In the past, Investors Chronicle has not made a habit of telling its readers how to vote, something that I have no plans to change. That’s no bad thing, because the paucity of substance in this election campaign would make it very tough to make any recommendation. There’s no harm, however, in marking the cards of each of the main parties.
Gordon Brown did handle the banking crisis well. While Europe’s leaders sent out contradictory signals and the US Congress was paralysed by infighting, he took bold and decisive steps to stop a systemic banking crisis becoming another depression, winning widespread admiration outside the UK for doing so.
The next government had better prepare itself for some heavy lobbying from some of my breakfast companions this morning.
I went along to discuss the future of pension saving with some well-known people in the business, including Maggie Craig, director of life and savings at the Association of British Insurers, Tom McPhail, head of pensions policy at Hargreaves Lansdown and Laurie Edmans – who’s just been appointed one of the people who will run the government’s new national pension saving scheme, Nest.
One of the topics that got people most excited – after we had discussed the problem of people not saving enough for retirement, and not being aware of their options when they do retire – was Tom’s notion that the next government should appoint a minister for savings. Such a person, he argued, would focus purely on making sure people understood how to save their money – both for retirement and for other things, like putting down a deposit on a house.
Everyone around the breakfast table nodded agreement and said we should all start lobbying straight away – or, in Tom’s words, “kick the door down in Whitehall and get them to make changes”. “I wish I’d thought of it myself,” said Laurie.
It doesn’t sound like a bad idea – especially when you consider that people failing to save their money means they have to rely on the state in retirement, and that a lack of savings means reliance on credit card bills and potential bankruptcies – contributing to the state our economy is now in. After all, we have a minister for housing, a minister for investment and a minister for pensions. Why not one for savings too?
It’s been the key phrase of the last week of the campaign. But while the possibility of ‘a hung parliament’ has only ever had a very remote chance of happening, now it is moving slowly closer towards reality. Whilst hung parliaments are very rare, the opinion polls are suggesting that this is the closest run election in a generation.
And everyone has an opinion about it. From the Sun’s blunt headline on the prospect of a coalition government, “Well Hung…and Shafted” to the FT’s own thoughts on why the third placed party, which most polls suggest is currently Labour could still dominate the Commons.
Private investors themselves are becoming increasingly concerned about the potential impact on their investments of a hung parliament after the election. Markets do not like uncertainty and can become more volatile ahead of any general election.
Whilst the most pressing issue for the government in power come May 7th will be to set about reducing the budget deficit, at the same time, it should not lose sight of the importance of encouraging the savings habit in the UK.
The three main political parties each have a different view on Child Trust Funds, with Labour looking to carry on with the scheme as it is, the Liberal Democrats wielding the axe and the Conservatives maintaining the funding for the poorest third of families and those with disabled children only.
Forget the Bank of Mum and Dad. First-time buyers have found a new way to raise the extra money they need to finance the deposit for their first home: selling make-up from cosmetics company Avon.
The door-to-door makeup sales firm, for whom Hollywood actress Reese Witherspoon advertises their products, says it has seen a “huge growth” of new recruits who cite saving for their first property as a reason to join Avon and supplement their income.
You may not have paid much attention before to what the Liberal Democrats’ policies on tax consist of but now that they’ve taken a surprise lead in the polls it’s worth knowing exactly what they have proposed and how it might affect you. If a hung parliament is the outcome of the upcoming general election then the Lib Dems’ manifesto will be all the more significant.
Does the general public care about huge levels of unsustainable debt? Not if it’s the government’s, apparently. As my colleagues wrote in this morning’s FT:
Ten leading investment funds all told the FT that a hung Parliament, potentially delaying action to tackle the UK’s £167bn deficit, was the biggest threat to the market… But Sunday’s polls suggest the public does not share market concerns about a hung parliament. In polls by ComRes and YouGov, they said that would be their preferred outcome. More…
Are Britain’s consumers so intoxicated, or numbed, from their 13-year credit binge that they no longer think of debt as a problem? Not so, claimed Sainsbury’s Finance – arguably the ultimate “off-the-shelf” lender – this morning:
No, not the 1986 falsetto hit by Prince, nor the ludicrously over-theatrical American stadium rockers. Kiss is an acronym beloved of web programmers and sundry other Californian software nerds – and one that investors would do well to take on board. It stands for Keep It Simple, Stoopid.
And the benefits of keeping things simple are plain to see. In last week’s Investors Chronicle, we saw that John Baron’s two investment trust portfolios, each comprising just 16 holdings, have comfortably beaten their benchmarks over the past year.
The three main parties have all published their manifestos this week, but what do they really mean and how will the plans affect your finances?
While it’s hard to take the manifestos too seriously as political parties often make vote seeking pledges and then neglect to implement them later if elected, there’s alot of specific detail so it’s worth taking the time to understand the potential implications of your vote.
Consumer website www.candidmoney.com has pulled together a handy guide to the pledges, so here are the highlights:
Income tax: While Labour will not raise tax rates during the next parliament, the Liberal Democrats have pledged to increase personal allowances to £10,000.
National Insurance: Labour plans a 1 per cent increase in April 2010 but Conservatives and Liberal Democrats intend to reverse this 1 per cent rise.
Inheritance tax: Labour will freeze the nil rate band until 2014/15 but the Tories would raise the nil rate band to £1m.
Stamp duty: Both Labour and the Conservatives propose no stamp duty for first time buyers on properties up to £250,000, but while the Tories say this is forever, Labour has set a two year time limit on it.
Property tax: The Liberal Democrats are pushing this one, proposing an annual ‘mansion’ tax of 1 per cent on properties worth £2m plus.
Personal pensions: The Conservatives and the Lib Dems, both propose scrapping effective compulsory annuity purchases at 75.
Child Trust Funds: Labour says it will protect these and fund an extra £100 for disabled children, the Conservatives suggest scrapping government contributions to these for all but the poorest families and the Lib Dems say they would scrap contributions altogether.
Visit our indepth election page to keep up to date with what’s happening.
While currency fluctuations have benefited international buyers purchasing property in the UK, the same cannot be said for UK residents who own overseas holiday homes.
The depreciation of the sterling against all the world’s major currencies has seen the cost of owning a property abroad spiral upwards for UK second home owners.