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Soft target

Last Thursday, I was at the Financial Services Scotland conference as one of the investment question time panel. I was disappointed we did not have a bigger audience but it happened that our session coincided with the announcement of the result of the monetary policy committee’s deliberations over interest rates. Feeling mischievous, I was the sole panel member who suggested that the MPC might have a rush of good sense and cut rates. It did not, of course, but then it did disclose that its expectations for inflation had been revised upwards.

There has been much in the news on the subject of the rising cost of living. Concerns have been voiced over the inadequacy of the global food supply. The reason has been put down to a variety of factors, not all of which are discouraging. The alleviation of poverty in areas of the third world and a general improvement in living standards is one reason. Other influences, such as poor harvests, the diversion of farmland to biofuels and effects of global warming have been cited. Another upward pressure has been the creation of investment vehicles to allow people to access these so-called soft commodities.

The diversion of investment resources into a whole range of commodity products has undoubtedly contributed to price rises and this is a little worrying. The impetus behind the demand appears to be a lack of trust in more traditional financial assets but it has come at a time when a slowing of the global economy should be easing upward pressure on raw material prices, allowing inflation to settle back. Recent weeks have seen a few shocks in commodity prices, so it could be that investors are piling in at the end of a bull run.

As we approach the end of the tax year, advisers’ thoughts turn to saving tax. Files will have been dusted off and phone calls made to clients who had not yet taken out an Isa or made a contribution to their pension. Investment portfolios will have been scrutinised to see if judicious juggling could reduce a liability or shelter tax. This year there was more to do than usual. For a start, the Isa and Pep regime changes in the new tax year while Chancellor Alistair Darling’s tinkering with the capital gains tax rules has led to a flurry of asset sales that would henceforth attract a higher rate of tax. The opportunities for creative tax planning must have made mouths water in a variety of businesses. It certainly provided a boost to the enterprise investment scheme industry.

This tax year saw me make my first ever investment in an EIS qualifying company, so I felt I should try to better understand the rules that govern their existence. It led me to join one of the Enterprise Investment Scheme Association’s committees and attend its principal annual function at the Palace of Westminster. Howard Flight is the chair of this interesting body. I only hope the Chancellor did not tinker with the rules in this week’s Budget. If he did not, then this might well be a topic I return to in the future.

Brian Tora ( is principal of The Tora Partnership


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