Ozzy Osborne bit the head off a bat onstage in Des Moines in 1982. We could have done with some of that chutzpah to liven up yesterday’s effort from the other Ozzy. Don’t get me wrong, it was an oratorical display to be proud of, but there was relatively little to be interested in otherwise.
Before we dive in, a note to Ozz’s speechwriters. Doing the, let the words ring out from Singapore to Stockholm, bit doesn’t make your man sound Chuchillian. It makes him sound like Jim Hacker. That said, it’s a fun game:
From Marrakech to Machrahanish
From Sao Paulo to Strathmiglo
From Chongqing to Chipping Norton
and so on.
Anyway, Ozzy had a tough job to do as the Chancellor with perhaps the weakest mandate for change in living memory. So he concentrated on things he could do without fiddling the figures too much, promising tax simplification for businesses and so on. But this is a personal finance blog, so let’s have a think about investment and pensions.
I’ve got a little frustrated with the trade media about the declarative nature of their pieces. Osborne didn’t announce the death of DB schemes, he cut the c/o rebate by 50bps. He didn’t say there would be a Â£140 per week state pension, he said that it was far too complex and that that’s where it might end up. He didn’t say the Hutton report would be adopted, he said it was a basis for consultation. He indicated some directions of travel, but that was it. Let’s not credit the man with more than he did.
To me there were two items of real interest, the discount rate on calculating the public sector pension liabilities and the EIS announcement.
Going for RPI + GDP was an unexpected move and it will have the numbers monkeys clacking furiously on their abacuses. Too complex to do here, but I suspect the rationale was to allow room to bump contribution rates higher if the Hutton consultation requires it. In a sense it doesn’t matter, it costs what it costs and we’ll end up funding these pensions whatever happens.
The EIS announcement was interesting too, with tax relief on pensions now limited to contributions of Â£50k and under and pressure coming down hard on the more aggressive avoidance schemes (did you notice how he lumped ‘voidance’ and ‘evasion’ together? I wonder how Osborne & Little structure their tax affairs?) the wealthier chaps and chapesses will be looking for alternative tax shelters. EIS looks to be set for a democratisation, which is welcome I guess. As long as the tax tail doesn’t wag the investment risk dog, this could be good news for planners.
In terms of how to access EISs, I reckon there’s a win for one of the platforms somewhere if they can find a proposition to offer a good range of these with some kind of valuation feed that makes sense (many are valued infrequently and those valuations are often a matter of opinion). Should be interesting.
But what most folk will have taken a way is that filling up their Ford Focus will cost 50p less a week, and that there was some chump change for fixing potholes. Nice one, Ozzy. Have a bat.
PS, thanks to Simoney, Hal and the Financial Adviser crowd for letting me watch it at their gaff and feeding me sandwiches.