View more on these topics

Taking a simpler approach

Economic growth and inflation over the last four years have been much as ex-Chancellor Ken Clarke forecast in 1996. The only difference is that taxation has been £28bn a year greater.

The substitution of Isas for Peps and Tessas has reduced the maximum amount of tax-free savings available to an individual by £3,800 a year and complicated the arrangements with maxis and minis in a way most people still do not understand but it has added some investment flexibility.

The combination of the retrospective and, in some cases, unfair pension review, the costly and demanding provisions of the Financial Service and Markets Act as well as the current Treasury initiative to abolish polarisation all threaten the future of many conscientious IFAs – albeit that happily they are a hardy lot and citizens want and need their services.

The boom and bust in technology stocks in the US and UK have probably made investors more cautious of buying individual securities and reinforced the case for investment diversification through collective investment schemes.

Unfortunately, the greatly increased costs of regulation have more than offset the downward pressures on charges resulting from consolidation within the fund industry.

The main effect of stakeholder schemes is likely to be to hasten the demise of final-salary schemes for middle management, replacing them with considerably less generous and higherrisk (to staff) money-purchase schemes.

The take-up of stakeholder is likely to disappoint unless attractive employer contributions are provided. They will also bypass the many self-employed and those working for small companies.

Perhaps the biggest financial issue of the last four years has been the collapse in the savings ratio from 11 per cent to around 4 per cent of national income, largely the result of the massive stealth taxes reducing growth in disposable incomes to 1.6 per cent a year from 2.7 per cent a year in the previous four years and to below the growth rate of the economy as a whole.

This has largely reflected itself via increased borrowings, more than a reduction in gross financial saving.

As you would expect, I would recommend all savers to vote Conservative in the general election.

We are committed to abolishing standard-rate income tax on the income from savings and abolishing the 10 per cent charge on dividends and refunding the 10 per cent it was originally intended, a simple “tax wrapper”, analogous to a Pep or Isa but subject to the pension tax regime, that is, tax deductibility on contributions; roll up in the individual pensions account free of tax, with income tax on withdrawals on retirement.

This will afford full competition between the fund management and insurance ind- ustries for retirement savings and also offer a simple and flexible arrangement for retirement, financial self-provision, especially for the self-emp-loyed and those working for small businesses.

At least initially, we will apply the same contribution regime as applies to eligibility to participate and contributions for stakeholder.

The crucial point is that we will remove the unnecessary requirement and cost of having to become a member of a pension scheme to use the IPA, a requirement that defeats the whole purpose of the IPA.

More generally, we remain committed to cutting down the role of the state, reducing the general burden of taxation over time and reducing and simplifying capital gains tax.

Finally, I suggest it is also in the interests of savers for Britain to keep its own currency. To join the euro would mean being subject to pan-European monetary and interest rate policies, inevitably to pan-European economic policies and, in due course, to higher pan-European taxation.


Niche work if you can get it

The mainstream mortgage market is easy to grasp. It services people with straightforward housing needs who have financial profiles that can meet regular commitments such as utility bills, monthly credit card repayments, the mortgage, a car loan or the many other minor payments such as satellite TV and mobile phones.The products offered by lenders to […]

GE targets over-50s with income and growth plan

GE Life has set up an income and growth plan for the over-50s market, offering investors a fixed annual gross income of 10.25 per cent.Investors have the choice of either monthly income of 0.78 per cent, annual income of 10.25 per cent or capital growth of 33 per cent over the product&#39s term of three […]

Paragon offers refurbish and buy to let

Buy-to-let mortgage specialist Paragon Mortgages has designed its buy and refurbish to let mortgage in response to incentives for property renovation that were announced in the March 2001 budget.The mortgage allows borrowers to buy run-down properties and develop them to let. The finance for development is granted up to 70 per cent of the original […]

Michael Both

It&#39s official – the lunatics are in charge of the asylum.Having spent more than 10 years raising standards so high that only a weightlifter can carry a key features document, illustration and reasons-why letter at the same time, apparently anyone will be able to sell anything to anyone in future – so long as they […]

Budget summary – March 2016

This week’s Budget looked as if it would be a difficult one for the Chancellor, with disappointing economic numbers and the need to avoid ruffling feathers ahead of June’s in/out referendum. Nevertheless, Mr Osborne did spring a few surprises, including some tax reductions. So how does this budget affect you? If you are – or […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm