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Teresa Hunter: Penniless PM won't win any medals for handouts


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Published Date: 24 August 2008
HOW Prime Minister Gordon Brown must relish returning to the UK now our triumphs on the sporting field are overshadowed by an economy that failed to make it off the starting blocks.
I have this bizarre vision of him wandering around foreign airports in a Gary Glitter disguise trying to put off the moment when he must come home and face not only the voters but Scotland's unstoppable First Minister.

Have you noticed how Alex Sa
lmond is becoming so swollen with success he's sprouted more chins than a Chinese telephone directory?

Brown has promised us a package of measures to kick-start the housing market and pay our utility bills, which we can expect in September, around the time of the party conferences.

Yet I am told by those who count the big numbers Governments spend that, rather than giving cash away, he actually needs to raise basic rate tax 5p by 2010 just to balance the books. Mulling over that 5p tax increase for a few moments illustrates the scale of Brown's problem.

So getting back to his desk this week and taking those difficult decisions could be as pleasurable as being punched around by the British boxing team.

Let's hope he hangs on to his teeth, because he'll have vast quantities of humble pie to swallow in the months to come.

So what will he do? Some help paying fuel bills seems inevitable. One idea being floated is a £150 winter fuel bonus for all families in receipt of child benefit, costing around £1bn but paid for by a windfall tax on utility and oil companies.

This could be self-funding and prove popular with many struggling to stay out of debt. But would it get the thumbs-up all round?

Single people with big bills to pay might be underwhelmed, as might low earners without children. Many groups would miss out.

Look at me. Wouldn't you know, only last week I was notified I'd had my last ever child benefit payment. So that's me out. Still supporting two young adults in full-time education, my money worries are anything but over. Indeed, you could say I've got three lots of gas and electricity bills to pay.

Alternatively, he might target those most in need with extra support through tax credits. This has the additional benefit that no one will be able to work out what he has done, or indeed criticise it. There will almost certainly be more money for grants to improve insulation.

Finally, he could cut fuel and energy taxes, although the Treasury is already out of pocket to the tune of £1bn after postponing the 2p-per-litre fuel increase.

Stamp duty continues to be the front-runner when it comes to helping the housing market, not least because all opposition parties agree the tax should be reformed. A complete moratorium looks unlikely. More probable is a temporary suspension of tax on properties worth less than, say, £250,000 to help first-time buyers.

This would have little impact. Novice buyers are advised to sit out falling prices for the time being and stay put with mum and dad or in their cosy rented flat. Higher up the ladder, it might have made a difference, encouraging established owners to take a hit on their house price in return for avoiding a hefty stamp duty fee.

Other ideas floating around are the reintroduction of tax relief on mortgage payments, at least for first-time buyers (unlikely), or some form of Government saving scheme to help them get the money for a deposit (possible).

There will certainly be an announcement of more money for public housing schemes, as Salmond has promised for Scotland, although whether the money is forthcoming or indeed ever spent is another matter.

Last week Salmond announced he would bring forward £100m due to have been spent on affordable housing after the next general election. It's fascinating to wonder where this money is coming from. The Scottish Government is putting up £60m and wants local authorities to stump up the remaining £40m, which begs the question of what other bills they won't pay.

Finally, there will be more money to help housing associations bail out struggling homebuyers by converting their mortgages to rent.

As for tax cuts, Brown has no room to manoeuvre on the income tax front, although next month basic rate taxpayers receive a welcome extra £60 in their pay packets, half the £120 legacy of the row over the 10p band. Clawing this back was always going to be tricky in the current climate, so the Government could announce it will be maintained and package that as a big tax giveaway.

Which is a load of pants. On which subject, did you know there has been an enormous surge in sales of thermal underwear?

The truth is that Brown doesn't have enough cash to even treat us to a new pair of smalls (£18 for a set of vest and pants at Marks & Spencer). If he did, you can bet they'd leave you itching for ever more.

Searching for sense

COMPARISON websites were supposed to make our lives easy by doing the shopping around for us. But according to the consumer lobby group Which?, you have to compare the comparison sites to stay ahead.

Which? compared home contents, car and travel insurance policies, as well as loans and credit cards, only to find that each site came up with a different answer.

When searching for a home contents policy, for example, the cheapest quote varied from £51 on Gocompare.com to £71 on Confused.com.

I think I need to go and lie down.



The full article contains 954 words and appears in Scotland On Sunday newspaper.
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