George Osborne has twice said or done something very popular which has changed the national mood.
His Conservative Manifesto promise to take most people out of paying Inheritance Tax was very popular when he first proposed a new £1m threshold before having to pay. Labour gave up any idea of an early election on the back of it. They then increased the tax free allowances for IHT to show they had understood the public mood, taking it up to £650,000 for a married couple. The Lib Dems did not allow the full increase in threshold the Conservatives had offered in 2010 when joining the Coalition.
Last week his decision to let people with defined contribution pension schemes enjoy the freedom to decide when to take their money out in retirement was another one of those opinion changing moments. Ever since the announcement the Conservatives have gone up in the polls, the Chancellor has become more popular and Labour after early misgivings have decided to back the policy.
We should ask why is it that these two things amidst the thousands of decisions that governemnts make should be the ones that attract so much attention and favourable comment?
The first point to grasp is it shows people are not primarily motivated by jealousy. Few people will benefit from the pension changes – around 400,000 immediately out of an electorate of more than 40 million. Most people are in defined benefit schemes or do not have an employer pension fund. A minority have significant sums in a defined contribution scheme which will ultimately benefit.
Similarly, when Mr Osborne proposed a major increase in the Inheritance Tax threshold most people were not in the bracket where they were facing any IHT bill at all.
What both reactions have in common is the view that the state does not have a right to confiscate your money after a lifetime of hard work and prudence, nor does it have the right to tell you how and when you might spend it. Many people who do not stand to inherit a decent sum from their parents do not want to stand in the way of those who do. Others think that given time maybe they will stand to inherit, and do not fancy the idea of a large tax charge on their parents’ effots. Similarly people may not have much or any pension savings yet, but do not rule out one day having some and then wish to be free to use them as they see fit.
It has been good to see the instant reaction against the nanny state when some dared to argue that people should not be free to draw down their savings in retirement when they wish. The public mood thinks government interferes too much and charges us too much for what it does and what it can offer. The two popular statements by Mr Osborne show there are lots of people in our country who want the state to know that many of us wish to be responsible with our money and want the state to interfere less.
March 26, 2014
Whilst watching the budget that announcement struck me as an election winner. The fumbled opposition response confirmed it.
Pick a fight with the LibDems, break the government, go to the country early. The lib(student fees)dems should be the least of your worries. Fixed term parliaments is a nonsense.
March 26, 2014
Osborne will have to do rather more than that to win, even just against the hapless Miliband. Osborne and Cameron will have to de-rat on IHT (and scrap it) and de-rat on the EU cast iron. Then they have to convince the public they are not the heart and soul, no greater Switzerland, tax borrow and waste, green crap socialists that they clearly are.
I cannot see how they can do this without UKIP.
The logic of the pension reforms and the ISA increased limits is to scrap the lot of these pointless, restricted saving vehicles with their silly costs, complex rules and investment restrictions and just give some decent tax relief for all savers. Cut out loads of pointless middle men and red tape, free investment up and make it all far more efficient.
Do not forget that Miliband can make promises too and he might be believed unlike Cameron & Osborne. He will do so if needed.
March 26, 2014
I said a couple of blogs back that this pension reform and a pledge to raise IHT to a million pounds might be enough for them to sneak the election. It might be too, but I am sure that Labour will come up with some promises. If the Tories had stuck to their word, they would not have been struggling now for credibility.
zorro
March 27, 2014
Indeed they ratted on the Cast Iron promise, thus throwing the last election away and then ratted on IHT thresholds. They kept the damaging 50% IT for far too long and still have the 45% and then also increase 299+ other taxes and expect the country to ever trust them again. Then Cameron claims to be a low tax conservative. He is clearly a tax borrow and waste, pro EU, greencrap, say one think do the opposite, Libdem to his very core.
All so they can piss money down the drain on green crap, loans to the PIGIS, HS2, payments to the feckless ……
March 26, 2014
The govt position and the people’s reaction to it are beyond absurd.
The govt is basically telling us that if you have any of your OWN savings left over, after they have taxed and inflated a large chunk away, then we will reward you with access to these remains of your OWN savings.
And the people, eager for crumbs from the master’s table, even if they are their OWN crumbs, rejoice and give thanks. !
I despair. What have we become?
March 27, 2014
Gary
Just shows how very far we have gone down the State control road when as you say, many get excited when a few crumbs are thrown back to them.
Perhaps, just perhaps our Chancellor has at last twigged the mood, that enough is enough from those who have old fashioned conservative minds and values, but I will not hold my breath given it is close to an election time.
March 26, 2014
“What both reactions have in common is the view that the state does not have a right to confiscate your money after a lifetime of hard work and prudence, nor does it have the right to tell you how and when you might spend it.” Eh? That is news to me. IHT is the easiest tax to avoid paying. However little George Osborne has done nothing really substantial to stop the biggest threat to most people passing their wealth over to their kids i.e. long term care costs. The state also has a duty to ensure that those with pension savings are not ripped off either. A quick look through the FCA and FOS websites confirms that the banks, insurance companies and IFAs are just as rapacious as they were in the 80’s when the Conservatives last gave you the “freedom” to plan for your retirement. So proceed with caution you know what happened the last time.
March 26, 2014
“the state does not have a right to confiscate your money”?
Well they certainly do. With IHT, income tax, NI, duties, Stamp, fees for planning, land registry, VAT, CT, charges for driving licences, passports, council tax, building control, cars, roads, insurance, carbon, alcohol, fuel ……. they get very perhaps 99% over the years.
£1M after 70 years at 10% PA growth with no tax gives – £790M perhaps £100M in real terms.
The same with all the taxes and you are doing well to beat inflation and still have your £1M intact.
March 26, 2014
It is true that many people, including myself wanted and still need to live responsibly, yet having lived through a period where money came very easily to others , out of my bank account and the representation of my hard work and also in a time of national affluence , my perceptions changed. Whilst the few follow the old British way of honesty , economical living, hard work and sensible saving , the parasites will take where they can,will act foolishly , spend beyond there means , then move on to others where they can re parasitise.
With freedom comes responsibility .
March 26, 2014
I am not sure who is on me at present. “spend beyond THEIR means” I have just heard in the supermarket a manager saying, we can’t roll her on so why are we paying for her? I don’t know who they were referring to , but doesn’t that say it all .
Farage / Clegg interview…Will it make any difference?
March 26, 2014
Actually individual citizens having control of their own decisions, having buying power over resources aimed at their needs, is always going to be popular. That is why we should go further and hand patients control of their own health budget, hand parents buying power in the relationship with schools, and hand residents control of their own housing subsidy. Stop giving subsidy to quangos and state apparatus to spend, instead give it to the individuals and let individuals having buying power force the providers to change in millions of small ways that state regulation never can.
March 26, 2014
Exactly.
March 26, 2014
This is a step in the right direction.
I am afraid that JJ Rousseau was wrong: the general will can indeed be very wrong.
What the general will seems to be is that we need, with one hand, to increase our prosperity, jobs and build a better Britain by handing out squillions of goodies all round and, one the other hand, to reduce taxation and put a cap on government spending and waste.
For me, as an OAP, the priority must be to reduce the debt – or at least get rid of the deficit. People of my generation have always known that debt is a menace that must be dealt with quickly, ruthlessly and efficiently before it takes over your life. So we ought to pay that off before we do anything else.
March 26, 2014
@Mike Stallard
If debt is used to fund current expenditure like foreign aid, then definitely agree with you. I certainly don’t see any justification to increase aid, especially while our economy is in “special measures” and existing aid was not being properly targeted.
If debt is used to fund capital projects which provide future value then, provided there is a clear and compelling case for the investment I see no problem. Sadly a clear and compelling case is what HS2 lacks.
March 26, 2014
I have made a fair bit of money by borrowing and then investing it wisely for a better return than the interest. Borrowing is good if you invest it well and do not pay interest. The problem is government often tend to borrow just to waste it, or worse help themselves and their mates to it.
Indeed if you start off with no money how are you going to start a business or buy a home without some borrowing?
March 26, 2014
do not pay “too much” interest I meant.
March 27, 2014
OK but if you have £1000 in the bank, you have the asset, but who has the debt?
If you have £1000 in National Savings Certificates, same question, who has the assets and who has the debt?
If all the worlds National Debts are added the total figure is $57trillion. Who do we owe it to? Not Mars obviously. Who then holds the assets?
March 26, 2014
You say “The Lib Dems did not allow the full increase in threshold the Conservatives had offered in 2010 when joining the Coalition.” But what happened was that Cameron and Osborne simply did not push the issue and merely decided to rat on the electorate once again.
It was unforgivable. Why trust them this time they have virtually no chance of a full majority.
They have not even yet promised to do it immediately in the highly unlikely event that they win a majority after 2015. Just vague words from ‘tax borrow and waste’ Cameron after being asked a question at a Saga meeting.
He threw the last election with his pre-election ratting and socialist agenda. Thus inflicting the yoke of the “wrong on virtually everything” Libdums.
Inheritance Tax is a hugely damaging tax, distorting people’s decisions massively and raising little tax anyway. This mainly from the middle wealth people whose home is their main asset (and thus hard to dispose off especially with all the “gift with reservation” and pernicious & complex anti avoidance rules). So more pointless expensive work for tax accountants and Lawyers too.
IHT is basically saying that even after paying your income tax, NI, vat, CGT, CT, council tax, VED, stamp duty, alcohol duty and all the rest 40% of your money can still be stolen by the state. As we all know the state is highly wasteful and insists on chucking money down the drain on the PIGIS, the expensive green nonsense energy, destructive wars, over paid parasites, HS2, the EU, over regulation, an incompetent NHS and endless other absurd drivel.
Just leave the money with the sensible people who made it and know how to use it. It is far better for the economy in the long term. It sends the excellent message the if you make it it is yours to keep, to spend, to invest or give away as you wish and if & when you wish.
The solution is full abolition, but perhaps with Capital Gains payable on death for other than your principal residence as in Canada I understand. But I would also reduce CGT to less than 20% and then only payable on real gains after inflation.
This is the right signal to send create some real growth and confidence. It should have been done four years ago but Cameron has alas socialist, innumerate, genes. It is too late now, even against the useless, state sector union man, Miliband he will surely lose.
March 26, 2014
The comment by IDS of having a cap on total benefit spending. How on earth can he even say it? We are in the situation where millions can walk in here and claim benefits, for having contributed absolutely nothing. With Turkey and Ukraine ( and others) wanting to join the wondrous bottomless money pit, where, our population could be , in a worst case scenario, quadrupled, the thought of a “total benefits cap” is ridiculous. It has clearly been said as a weird, un-thought out promise for an election. “We will do this” – -it is impossible while the doors to here are open. IDS has thrown it in to see what the others do. When people like myself get absolutely nothing after working 45 years, yet the majority of the EU can walk in here and get a free house, money, NHS and schooling – – for having done -and never will do -nothing – -then please explain the RIDICULOUS comment by IDS – who, after 1 year I am STILL waiting for a reply to my email, or after being taxed for 45 years would he prefer it if I just went and quietly disposed of myself. With foreigners continuing to flood here, and be treated better than us when is the govt going to admit the aim is the total destruction of this nation?
March 26, 2014
It’s a bit sad that so much fuss is made over such a small move in the right direction. I seem to remember in the early 80s Thatcher, Howe and Tebbit delivering decisions like this on an almost weekly basis.
Also, the move isn’t THAT significant. Even wealthier folk generally won’t go far above the 40% limit in drawing down, and poorer folk could already release their small pension pots. The GAD limits were always iniquitous anyway. And bear in mind that it will be tough to reach £1.25m contributing for a working career with a max of £40k per year in the good years now. Those limits were set by THIS government too, you know?
Once such momentous decisions are made on
Welfare bill reduction
Debt not deficit reduction
Public sector employment terms
Student loan scandal
EU referendum in the Parliament (a bit too late now)
Flat rate taxes
Grammar schools
Energy tilting away from windmills
Sensible foreign policy run by a sensible foreign office
Then there will be something to cheer!
March 26, 2014
Blame the LiB Dems again JR, this is a sorry state of affairs. Cameron chose to go into coalition and he knew what that would mean by them, a fanatical, minority party equal billing.
You might also recall how the Lib Dems were shocked by the amount of ground the Tories gave them. I suspect we could envisage the same in any negotiation involving Cameron. A bit like Blaire’s peace deal in Ireland, it turns out to be a total capitulation for one side, difficult to understand how it could be called negotiation or deal. Or difficult decisions need to be made, he gave them everything! I would imagine the same tactic used by Cameron in any EU negotiation ie arrest warrant or change to the Lisbon Treaty in 2010, or fiscal compact- he got nothing in return whatsoever. Now he wants to offer crumbs to get votes. Too little too late. No one trusts him and his judgement is terrible.
March 26, 2014
Hope
Just wait and see what Scotland get in additional powers, yet to be given away when they vote no later on this year.
It would seem none of our leaders, past or present have a clue how to negotiate, they simply cave in and want to appear to be generous.
How many Countries has Mr Cameron been to visit with then offers of funding with truck loads of money ?
March 26, 2014
Indeed the tail waging the dog but Cameron is a heart and soul a Libdem simply wrong on nearly all the main issues. He welcomes them a fake excuse for his ratting.
March 26, 2014
It just shows how gullible Cameron & Osbourne think we are if after four years of their pro EU, green taxes ,gay marriage and all the rest of their metropolitan elite ideology,one or two sops are going to get them voted back in.We need a resounding victory for UKIP a the forthcoming election to show them and the other parties people are heartily sick of them all.
March 26, 2014
Agree with what you say John, but also it was the punitive rates of tax being charged that also just simply felt unfair.
Let us not think of inheritance tax being payable on anything above £650,00 because that is simply not true.
It is £325,000 per person.
If you arrange your affairs in a particular way, it could be up to £650,000 on the second death of a married couple.
Arrange your affairs and your wishes in a different way and it will not be £650,00 that is exempt on the second death at all, but could be far less.
For very many people the rate is thus £325,000. with no prospect of using the first death allowance benefit of a partner on your own (second) death calculations.
After the allowance it is straight into the 40% tax rate on the estate of perhaps someone who has never earned enough in their whole lifetime to have paid the 40% rate ever before, and that just seems plain wrong.
As far as Pensions go the insurance companies have only themselves to blame, offering such miserable annuity rates, that policy holders were in effect legalised sitting ducks waiting to go to the slaughter.
What the Chancellor has done is to RESTORE some freedom to the individual with his Pension announcements, he now needs to build on this with a significant increase in the IHT tax free allowance.
March 26, 2014
While Labour increased IHT nearly every year they were in power the Conservatives haven’t increased it once. I guess that if they can’t increase it to £1 million they won’t increase it at all.
March 27, 2014
Uni 5
I guess you may be right.!
March 27, 2014
But uni, they have greatly helped couples by allowing the maximum tax free amount to transfer thus effectively making £650,000 the tax free amount.
March 26, 2014
Is it true that most people are in defined benefit schemes? If so it must be as a result of the public sector weighting as they are rarely offered these days in the private sector.
Most people who start or move jobs in the private sector now go into a defined contribution scheme.
Many will be in my position of having accumulated benefits in a mix of both types.
March 26, 2014
JR: “The Lib Dems did not allow the full increase in threshold the Conservatives had offered in 2010 when joining the Coalition.”
That tells us how much importance your party leaders put on that particular election pledge. No doubt it would be ditched again in the event of another coalition, after all its more important to be in office than implement your pledges to the electorate. Worse still, your Chancellor has not even increased the allowance in line with inflation once during his time at the Treasury, thereby, not just reneging on his manifesto promise, but making the inheritance tax grab even worse than under Labour.
March 26, 2014
Osborne has failed on every measure he asked us to judge him on, nil using the 80/20 split in spending cuts and tax rises. JR has made this clear on so many occasions. If Osborne had made the spending cuts the structural deficit might have been achieved or he might have been able not to raise over 300 taxes. It strikes me he has followed Alistair Darling’s budget plans ie the one that the Treasury had planned who ver got into power. He even announced the pasty tax that the Treasury wanted for some. cease he was on a jolly in the US president’s plain watching a basketball match! While at the same increasing our energy bills by voting and implementing the Climate change Act claiming alarmist global warming!
March 26, 2014
Well it took them a while! It is noticeable that when politicians say something popular it is often because there is an election looming !
March 26, 2014
@Cheshire Girl
And it has nothing to do with the loss of support to the fastest growing political movement in the UK.
March 26, 2014
Prove it. Increase the limit now. Increase it to 2 million, because that’s the level at which Vince Cable wants the mansion tax.
March 26, 2014
Just scrap it and cancel HS2 and all the green crap it is hugely damaging on confidence and motivations and does not even raise much for the government – to usually just tip down the drain.
March 26, 2014
If only goverments realised and put into action that they do interfere in to many areas which they should not be concerned with. Conservatives said that they want smaller goverment but has it happened no. Compare the first few years of this government with what was brought in as legislation the polls showed they were not of interest to the public and disliked in some cases. Now that George Osborne is bringing in Conservative policy’s their poll rating are going
up long may it continue. It’s time to start talking up for there self’s instead of allowing the Libs to take credit and hog the airwaves.
March 26, 2014
Actions speak louder than words. I will only believe it when it happens. But I do agree with you about the response to retirement benefits that will enable those retiring to make their own decisions about their own money. As things stand I believe it makes more sense to invest on your own account through self select ISAs if you can. There will be bumps along the way, but it is possible to build a diversified portfolio over the years.
At present ISA entitlements are only available on a year by year basis. A useful reform would be the ability to top up ISAs for those past years when the the full entitlement could not be exercised. For many people earnings are uneven over time as are expenditures, especially when bringing up families. This makes it next to impossible to save anything for a rainy day. It would help enormously if people were able to infill past years when they did not have the spare cash to save, for example once they are free from the costs of raising a family. The principle of evening out earnings for tax purposes is not new – I believe it applies, for income tax purposes, to certain professions which experience erratic earnings patterns such as in the entertainment business. Why not apply it to savings too?
March 26, 2014
These are two supposedly right wing policies which are very popular. Labour hate it and are supporting them through gritted teeth as opinion polls tell them they have to. Such policies go against everything Labour stands for. This morning on the Today programme Evan Davis conducted an almost hysterical interview with Ian Duncan Smith, shouting him down and interrupting him such that it was very difficult to hear what Mr D-S was saying. With these reforms and the welfare cap the Conservatives have got Labour and their many supporters at the BBC on the run.
Next target: green crap.
March 26, 2014
Ed Davey says we are leading the world in offshore wind and it is creating jobs.
What a plonker. Leading the world in paying over 3 times the going rate and for intermittent electricity!
March 26, 2014
Offshore wind is a nonsense. I see Mr Cameron said Crimea is a wake up call we need to press on with shale gas. The tide is turning and the Conservatives are looking for a justification to cut green crap now the costs are clear, and with the underlying theory more than ever questioned.
March 26, 2014
With these reforms and the welfare cap the Conservatives have got Labour and their many supporters at the BBC on the run.
So far the welfare cap only applied to house benefit (paid to the unemployed and those in low paid work) and tax credits (paid to those in low paid jobs). So any cap will cause more problems for those in low paid work because it will result in a higher level of means testing.
Perhaps you should have listened to what Evan Davis was saying regarding why the cap won’t work (just like all of IDS’ ideas such as universal credit, the universal jobsmatch, and workfare).
March 30, 2014
Well most people favour the cap so don’t expect many votes opposing it. It is an outrage that the supposedly neutral BBC allows a presenter like Davis to foist his own views on listeners at the cost of not being able to hear the interviewee.
March 26, 2014
I’d like to see the conservatives write a ‘Manifesto for England’, and create a Minister, and Departments of State, for England.
March 26, 2014
PrangWizard,
No chance of that happening I’m afraid.
The Conservative party is far too Europhilic to allow this to happen as it is a path to England leaving the EU.
You’ll need to seek this policy in another party’s manifesto.
The Conservative Party does not even want to discuss the “English Question” and remains quite happy that Scottish MPs can vote on English only matters.
March 26, 2014
Indeed. This will only become an issue when the three main parties start to lose votes over it. At the moment, it is a issue of low value to the political class, so they can safely ignore it.
When Scotland get more powers, and the Welsh and the N.Irish start agitating for the same, I expect many in England to become increasingly dissatisfied.
But eventually, certainly Scotland, and perhaps Wales and N.Ireland will split form the UK.
What shape England will be in by then, lord only knows.
March 26, 2014
Nowhere near good enough for me. Savings are still being savaged by inflation with the ultra low savings rates available, while it’s party time for the banks, the feckless, and the BTL brigade. This is a result of FFL and Help-To-Sell, both introduced by Osborne on top of ZIRP and QE. No wonder with so many MPs being BTL landlords and lining themselves up for cushy bank positions. This needs to be sorted.
March 26, 2014
@Dave
It’s amazing how you can view something differently just based on how it’s labelled. It’s the same for “National Insurance Contributions” which is just income tax by another name, “Bedroom tax” which is not a tax at all or “Liberal Democrats”.
March 26, 2014
The budget was a small step in the right direction so it is no surprise that opinion polls have reacted positively . Restoring the right of decision over ones’ savings does not mean that the public will become irresponsible and profligate ; it provides a dignity of opportunity at a very important time in ones life . There are many more steps to be taken and I fully agree with the views expressed that Estate Duty must be high on the Chancellor’s agenda for much needed improvement . Working hard and saving is to be applauded and rewarded and not penalised through the taxation system . Osborne has given a glimmer of hope at a time of despair for the Conservatives .
March 26, 2014
Changes to Inheritance Tax and pension arrangements are both welcome. The former had become essential as house prices, especially in parts of the South, now mean that many people who are effectively ‘asset rich, income poor’ now fall in the tax trap. It never ceases to amaze me how some people choose to define wealth by asset value rather than the income it produces and in the case of a family home that income is zero.
Extra freedom with pensions must be a good thing and I expect one likely effect will be to cause a rise in annuity rates as companies seeking to sell them will no longer have a captive market for their products.
However, might it be possible to backdate the ISA changes to allow money from pensions only to be paid into them using a retrospectively increased allowance from previous years?
March 26, 2014
” What both reactions have in common
is the view that the state does not have
a right to confiscate your money after
a lifetime of hard work and prudence”
Then why is the govt pegging rates at usurious levels to steal from savers and why is the govt misappropriating taxes to underwrite the housing ponzi?
Govt only knows how to lie. And this bone that it threw to pensions is the slight of hand to conceal the large lie that it really cares , because if govt really cared about pensions and savings it would stop stealing them with sub-economic interest rates.
The media are complicit and bury the real story underneath the froth.
It is about time the public woke up and threw all these chancers out.
March 26, 2014
This is JRs Marie Antoinette moment “Many people who do not stand to inherit a decent sum from their parents do not want to stand in the way of those who do. ” Once the political elite’s money printing exercise comes to its natural conclusion we will then see just how contented the lower orders are with the UKs political settlement.
March 27, 2014
UK inflation has fallen to 1.7%. The global environment is already strongly deflationary and only needs another shock to tip into full-scale, inoperable deflation. The Bundesbank is finally waking up to the problem. Without ‘money printing’ we would be there already.
March 26, 2014
Yes, well done Mr Osborne. There are other instances where people might be allowed to spend their own money in their own way. Tied subsidies are wrong in principle.
What is the justification for giving concession fares on public transport to the elderly, as opposed to paying them a bit more pension? Etc, etc.
Getting back to liberation of the elderly, and bearing in mind that some commentators have said that the average pension pot is as little as £36000, it’s clear enough that other consequences might follow:
– Pensioners working until aged 70 or as long as they are up to it (in the employer’s opinion)
– Liberalisation of the law on assisted suicide, with safeguards
– Downsizing a bit earlier in life, to release capital and indirectly helping the housing market
– Limiting the NHS spend on geriatric medicine
These aspects of liberalisation are, of course, much less pleasant. However, with the number of over 65s set to rise by a third between 2011 and 2030, something must be done to contain government expenditure.
March 26, 2014
You say “The Lib Dems did not allow the full increase in threshold the Conservatives had offered (promised!) in 2010 when joining the Coalition.”
Well Cameron did not try very hard.
Cameron should have done a proper deal one that allowed him to get rid of the damaging 50% tax rates, kept the manifesto promise on IHT and allowed the Libdims something like a graduate tax instead of tuition fees in return so they could have kept their word. The current student loans are in effect grants anyway in nearly 50% of cases anyway as they will not be repaid. Especially the ones given to EU students and females who take career breaks.
He should also have ensured that he got the fair electoral boundary changes too. He was alas incompetent in his negotiation, just wanting to be PM at all costs. Treating the electorate and his supporter with his usual total contempt.
March 26, 2014
Re the EU. United they stand, divided they fall.
The fuhrers of Brussels know that just one domino needs to fall to bring down the whole facade of the U S of Europe and they will not let that happen. So, it’s up to us, the True Brits, to make that first move. Again. RIP EU, long live the Single Market.
March 26, 2014
They often say and don’t do, or in the case of gay marriage don’t say, but do.
March 26, 2014
A rise in the capital allowance lower limit – for us scroungers – would make Gideo popular with some of us !
£6K > £11K ?
March 26, 2014
Saving money for something…heres an idea:
Stop the tax on people saving, dump ISAs and related fiddly schemes.
That would mean I could tell both my children (old) and grandchildren (specially them) that its a good thing to save up for something. Should learn that early. They might say why…and I would tell them that its far better than borrowing and you will also get money added to it (interest). Why interest added they would say. I would say that everybody in banks etc likes to de-value your money when you save it, so more has to be added to maintain its original value. And the state likes to take a percentage….at source (taxed before you get it).
They will probably say after that…no, we’ll just spend it and ask you for lump sums.
So saving fails and debt climbs…good for some I suppose !
March 26, 2014
I would agree that Governments should not interfere and insist that pensioners should buy annuities with any lump sum which comes their way. If Governments didn’t like the idea of the lump sum that should have been made clear, initially, when the savings were being made. Having said that, savers shouldn’t necessarily consider themselves to be doing society a favour by saving. They are doing it for their own convenience.
At the risk of stating the obvious, I’d just point out that all Governments would like their GDP to grow from one year to the next. GDP is the total sales that occur in any one year in the economy. We like to think that is our income as a country. It shouldn’t be forgotten that GDP is also what people in the economy spend too. If there is no spending there is no selling. So in other words Governments want to see spending rise from one year to the next.
If you or I don’t spend then GDP falls. Of course we do not have to spend. If we want to save we can. But having saved, should we then complain if Government borrows that money from us, putting itself into debt, and spends it on our behalf? I don’t think so. If it didn’t do that GDP would fall.
March 26, 2014
Well Osborne could do worse than listen to tonight’s issue of ‘Boom and Bust’ on RT. The Australian economist, Steve Keen’ just gave an interesting critique of Keynesian economics (much espoused by the left) and shows how people like Krugman have had to row back on certain things they previously held as solid.
Tad Davison
Cambridge
March 27, 2014
Id be interested to know exactly what Steve Keen’s critique of Keynes might be. Knowing Steve’s views on economics, it can only be that Keynes wasn’t sufficiently Keynesian in his views!
March 26, 2014
What a pity George Osbourne has failed to undo the damage done by Gordon Brown’s raid on pensions. Once upon a time dividends on stocks held in pension funds were paid free of advance corporation tax. Brown did away with that and the then Conservative opposition made quite a stink about it. How silly to think that once in government they would do anything about it.
March 26, 2014
I agree with your comments. What we next need is a change in CGT :
The properties my wife and I have bought, refurbished and let over 20 years now carry such a heavy CGT penalty that our children would be better off if we both died than if we sold some to help them with house deposits. That can’t be sensible or just.
We need to return to a taper relief system without increasing rates of CGT to encourage people to invest for the long term. The current system just encourages wide boys looking for a quick buck.
March 27, 2014
It seems odd that the government we voted for make our early death seem advantageous to our families.
March 26, 2014
His Conservative Manifesto promise to take most people out of paying Inheritance Tax was very popular when he first proposed a new £1m threshold before having to pay.
Who exactly was this popular with? The average person doesn’t have enough money to have to pay inheritance tax.
We should ask why is it that these two things amidst the thousands of decisions that governemnts make should be the ones that attract so much attention and favourable comment?
Well a lot of the Conservative policies have been unpopular, so that’s probably why there’s only a few popular ideas. The pasty tax, bedroom tax, and workfare and everything else that resulted in a u-turn have all been very unpopular.
What both reactions have in common is the view that the state does not have a right to confiscate your money after a lifetime of hard work and prudence, nor does it have the right to tell you how and when you might spend it.
Alternatively it means that the wealthy shout very loudly whenever anyone tries to remove the trough from them; then claim that they’re acting in the public interest to try and convince people who won’t benefit to support them.
It has been good to see the instant reaction against the nanny state when some dared to argue that people should not be free to draw down their savings in retirement when they wish.
Though it remains to be seen whether this policy will result in sensible spending or many pensioners going bankrupt because they miscalculated how long they’ll live.
March 27, 2014
Another predictable epilogue Uni.
Inheritance tax is unpopular with most voters because they instictively feel that taxing money and goods they have already paid tax on once already just because they have died is unfair in principle whether they are likely to pay any or not.
Tax reductions are more popular with less well off citizens as a few hundred extra pounds spending money can be put to much more effective use, than the very rich.
And of course there are much more of them as potential voters.
Giving people freedom from the City establishment by allowing them extra choice in handling their own retirement savings is, to me a very good thing and may lead to more attractive annuities.
Strange how you left wingers have no little trust in the people to manage any freedom they are allowed from your control.