on older accounts that have drifted out of the best-buy tables. Many of these savings products now pay just 0.1pc. But keeping track of the best-buy accounts isn't easy. In most months over the past year banks have imposed rate reductions on more than 100 separate accounts. Some months brought changes to more than 250 different savings accounts. Often different issues of the same account, or even the various tiers within the same account, can be cut by different margins - a nightmare for savers determined to get the best possible rate. Savings experts have described this relentless process as a "death by a thousands cuts." Banks and building societies fear an influx of savers" money if their accounts top the best-buy tables, so they reduce the rate, pushing another bank to the top of the table. That bank then in turn cuts its savings rates in a depressing race to the bottom. Susan Hannums of Savings Champion said it was typically older savers who had borne the brunt of the cuts: they were least likely to have a mortgage or other debts to benefit from the scheme, and older savers were usually more risk averse, so tended to stay clear of investing in the stock market. "Funding for Lending has sucked the competition out of the savings market and destroyed the rates on offer," Ms Hannums said. The scheme has had a devastating effect on savers. To rub salt into savers" wounds, it appears that the scheme has also failed to deliver the intended results for mortgage borrowers. Initially, the funding had been used to provide mortgages for first-time buyers and those with little equity in their home. But the Bank of England withdrew this facility at the start of this year amid fears that it was causing the housing market to overheat. The funding was then focused on commercial business loans, but the most recent figures indicate that this lending fell during the first half of the year. But with the scheme due to end in January, is there hope for better savings rates in 2015? Ms Hannums said: "Hopefully this will signal the end of these relentless rate cuts. But it remains to be seen whether more competitive rates will be available. One thing is for sure, the savings market has changed dramatically as a result of FLS. It used to be a rarity for there to be any change to existing savings rates outside a Bank Rate change. But it is now the norm. The end of the FLS should coincide with the launch of the new "Pensioner Bonds" from NS&I, which will be available to those aged over 65. They are widely expected to pay significantly more than the fixed rates currently available. Ms Hannums added: "We will have to wait and see whether this creates some much-needed competition. But those looking to buy the Pensioner Bonds should not hang about when they become available. We are anticipating considerable demand. She added that although savings rates remained low, it was important to shop around to get the best deal. Savers who secure the best deal can boost their income by around £450 a year for every £50,000 they have on deposit. Judith Hailstone, a pensioner from Badby, Northamptonshire, said she was "fed up" with the low rates paid on her savings accounts. I switch my savings regularly to ensure I am getting the best rate. But banks make this as difficult as possible, with frequent rates changes, new issues and bonus rates disappearing. It's bad enough trying to keep track of products available from one bank, let alone across the market. She recently opted to use the "concierge" service offered by Savings Champion, which would automatically move her money into the best-buy accounts.