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Brown in the soup

It must be terrible to be Gordon Brown right now. After all, here is a man who built up a reputation over the past decade as the Iron Chancellor, a man in control not just of the UK economy but almost every other Government department he cared to interfere with.

Yet today, the Prime Minister finds himself under constant attack for dithering and being unable to deal effectively with the country’s problems.

Last week, Brown flew off to the US. At the top of his agenda was the need to find a solution to the credit crisis gripping the world economy. Yet, as far as many commentators were concerned, the PM found himself upstaged by the Pope who, unluckily for him, had decided to visit the US at the same time.

Now, on one level, if anyone seriously believes that the leader of the Roman Catholic church and a senior British politician are somehow vying for newspaper column inches and TV air time, they need their head examining. Sure, positive PR is always extremely useful but the two men had totally different aims for their journey when they travelled to the US.

Yet the very fact that comparisons are being made tells us something about the febrile state of UK politics, in which any initiative from Brown or events happening to him are milked for all the negativity that can be squeezed from them.

At one level, I almost feel sorry for him. Yet on another, I don’t. The reality is that he deserves what he gets. Here is a man who fundamentally does not understand why the public is feeling disenchanted with him and his Government. Frankly, Labour appears unable to respond to growing concerns by many families across the UK over a weakening economy and its effect on their finances.

Much of Government policy appears to be driven by panic. A classic example of this is the way that the Government was stampeded last year into reforming inheritance tax. As we all know, Chancellor Alistair Darling unveiled his proposals because the Conservatives had announced at their party conference a few weeks earlier that they would scrap IHT on all assets below £1m.

Similarly, where mortgages are concerned, although the Government has no direct control over the way lenders price their products, it seems incredible that it took until last week for Brown to recognise publicly the worries felt by many at the rising cost of homeloan repayments on top of just about every other household bill from council tax to gas and electricity, petrol and even food.

The problem, it seems to me, is that for the best part of 10 years, from the moment when Labour won the 1997 general election, everything seemed rosy. Hardly surprisingly, Brown felt he did not need to heed anyone else’s opinions, not that he was ever inclined to do so anyway.

Stakeholder pensions are not successful? Start off by insisting that they are, then walk away from the mess and pretend it never happened. The same goes for stakeholder mortgages and Isas.

Isas are a messy, complicated and substandard version of Peps? Deny the fact and then spend a seven or eight years changing the rules in order to make them vaguely acceptable.

Stamp duty is clobbering first-time buyers among others? Of course it isn’t. The fact that an average house prices paid by FTBs across the UK is £175,000 – much more in many parts of the south-east of England – is neither here nor there.

Abolishing the 10p tax rate penalises low-wage-earners? Not so. In fact, taking various tax credits and other means-tested benefits into account, it can conclusively be proved that in the past 10 years, the poorest in our society are better off. Oh yes.

The reality is that if you do not have children, you do not receive any of these benefits. Childless, single people earning under £18,500 lose around £230 a year. Even those entitled to child benefits do not claim them because they are so complicated.

The irony is that in almost all of these cases, it would be possible to reform the tax system in such a way that the Government does not lose out in terms of its overall take.

There are proposals, for example, from the Council of Mortgage Lenders and surveyors’ professional bodies, whereby you could end stamp duty on purchases under £250,000 while increasing them for sales over £1m, thereby making the scheme revenue-neutral.

The 10p tax starting rate did not need to be abolished in the cack-handed way that it was. Alternatively, it would have cost a few hundred million quid to protect all lower-paid taxpayers from its potentially negative effect, money that could have been raised elsewhere.

Yet the Government chooses not to listen. It is led by a PM who has turned not listening into an art form. So here is my prediction – I now believe Labour will lose the next election and it will be the nitty-gritty issues of personal finance, the stuff you advise on and I write about, that will ultimately do for Brown. He will deserve what is coming to him.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk

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