Jeremy Warner's Outlook: Predictions of a pensions-inspired second housing boom look much exaggerated

Prominent among these is the lifting of restrictions on what you can invest your pension in, including the ability to invest it in residential property. This has prompted predictions that the reforms will encourage a fresh stampede into second-home ownership, squeezing out first-time buyers and leading to a new speculative bubble in the housing market.

Now it is certainly true that the housing market is scarcely in need of any new tax breaks. It's already free of capital gains tax on first homes. To allow a 40 per cent income tax break on top to those who chose to invest their pensions in second homes would on the face of it seem the height of folly. The Lib Dems have led from the front in calling on the Chancellor to rethink the proposals, and indeed there plainly does need to be some adjustment around the edges.

Yet I wonder whether the effect on the housing market will be as great as predicted. Housing isn't being afforded special tax treatment in the new rules, only the same treatment as every other asset class. Given the fact that the property will eventually have to be sold to buy an annuity, the buyer will have to take a view. Is property likely to appreciate more in value than say equities?

Furthermore, there are big restrictions on using the property as a second home in the meantime. The pension plan owner would be forced to pay a commercial rent when staying in the house in the same way as other tenants. Of course, you could just ignore this stipulation, but that would be breaking the law. The attractions of investing your pension in a second home aren't in practice as great as they seem. Just to underline the point, the Financial Services Authority is likely to be asked to regulate the whole territory in an effort to prevent another mis-selling scandal.

CSFB fails to back SkyePharma rights

Andrew Sinclair is Credit Suisse First Boston's pharmaceuticals analyst. Was he being brave, stupid, pig headed or just plain misinformed in deciding to slag off a £35m SkyePharma rights issue which his own investment bank had seen fit to underwrite?

SkyePharma launched the rights issue after failing to close a partnership deal to take its Flutiform asthma drug through to phase III clinical development. Instead, the company plans to pay for the trials itself. In a circular to clients Mr Sinclair asks what faith investors can have in SkyePharma's ability to see the product through to regulatory approval given that it has failed to interest a partner in so doing.

What he calls "limited visibility" on the project means that he has removed all Flutiform-related revenues from his modelling of future earnings. Given its failure to find a partner, SkyePharma was faced with the choice of either raising more equity or dropping the product entirely. Mr Sinclair doesn't say it outright - that the company would have done better to pursue the latter course - but the implication could hardly have been clearer.

The positive view of this episode is that CSFB has demonstrated just how independent of corporate finance its sell-side analysts really are. Yet the bank wasn't using this explanation. Instead it said that Mr Sinclair's work was sanitised by compliance to remove most of the positive stuff, as the bank is not allowed overtly to trumpet through sell-side analysts the merits of a capital-raising exercise it is meant to be marketing. What a strange old world we live in where bankers are allowed to say only negative things about their own transactions.

Ian Gowrie-Smith, SkyePharma's chairman, said he was prepared to forgive Mr Sinclair his circular but for good measure added that the work was "a pathetic act which will diminish his professional standing". Somehow I doubt that. When the rights issue was launched, it was at a 47 per cent discount to the ruling price. By last night the discount had been virtually halved and CSFB is left to contemplate the unthinkable - that if the shares slide any further it might actually have to earn its underwriting fee by taking up the bulk of the stock.

What's the story at Marks & Spencer?

The City is alive with rumours about Marks & Spencer again, from the vaguely believable - that the company has had a disastrous second quarter - to the wholly ridiculous - that Stuart Rose is about to launch a management buyout bid backed by his old sparring partner Philip Green.

Despite the backdrop of the worst high street trading environment in 22 years, the shares have enjoyed a remarkably strong run since the early summer, so what's the story? In the past week, at least four brokers, two of which had previously dismissed M&S as virtually a basket case, have all turned bullish, from CSFB and Deutsche to Goldman Sachs and Lehmans.

All of them are of the opinion that second-quarter trading wasn't nearly as bad as some of the gloomier predictions suggest. The range is for a year-on-year fall in like-for-like sales of between 2 and 5 per cent, which would be better than Next and many other clothing retailers. But the thing the company will be most keen to trumpet when it reports the numbers the week after next is that full price sales are again on a rising trend.

This has been Mr Rose's holy grail; he's not that interested in top line growth for the sake of it. Instead, he's focused his attention on stock control, reducing costs, limiting markdowns and on improving higher-margin, full-price sales. Mr Rose won't be able to declare the turnaround complete, but things do seem to be moving in the right direction. M&S has nearly £8bn of annual revenue; with a proper grip on costs, it ought to be possible to make a very considerable return on those sales. The City is finally waking up to this possibility.

Mr Rose's opposite number at Boots, Richard Baker, has been busy trouncing the margin in an unsuccessful attempt to maintain his sales growth and make the group competitive against the supermarkets again. At M&S the approach has been to try to boost the margin through better supply-chain management and cost control.

Would Mr Green return for a third bite at the cherry? Not unless he was asked politely and certainly not at £4 a share, the bid price he suggested last time around. The way the price is moving at the moment, the City may be spared the grovelling.

OFT off the rails on franchises

The Office of Fair Trading never tires of wasting taxpayers' money by packing rail-franchise bidders off to the Competition Commission. Yesterday it referred all three bids for the Greater Western franchise on the grounds that they might reduce competition between buses and trains in the West Country.

At least this time the OFT has managed to refer the bidders before one is selected, unlike the fiasco over Greater Anglia when National Express was sent off to the Competition Commission five months after it had taken over the franchise.

If precedent is any guide, then the Competition Commission will clear all three bidders for Greater Western with little or nothing in the way of conditions. At least the Commission seems to recognise that the competition these days is not between buses and trains but between public transport and private cars, even if the OFT has still to cotton on.

j.warner@independent.co.uk