Personal Finance and Politics

Wednesday, 7th October 2009 12:55 - by Resident IFA

The golden rules: Never discuss Religion or Politics. Well, I chose to take a brief look at modern religion a few Blogs ago, so why not go the whole hog... You have to give the Conservatives credit for being the first to come out with an agenda based on ‘pain’. We all knew it was coming, so there should be no reaction of surprise from the public – apart from those in Walter Mitty mode. Of course, we all have vested interests. Public Sector workers earning over £18,000 per annum, for instance, will be gnashing their teeth today after George Osborne’s vow to freeze their pay in 2011 – if the Tories attain governance. Some other ‘highlights’ of the Shadow Chancellor’s speech to the Conservative Party Conference in Manchester yesterday:  Stop issuing Child Trust Funds for all but the lowest-income families  Potential extra taxes applied to Bankers bonuses  A year added to the State Pension Age. From 2016, it will be 66 years old for men, with women facing the same measure from 2026  Government (Whitehall) salaries – no-one will earn more than the Prime Minister without prior Treasury approval  Tax Credits abolished for families with an income of more than £50,000  Retain the imminent 50p tax rate for higher earners for the time being Mr.Osborne used the phrase “we’re all in this together” a number of times in his speech. I have to say that I agree. As a country we gorged ourselves on credit and the ‘never never’ for years on end. House prices would never fall, stockmarkets would never plummet, and then the taxpayer – whether previously indulging in the financial orgy or not – picked up the tab for bailing-out behemoth institutions. So, the pain was coming our way...any time soon. If the vested interests can be placated, the cuts that the Tories (and perhaps Labour too) will make might start to place the UK back on a firmer financial footing. By the end of the next governmental term, Mr.Osborne estimated his proposals would save £7Bn per annum. Bizarrely, this wouldn’t put a huge dent into our deficits, showing the hole the country is in...but would be a start. How is this linked to Personal Finance? Well, I can’t help but think a family with over £50,000 household income has been jolly lucky to receive State assistance up until this point, so will now rightly have to stand on their own feet. This will see a drop in their total income, along with other individuals and families liable for any of the other proposals to limit or cut incomes or benefits. Will people, with less money in their pockets, understand the need for a period of country-wide austerity and go along with it? Or have the Tories actually shot themselves in the foot by finally enunciating some firm policy proposals and the inevitable attaching bad news? We all seem to carp on about dishonest MPs, but will the first bit of realism actually show this to be a situation we actually prefer – living in blissful ignorance? How are you affected? Do you think we need to be poorer while the country recovers economically? Do the Tories proposals put you off voting for them? Can Labour actually win the next General Election? Until next time...