DIY Investor Magazine
|
Oct 2017
19
MOORE ABOUT MONEY
On 22nd November the beleaguered Chancellor of
the Exchequer, Philip Hammond, will present what is
predicted will be a ‘bold’ budget as he battles to save
his job having angered Tory Eurosceptics by refusing to
fund a ‘no-deal’ Brexit scenario in the face of increasing
EU intransigence.
With his party widely being seen as trumped by Jeremy
Corbyn on the ‘fairness’ front, and on the back of an
inglorious party conference, Mr Hammond is expected
to deliver a budget to deliver ‘intergenerational fairness’
– reducing NI contribution for those in their 20s and
30s, funded by reductions in pensions tax relief for older
workers.
What else can we expect? The £24bn war chest has
been blown, the MOD needs £20bn to keep afloat and
the NHS will need more funding; so not much scope
for largesse although Mrs May will want to continue the
costly fairness for all policy.
Pensions tax relief is matched by pensions tax
deductions on retirement income/benefits and because
of pension reforms and George Osborne effectively
ending annuities, tax takes for retirement benefits have
never been higher so it could be argued the government
is actually ahead on tax. Pension lump sums could be a
target, but that would break many promises; alternatively
Mr Hammond could further lower the lifetime allowance
to the point that pensions become meaningless.
He could restrict higher rate tax relief, though higher
rate tax payers are also paying out higher rates on
retirement benefits; not a fair swap but an opportunity.
Inheritance tax could be another target - exemptions on
main residences could be scaled back on the premise
that this would encourage scaling down, although many
cherish Mrs Thatcher’s vision of people owning their
own property and enriching their dependants.
I personally also believe in pension funds being passed
down to beneficiaries free of IHT to help them fund
their pension provision. It does not cost the exchequer
anything other than the marginal taxes on death
payments, but it would add a huge amount to the feeling
of security for our millennials. At 20% VAT is punishing
enough – particularly for those that are just about
managing.
So if tax raising looks to be a significant issue then the
Chancellor may have to look to increase borrowing;
interest rates are still low, so borrowing will not be
expensive and could boost the economy through
infrastructure projects and particularly house building.
There is plenty of scope in increasing housing supply
without unduly dropping house prices and risking
mortgage redemptions.
The NHS remains a significant concern; wracked
by inefficiency, still not operating 24/7 leaving the
huge capital employed in equipment underutilised at
weekends the NHS is unable to adequately serve an
ageing and increasingly unfit population.It requires more
than more money - it needs a major overhaul of health;
a crackdown on eating habits and obesity, a crackdown
on alcohol....and more!
Lord Lansley had some good ideas but left the
Conservatives viewed by some as a toxic force in the
NHS; Jeremy Hunt is picking his battles, but he is too
often on the losing side.
I have to hold my hand up and say that I have had
cause to call upon the NHS for lifestyle related
problems, and it is wonderful; it has saved my life from
severe infections, but the reality is that it has finite
resources and we all need to play a part.
In 2008 my son Archie had a horrible fall off a school
pony breaking his femur; it was a major break that
needed five hours of surgery. The care was superb but
there were no parent facilities; we had no hesitation in
helping with Salisbury District Hospital’s new children’s
facility, but it appears that no amount of money will solve
the core NHS issues.
Samuel Johnson said that knowing you are to
be executed in a fortnight concentrates the mind
wonderfully; the knives are certainly out for Mr
Hammond, so what price a ‘big, powerful and
revolutionary’ budget that reunites the party behind a
pledge to write off student debt and shucks off its ‘nasty’
reputation?
