William Kay: Gordon Brown can call his Budget prudent. That means you pay more

The Chancellor may be about to give us all a pleasant surprise on Wednesday, but on his past performance I wouldn't bet on it. Gordon Brown is in full tax-raising mode, and he clearly feels money is better in his hands than in our pockets, not least because he has plenty of plans for ways to spend it on socially desirable projects.

Add in a slowing economy and an armed conflict which has already disappointed the stock market in the time it is taking, and Mr Brown is not about to hand back the billions he has spent the past six years raising. The only hope is that he will not dip much further into our wallets and purses.

One constraint that may give Mr Brown pause is the reaction of the likes of Marc Doyle, our page one case study. Mr Doyle is a staunch Labour supporter, and he shows no signs of switching his allegiance. But his enthusiasm for Mr Brown's medicine is beginning to sound distinctly watery.

* Whatever the Chancellor has in store for us, it is important to take advantage of whatever tax advantages are going. And today is the last day to claim your entitlement for 2002-03 to a tax-free investment in the form of an individual savings account, or Isa.

So grim has been the so-called Isa season this year that most of the major providers are eagerly awaiting your call by phone or internet, or if you prefer to turn up in person at branches around the country.

Most people have been understandably put off by the stock market's unfriendly behaviour, and the Iraq war was nicely timed to deter any waverers who might have been inclined to take a last-minute plunge. But that would be a mistake. There are two main routes to take advantage of the tax concession without exposing yourself to the vagaries of share prices. One is to invest in a cash mini-Isa, up to a maximum of £3,000, where the money simply goes on deposit. The other is to take out a maxi-Isa of up to £7,000. You must declare the intention to invest in equities, but some providers will let you put the money on deposit for up to a year or so while you make up your mind. By next winter, or the new year, the outlook should be clearer, and you will have had the tax-free interest in the meantime.

As I have written before, I would not be afraid of the stock market at present levels but it makes more sense to invest monthly rather than commit a lump sum when share prices could have further to fall.

* The ugly world of pyramid schemes surfaced again this week, with the glamorous twist that this time it involves wealthy young women who should either know better or at least have access to the sound advice that they shouldn't touch such schemes with the proverbial barge-pole.

Recent schemes ensnared poorer women in the Isle of Wight and Glasgow, but this one is apparently doing the rounds of fashionable addresses in London and the Home Counties. In all cases, though, the formula is the same: put up £3,000, persuade eight more to join and expect to receive £24,000.

It was possible to sympathise with participants in the earlier schemes because £24,000 represented money beyond their dreams, enough to transform their lives. They were largely ignorant of finance and believed the sales patter that the schemes would be good for everyone.

The latest, called Hearts, is far less excusable. Its members are mostly the daughters or granddaughters of well-heeled peers tempted in on the promise of tennis courts, fast cars and guilt-free trips to Harvey Nichols or London's Bond Street.

It seems easy money, and it is for those who start such schemes or join early. It is not so much fun for the late joiners, who are left hanging in mid-air as they wait for their £24,000.

The essential point is that these schemes produce nothing. They are merely a transfer of money among the participants, according to a set of rules. In that respect, they are no different to the pact between a bookmaker and a punter.

The flaw in pyramid schemes is that losers are guaranteed, because those who profit are taking money from the late joiners in return for an empty promise. It is tantamount to fraud, which is a form of theft.

w.kay@independent.co.uk

William Kay is personal finance editor of 'The Independent'