FEAR OF FINANCE
Saturday 21 October 1995
The rumours about a possible commitment to pay nursing fees (but not the cost of accomodation) for old people in homes suggest the Chancellor is still being pressed to ease the fears of middle class Tory voters that they will lose their inheritances if their parents' homes have to be sold to pay for care.
Mindful of its political clout the housing lobby too is still fighting gamely for measures to revive the housing market and prevent a further increase in negative equity. And the drinks lobby still lives in hopes of cuts in duty to stem the flow of cross-Channel booze.
There is always the possibility the Chancellor will look for a few increases in indirect taxes to help make room for headline cuts in direct taxes. Over-indexing tax on petrol is more or less guaranteed, and the insurance industry is currently working itself into a lather about the possibility the tax on insurance premiums will double from 2.5 per cent to 5 per cent and lose them business.
But it now seems certain that the best we can hope for is a choice between some cuts in direct taxation, largely paid for by reductions in public sector spending, or a cut in interest rates. It would be too much to hope for both because the currency and bond markets would react badly if the Chancellor appeared to be playing politics with inflation and the public sector deficit.
So which should we be looking for? Tax cuts would renew the Government's rather tarnished commitment to lower taxes, an important consideration in an election where slogans could play a crucial part. Tax cuts will benefit everyone in work, rich and poor, borrowers and savers, and could encourage the missing feel-good factor, without which the Government's chances of winning the election appear slim.
But tax cuts are an inflexible instrument. Cuts announced next month would not take effect until April, and phased tax cuts covering the next two tax years would not be fully effective until after the last possible date for an election in 1997.
A cut in interest rates could at least be faster and more flexible. It would take effect more quickly and could be increased or reversed at short notice. It would benefit borrowers in general and home-owners in particular, and would benefit business. But it would not suit savers, whose goodwill is equally important to the Government.
And because they benefit debtors (who simply want to reduce their debts) more than creditors (who might actually spend the money) interest rate cuts pound for pound are probably less effective than tax cuts in stimulating consumer spending, which, as the latest retail sales figures show only too clearly, is the sector that has so far failed to benefit from the recovery. It is also the sector where elections are won and lost. Put your money on direct tax cuts.
sportLiverpool 5 Norwich City 1: Uruguayan striker has now scored 11 league goals against the club
arts + entsOlivier-nominated actor and singer is set to star in Lloyd Webber's musical about the Profumo affair
filmWith more than 70 per cent of early films lost, archivists are scouring the world to preserve the precious examples that remain
sportUnder-10s football coach sacked for telling parents he was 'only interested in winning'
techA piece of new hi-tech kit aims to get us scribbling again
life + styleClarissa Baldwin is the brains behind the slogan 'A Dog is for Life not just for Christmas'
Banks are brought to account by switchers as growing number of people expect to be rewarded by their bank
Stock market: Looking for value left out there?
Bargain Hunter: Playmobil plays to the gallery with discounts on its toy range
How to start your own internet business
Five ways to make money on the internet
- 1 The hardwired difference between male and female brains could explain why men are 'better at map reading'
- 2 Is this the scariest advert ever? Japanese tyre commercial comes with its own disclaimer and health warning
- 3 A forgotten episode in Russian history leaves links with the Philippines
- 4 Hate With Friends: Now you can find out who your Facebook frenemies are
- 5 ‘Put it in my mouth’: Viewers outraged by apparent reference to oral sex in VIP e-cig advert
iJobs Money & Business
£Negotiable: Citifocus: High calibre individual with a strong understanding o...
£50000 per annum: Morgan Hunt: Whilst the Real Estate sector was suffering thi...
£Negotiable: Citifocus: The role will suit a fund product specialist, current...
£75000 - £85000 per annum + Bonus and Benefits : Harrington Starr: An award wi...
Day In a Page
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.
A three-bedroom house in an enviable new development moments from Oxshott High Street, with secluded garden and decked area, £385,000
A two-bedroom split-level flat with stunning south-west facing roof terrace in the popular Brondesbury Conservation Area, £549,950.
A charming 16th century, three-bedroom detached house in Bidborough with picturesque garden
A top-floor one-bedroom flat in the heart of Pimlico with a terrace providing spectacular views over London, £495,000.