Around now is the time when the "ISA season" kicks off in earnest. This is when, traditionally, most of the big providers reveal the rates they will tempt customers with in advance of the 2012-13 tax year deadline for investment in an individual savings account. Many savers hold off using their tax allowance in order to grab the best rate as the deadline hoves into view.
But according to Moneyfacts the number of cash ISAs available today and the average rate they pay is far below the levels of just a year ago. In February 2012, 385 ISAs were available paying an average 2.55 per cent. Today the numbers available are down to 309, while the average rate is a paltry 1.74 per cent. Yet Bank of England interest rates are still 0.5 per cent so why are rates falling?
It seems that the Bank of England's Funding for Lending scheme is having a crushing effect on your savings rates. In short, the banks and building societies don't have as much need for your money as they once did because they are finding it through the scheme and the less gummed-up wholesale market. Savers, this ISA season, will be paying for cheap lending to the banks.
So what to do? Hopefully nearer to the deadline there may well be renewed competition and some eye-catching best buys but you may be wise to use your ISA allowance (provided you can take the risk of potential losses) for the stockmarket. You can invest up to £11,280 in a stockmarket ISA while a maximum of £5,620 in a cash ISA. You can also mix and match these two products provided the maximum you pay into the cash ISA element doesn't exceed the £5,620 limit. This way at least you won't be at the mercy of the Bank of England's financial engineering.
Le grand tax faux pas
Incredibly, London is now France's sixth biggest city according to the number of French people setting up home in the capital.
Why are our French friends coming to Britain, the revamped and modern cuisine? Probably not. Our innovative high-fashion industry? Ermm, again, no. Even if these things were a factor Gallic pride would prevent them from admitting it. The answer is more mundane – it's our tax regime.
The French government of François Hollande seems hell bent on replicating the tax policy of 1970s Britain. They haven't quite reached the ridiculousness of 98 per cent tax as under Labour chancellor Denis Healey but they are nudging up to 75 per cent. As a result, many of France's brightest and best are coming to the UK, especially London.
Of course, this is stupidity by the French on le grand scale and our own Prime Minister has angered the Hollande government in the past by saying he would lay out the red carpet for French tax exiles. But I can see a time when the boot could well be on the other foot.
Let's say that post 2015 – or sooner if there were to be a Con-Lib collapse of the coalition – we were to have a Lib-Lab government with Ed Balls's hands on the economic tiller. The structural deficit – created in the 2000s by a near doubling of government spending in real terms – will still be in place and markets will by then be spooked by Britain's huge debt pile. The timeless cry of "tax the rich" will be heard.
The fact is, though, that the "rich" make up such a tiny proportion of the population that taxing them in the French way will be of little worth. Instead, what we would likely see is an asset tax – it would be spun as a "wealth tax" in the same way as the current "mansion tax" – and this could will be indiscriminate, hitting people regardless of whether or not they are income poor and asset rich. At that point, it may well be Brits who are fleeing to France to take advantage of its "low" tax regime.
Watching the political debate in this country over tax-and-spend is very depressing. It's as if many of our leading politicians have learnt nothing from the past 30 years or the ways in which globalisation in essence destroys national tax take.
Government has to adapt itself to a low tax-take, freelance world but the message is not getting through – if you have even an average priced house, some shares, savings and a pension pot then the taxman may come looking for you post 2015.