Nic Cicutti: Back to the Future policies are failing voters

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Of all the sayings about the media’s need to remain neutral when delivering information to the public, one of the most over-used is that from former Guardian editor CP Scott back in the 1920s: “Comment is free but facts are sacred.”

If so, then my column last week, in which I criticised the backward nature of the Conservatives’ election strategy when it comes to personal finance issues, amply passes muster.

At the time, I pointed out that the Tories’ proposal to raise the inheritance tax allowance up to £1m for married couples, funded by capping relief on pension contributions for those earning between £150,000 and £210,000, was a “bizarre set of priorities.”

Yes, my comments were “biased”, as some people noted. But it was clearly an opinion piece, not a news story, in a section of Money Marketing specifically reserved for columnists’ personal views.

The irony is that having accused the Conservatives of fighting this election on a diet of secondhand policies, including an IHT pledge dating back to 2007, we then saw them reaching even further back in time for additional components of a financial strategy aimed at the public.

First, there was the Back to the Future proposal to allow housing association tenants to buy their own homes at a discount. As it happens, for several years until we bought our own home in London, my partner and I shared a one-bed housing association flat just off Drury Lane, in Covent Garden.

The accommodation was on a housing estate mostly populated by local working class residents who had lived there for decades, when the area was better known for its fruit and vegetable market. While not cheap, rents were affordable.

Covent Garden is now a well-known shopping and tourist location, with even the smallest flats fetching astronomical prices. It is easy to see why someone lucky enough to be living there when any right-to-buy legislation is introduced will seize the chance to snap up their property – and then sell it on at a vast profit.

An article in, amazingly, the Telegraph newspaper noted that the 35 per cent state-funded discount in the proposed extension of Right To Buy will cost the Treasury some £5.8bn, according to the most conservative estimate by the National Housing Federation.

“That’s £5.8bn that could be far better spent building many more new homes at affordable rents, rather than helping a few people who are already doing just fine.”

Meanwhile, back in Covent Garden, the new owners of former housing association flats will gradually drive out one more small pocket of local history, while those in need of housing find their options even more restricted.

As if this electoral version of Back to The Future were not enough, this week we saw the Conservatives’ attempt to return to the privatisation bonanza of the 1980s, offering the public some £4bn worth of cheap shares in Lloyds Bank when a further tranche of the institution is sold off.

Bear in mind this is the same Lloyds Bank every taxpayer in the UK bailed out in 2008 and 2009, at a cost of many billions of pounds and a huge amount of financial pain – much of which is being reflected in cuts to our public services. Yet our taxes are now directly helping to subsidise the Tories’ bid to be re-elected next month.

Biased? Of course I am biased. The terrible thing is not my bias but the fact that Labour has been so hopeless not just in opposing these ideas but also in articulating an alternative set of personal finance priorities for consumers.

For example, why did Labour fail to reform stamp duty land tax? It was clearly evident that the “slab” approach to stamp duty – charging a rate of tax on the full purchase price of a property not just the element over the threshold – was manifestly unfair.

The Council of Mortgage Lenders campaigned for years to end this anomaly, offering revenue-neutral solutions to the issue. Yet Labour completely ignored calls for reform until it was caught out by George Osborne in his last pre-Budget speech.

Similarly with tax relief on higher earners’ pensions: there is some merit in reducing the 40 per cent rate available for higher earners to, say, 30 per cent – but not to fund an IHT giveaway on a few thousand estates a year.

How about using that money to launch a pound-for-pound matched funding scheme, capped at £1,000 a year, for anyone saving into a pension, whether private or occupational?

As for discounted shares, why not pledge that the money raised from selling off another tranche of Lloyds Bank will be used for a specific purpose, like building more homes? Or funding a particular NHS service?

The tragedy is that consumer finance is an area where it should be possible to have a debate on priorities that affect many millions of consumers. Yet one side has vacated the arena, leaving the other to come up with proposals that are staggering in their naked and crude appeal to a tiny minority of the population, plus those who aspire to join that minority.

The absence of such a serious debate is not good for democracy – and does all of us a disservice. Hopefully we can all agree on that.

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

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. The whole concept of Right To Buy is a travesty.

    Rather than giving away taxpayers money to lucky recipients would it not be better utilised within initiatives designed to benefit the entire population?

    Truth is, all the political parties now comprise exactly the sort of people which make up the regulators – theorists who have never had to suffer financial hardship nor had to work in the real world.

  2. Blimey I find myself agreeing with Nic Cicutti. The proposed right to buy policy is as flawed, disgusting and immoral as it was the first time it was introduced. On the one hand the tories blab on about the free market and then on the other offer a whopping 35% off for people wanting to buy the property they rent. What private landlord would ever say to a sitting tenant “yes mate you ve kept the toilet clean and done the hovering for all these years, so have £70 grand off my £200,000 flat” ? Bloody disgraceful use of public housing stock and social housing stock which aggravates the lack of housing rather than ameliorates it. Same as discounting the price of Lloyds Banking shares – a bloody disgrace. The taxpayer paid all this money to prop up the bank so why the hell should individuals make a buck on it? If they want to make shares available to the smaller investor a la Royal Mail issue that’s fine, but stop giving away our money and tax to a smaller number of investors. Disgusting pandering to people’s greed. And amazingly, I also totally agree with Nic slating the use of flat rate pension relief to benefit a few thousand estates by raising IHT with a slice for the family home. Disgraceful pandering to aspirational people. If you live by the market then you should die by the market Osborne and Cameron.

  3. The Lloyds share offer is a weak gesture, although it does give the taxpayer something back for their assistance in bailing out said organisation. Does it buy a vote? Well you would hope not.

    As for ‘right to buy’… The notion that someone could purchase a property that they have rented for may years, at a significant discount and then perhaps sell it on for a profit (or to retire in the case of London properties!) does ruffle my feathers (where is the risk?). Again, as taxpayers, we are the estranged landlords, these properties and their rental incomes help to cushion the cost of our taxes and as assets, should belong to the taxpayer. If a tenant wishes to purchase their home, then they should pay the full market rate.

    If you transfer ownership of a property to a family member for a nominal rate, it is assessed for CGT, based upon its present market value at the time of transfer versus the original purchase price, even if the family member has claimed to have lived in the property and paid a rent to you for a period of years (please correct me if I am wrong on this)? If this is the case, then should CGT be payable on a right to buy discount?

  4. The enormous social cost of buying votes in this way is already clear to anyone with any common sense.

  5. Elections are about bribing the population with promises not real ideas about the economy – it is ironic that a candidate in the election is being taken to task for handing out cakes as it might influence the way people vote!

  6. John-Dale McCallum 23rd April 2015 at 12:51 pm

    Interesting column and good to see some comments coming up too.

    I for one agree, in some regards, to the Right to Buy scheme. This finishes in 2016 for the Scottish Authorities. I myself am looking to buy my mother’s council house which she has rented for some 36 years. By the time I then pay (at a discounted rate) to buy the house outright the Council will have more than trebled their money…. so not a bad deal at all for the tax-payer.

    In my town we have already seen new council housing being built, these cannot be sold off – they are locked in to the council on a permanent basis.

    The Government – whomever is in charge – should be pandering to those who aspire to better themselves. Why would they not? Surely it is those people that will bring the country back to prosperity unlike the lazy mob who want to live on benefits – cut their benefits so that they have no option but to work… They should not however, be making consistent cuts that only affect the top 10% of the population, some cuts are fine but not a disproportionate amount.

    As for the Lloyds “scandal”… the real scandal happened many years ago when the British Government near backed Lloyds into a corner to purchase HBOS – so as to stop a foreign bank from purchasing. Lloyds buy them over and then are told to sell off part of the bank because they are now too big? There is a bad smell all around on this one…

  7. I think we can all agree that democracy is suffering at the moment. Journalists could probbaly do more on this front but it’s difficult when so many of them have such strong political ties.

    Nice quote; that’ll be the same CP Scott who said, “Truth, like everything, should be economised”…

  8. Nic how about this for a discussion: All political parties should be abolished. We should have local MPs to represent local issues and voting centrally in government; and do away with school yard bickering “my policy is better than yours” etc. We can then have long term policies for the good of the nation and not see-saw politics depending on which polictical party is in power.

    No political bias. Straightforward voting – yes or no. No abstentions. Simple majority carries the day.

    This alone would save the country billions over time.

  9. Anyone who takes seriously all the nonsense uttered by the parties – and the media – about the election and politics generally should, to redress the balance, Google “I shall vote labour” and read the brief poem that will appear. Bear in mind the story is that the author, a stalwart with the magazine Private Eye, started out to write a serious and strident defence of his political views but saw the light halfway through……

  10. Blimey indeed! I too find myself in hearty agreement with the same author who aroused in me equally hearty disagreement with his Rita-Skeeter-style pieces on the 7 Families campaign. Whatever next?

  11. When it comes to marking my bollot paper the only thing I’m struggling with is the last word;-

    “you’re all a bunch of…………..”

    Hmmm, what can I put that wouldn’t be seen as too provocative / offensive, yet still conveys a little more strongly the sense of frustration than simply “none of the above”??

    I’ve always voted (regard it as an article of faith), appreciate someone has to run the country, and while democracy has it’s faillings, dictatorship isn’t too appealing either. But never have I struggled so much to find anything positive to say about any of them. Boils down in the end I suppose to the least worst, but that’s not much of a choice.

  12. After we have debated this over a couple or three pints in the pub, all this jockeying for position and vote winning promises account for very little in the grand scheme of things !

    For decades what you give in one had has to paid for by the other, fact ! the trouble is after many years of tinkering the water is so murky, the voting public haven’t got a clue what they are paying for and more importantly why ! so lets run with the headline grabbing rate an suffer the consequences !

  13. Dear Nic

    I understand that you are a very politically engaged person. and if In have you right rather left leaning, as I don’t see any overt criticisms of Mr Milliband and his parties proposals.

    I think it is always as well to bear in mind that a significant proportion (if not a majority) of the electorate don’t vote at all. And who can blame them? Many feel completely disenfranchised and regard the choice akin to asking whether one would prefer syphilis or gonorrhoea..

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