FEAR OF FINANCE

To paraphrase the song from South Pacific, there is nothing in this world like a windfall for making investors happy. Members of the N&P Building Society will be hugging themselves with glee this week after voting overwhelmingly for a windfall on both their savings and their loans. Bristol & West seems set to make another 1.2 million people cheerful next week.

The total number of beneficiaries from windfalls since Halifax and Cheltenham & Gloucester set the ball rolling must by now be well over 10 million, although it seems that not very many of them live in Tamworth. Perhaps they all had their money in Nationwide, Birmingham Midshires and Coventry and were feeling let down last Thursday.

There is an alternative explanation. New accounts are still being opened at each and every remaining mutual society. By now there must be two or three impatient speculators for every satisfied one. Some of these at least seem doomed to be disappointed either by having their money tied up for a long time at low interest or by finding that their society goes in for a dull merger with another mutual rather than surrendering to the embrace of a commercial raptor.

The Government, however, is doing what it does best and working to create another class of satisfied speculator by announcing that everyone who has registered with a share shop for the Railtrack sale will get a 15p a share discount. The actual price of the shares will not be revealed even on Monday when the pathfinder prospectus is published. But the best guess now is that the shares will be offered at around 200p to provide small investors with a discount of, say, 7.5 per cent.

Spare a thought in all this euphoria for the proud parents and grandparents who took out school fee plans based on educational trusts to build up a pot of gold to pay for future private education. Those nasty people at the Inland Revenue have decided that the income generated by school fee plans will from April next year be subject to tax.

Although it is still a year in the future, the most effective school fee plans are those built up over a period of years and several thousand investors will find that without tax relief the contributions they have already made will not now generate enough cash to cover future fees.

The Revenue's ruling overturns accepted practice going back 30 years and it operates retrospectively on plans already in place. It seems to be yet another example of the Government instructing the Inland Revenue to take an active role in sniffing out tax loopholes.

School fee plans are not the only way of providing for fees, of course. A succession of Peps offers a very acceptable alternative method of building up a tax-free capital and income which can be released to coincide with a school career. But it leaves those who thought they had already made provision through school-fee plans in the lurch. Some providers such as Sun Life have stopped selling policies, but specialists like the School Fees Insurance Agency have no choice but to continue selling plans without the promise of tax relief, in the hope that the taxman's plans will arouse a storm of protest and force the Government to overrule its wayward creature.