Coalition Attacks Pensioners and Savers

Steve Webb, Britain’s Pensions Minister, has told the Daily Telegraph that the Coalition is “making changes to reinvigorate a culture of saving”, all part of the government’s plan to raise the retirement age sooner than was expected. Apparently, new figures show that life expectancy in the U.K. is increasing more rapidly than was forecast even just four years ago when Labour drew up its plans to raise, more slowly than the Coalition, the retirement age.

But doesn’t there seem to be a colossal mismatch between what the Coalition has actually been doing on the savings front with all of its talk about reinvigorating a culture of saving?

Following on from Labour – and the same is happening on the other side of the Atlantic – interest rates are being kept so low that inflation is being allowed to eat away at savings.

And the Coalition has clobbered those who are trying to save for their retirements by increasing the Capital Gains Tax on the sale of second homes and shares.

As I noted in an earlier blog posting, about 250,000 British families own a second home and there are one million buy-to-let properties. Many who bought a second home are not wealthy but decided after the Brown government raided private pensions that the best way to help weather their retirements with a little bit of dignity was to invest in property. After all no one can live on the old age pensions the U.K. supplies – that is if they want to avoid penury. So Coalition is punishing the people who are trying to ensure that they are not an increasing charge on the State.

Not content with raising CGT, thousands of British holiday-home owners face losing a range of tax benefits under changes announced in the Budget. From April next year, holiday property landlords will no longer be able to write off “trading” losses from second homes against their tax bill. Capital allowances and capital gains benefits will also go. That will also disrupt the pension plans of tens of thousands of people – many of who based retirement plans on the current tax rules for holiday lets.

So much for reinvigorating a culture of saving! But it gets worse in the Coalition’s obvious undermining of savers. New so-called tax simplification rules being proposed by the Treasury are also going to hit savers and those close to retirement. As economics commentator Ian Cowie has pointed out: “Many members of final salary company or occupational pensions face big annual tax bills and other savers will be prevented from topping up their pensions in the year of their retirement, if the Treasury proceeds with its latest proposals for ‘tax simplification’.”

On top of that the increase in Value Added Tax will leave even less money available to save. When it comes to saving, Coalition deeds are totally at odds with Coalition words.

Part 2 – The Silliness of Simon Heffer

Part 2: The Silliness of Simon Heffer

On 30th July in a Daily Telegraph column ostensibly criticising Chancellor George Osborne for arguing that any Trident replacement should come out of Ministry of Defence funds we got these gems from Simon:

“We live in a world whose massive instability seems to have passed the Prime Minister by.”

“Dave (by this Simon means Prime Minister Cameron) so obsessed is he with image management that real issues of governance are pushed to the margins.”

“If there is the political will, the money can be found to maintain the defence of the realm. As I have argued before, end the overseas aid budget, which is a pointless, socialist waste of money at £7 billion a year.”

As I asked in an earlier blog posting on Simon, are these really the comments one expects from a serious commentator writing for a supposedly serious daily newspaper?

You may or may not agree with Cameron’s recent criticisms of Israel and Pakistan or think they should have been made so publicly (I for one think the Prime Minister was right in the content of what he said and how and where he made his remarks), but does anyone really believe that the Prime Minister is unaware that we live in a dangerous World – always have actually – and that instability from elsewhere threatens?

When commenting on the Coalition, Simon likes to press the idea that the Prime Minister is just a PR man focused on image solely. What he ignores is how radical this government is planning to be – and radical in a lot of Conservative/Libertarian ways. Nothing less than a radical reform of the state and the relationship between the state and the public is being aimed for, a point emphasized last week by the Economist, which noted that “it is shaping up to be an ambitious administration.”

According to Simon, the Prime Minister is not interested in “real issues of governance” but let’s look at the short record so far. The Coalition has introduced an austerity package aimed at ending the country’s fiscal deficit that could see most government departments facing cuts of up to 40 percent – it is a spending reduction package that shames other European governments who claim they too are intent on putting the public books in good order.

But the Coalition is not stopping there. Coalition ministers intend to seize the opportunity to reshape the State and are proposing truly radical changes to NHS management, the Welfare system, schools, and the relationship between the police and the public. The Coalition is already acting to push back on the astonishing civil rights encroachments of the Blair and Brown governments. As the Economist – hardly a lefty or Lib Dem publication – argued “the historic nature of the coalition government itself is now less interesting than its domestic politics.”

So much for the Simon claim that the Prime Minister is pushing to the margins real issues of governance!

Does Simon think that he is writing fine commentary when he sneers and insults and misrepresents and tries to make out that Cameron and his ministers are ignorant and immature. Is this how Heffer’s mentor T.E. Utley wrote? Utley was an ideological Conservative but in his columns he was not bombastic and stuck to the facts and he would never have demeaned a Prime Minister by referring to them in a condescending manner by their first name.

So what does Simon think he is doing? And why he is doing what he is? Well, his chums on the right of the Conservative Party no doubt are egging him on. They, of course, are unable to accept any compromises to their narrow Conservatism. As far as they are concerned Britain should have no mass immigration – European Union citizens included – and Conservatives should not share government power. They want an old Britain that stands alone, proud, free and brave, etc. That fits in well with the kind of Britain Simon would like – the England of Trollope, where the Celtic fringes and working class people knew their places.

And so to be brave and free and proud we need an independent nuclear deterrent and shouldn’t be wasting money on some natives overseas. And according to them the nuclear replacement should not come out of defence funds but the government reserve. Well, boys, I have news for you – there isn’t a government reserve, the coffers are empty!

Britain’s nuclear deterrent isn’t and never will be independent – the Americans would have to agree before we fired it! And which country are we going to shoot at? The Russians? We knock out a couple of their cities and they knock out Britain lock, stock and barrel. Terrorists who sneak in a suitcase bomb? Iran has a far more important target than the U.K. – Israel.

I can well understand why Reagan thought all the generals talking about MAD were mad.

Back to Simon, briefly. The days when Britain’s overseas budget went straight into the pockets of Third World dictators are kind of over, Simon. Aid is far more targeted and monitored – although more monitoring is needed – and aid is starting to get more results-oriented, something Andrew Mitchell, the International Development Secretary, is keen to increase.

Yes, money to India and China should cease now but a lot of good can come from that aid budget in Africa and less developed countries, helping to ease the instability Simon worries about so much and encouraging economic development and that helps to ease the immigration pressures on us. Simon, maybe you should read less Trollope and start reading more studies and books on economic development, aid mechanics and even brush-up on what is actually happening in Africa.