The 50p tax isn't going to greatly enrich the treasury - but private pensions will

Ed Balls's 50p tax is nothing but theatrical politics - pay close attention to the Lifetime Allowance, the cap on pension funds, which has already been lowered and most likely will be again.

“It’s still £98.13 no matter if you have just installed a self-retracting awning sir.”

“But look, look at this picture – four bedrooms, two bathrooms, a recently extended kitchen and planning permission for a loft conversion.”

“It is very nice – would you please take your estate agent's valuation out of my face - but it’s still £98.13 for the groceries, or should I call my Supervisor?”

This is a familiar scene for me and my chosen check-out lady at my local supermarket in Wandsworth. She simply refuses to accept that my house, independently verified by an estate agent, is exchangeable for any amount of goods and services at her retail outlet. No matter how wealthy I tell her I am, she nearly always expects something that looks like ready cash. There is just no pleasing some people.

The distinction between wealth and money should be obvious. Still, it doesn’t stop some people trying to mix the two things up. Ed Ball’s announcement that a Labour administration would reintroduce the 50p tax band has deflected us from the wealth/money problem in a rather pitiful attempt to launch some sort of class war between the haves and the have nots. You can understand the shadow chancellor’s motivation: it is a mathematical certainty that the have nots are always going to be in the majority. The haves wouldn’t be your natural voting group. Besides, they are probably too busy whooping it up in Davos to notice anything you say.

The problem with this kind of theatrics is that although, in the short term, it will have the gallery punching the air in support – a recent YouGov poll shows that 61 per cent of people surveyed support the 50p income tax rate - the passage of time has a terrible way of reclassifying who is defined as wealthy and who is described as poor. For instance, this April a new and little understood change in pensions legislation will come into force, which is subtle but something of a time bomb if you think you aren’t with the haves. Something called a Lifetime Allowance (LTA) is being applied to everyone: the amount that you can have in a pension without penalty is being capped at £1,250,000 – if you have anything in a pension above this limit, when you retire, you will be taxed at up to 55 per cent on the excess.

Now I am sure there are many of you sitting there thinking “Good – make the bankers pay” (it’s always bankers in some people’s minds), while you are also probably thinking that £1,250,000 as a pension fund is outside anything imaginable for most people. And it is – currently.

Estimates I have seen show that about 30,000 people will be captured by it immediately, but that’s still only enough to fill Fulham Football Club’s ground to overflowing. Even with the current limit, about 360,000 people are expected to be captured by the time they retire.

HMRC have a way of calculating what your pension pot equivalent is – they merely multiply your expected pension income by 20. So let’s imagine that you expect to have total pension rights which pay something close to the national average of about £15,000. Well, that would give you a current pension fund size of £300,000 according to HMRC. It’s a big number, but nowhere near the one and a quarter million mark. Now let’s also imagine that we actually start to see pension income rising in line with inflation over the next ten years (as the baby boomers retire). In that case your pension fund will be worth the equivalent of over £400,000. This doesn’t allow for the growth of the underlying investment, so that is a lower limit – it wouldn’t be difficult to show how that number quickly becomes more than £500,000 if you allow for any rise in the value of the underlying investments. If you are lucky enough to have a pension income greater than that and say approaching the present average income then your pension fund could easily look like £900,000, putting you within spitting distance of the current LTA.

History tells us that things like the Lifetime Allowance start off in one place and end up in another – it has already come down from £1,800,000 to £1,250,000. I suspect that, as time progresses and the pensions problem moves from a distant rumble to a deafening roar, that the LTA number will fall to capture a lot more people than the capacity of Craven Cottage. In fact, one day, I doubt you’d be able to get them all in to the total capacity of the Premier League of a Saturday. In other words, a lot of people are about to be reclassified as Haves, and without knowing it, they will have become The New Wealthy Poor – those who have no money but are assessed to be wealthy and to add insult to injury may even have a large tax liability on retirement.

Let’s face it, the money for our pension promises and the care of the elderly is going to have to come from somewhere (we can’t just dump it all on the next generation) and, as we have seen, general taxation and silly gimmicks like Balls's 50p higher tax rates do not transform our public finances no matter what the opinion polls show. The one area that is ripe for raiding is the private wealth of the general public (not just the wealthy elite) and the reduction of the Lifetime Allowance is just the opening salvo in a long and stealthy war to get at it.

Ed Balls speaking to the Confederation of British Industry. Photograph: Getty Images.

Head of Fixed Income and Macro, Old Mutual Global Investors

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Just you wait – soon fake news will come to football

No point putting out a story saying that Chelsea got stuffed 19-1 by Spurs. Who would believe it, even if Donald Trump tweeted it?

So it is all settled: Cristiano Ronaldo will be arriving at Carlisle United at the end of the month, just before deadline day. It all makes sense. He has fallen in love with a Herdwick sheep, just as Beatrix Potter did, and like her, he is putting his money and energy into helping Cumbria, the land of the Herdwick.

He fell out with his lover in Morocco, despite having a private plane to take him straight from every Real Madrid game to their weekly assignation, the moment this particular Herdwick came into his life. His mother will be coming with him, as well as his son, Cristiano Ronaldo, Jr. They want to bring the boy
up communing with nature, able to roam free, walking among the lakes and fells.

Behind the scenes, his agent has bought up CUFC and half of Cumbria on his behalf, including Sellafield, so it is a wise investment. Clearly CUFC will be promoted this year – just look where they are in the table – then zoom-zoom, up they go, back in the top league, at which point his agent hopes they will be offered megabucks by some half-witted Chinese/Russian/Arab moneybags.

Do you believe all that? It is what we now call in the trade fake news, or post-truth – or, to keep it simple, a total lie, or, to be vulgar, complete bollocks. (I made it up, although a pundit on French TV hinted that he thought the bit about Ronaldo’s friend in Morocco might not be too far-fetched. The stuff about Beatrix Potter loving Herdwicks is kosher.)

Fake news is already the number-one topic in 2017. Just think about all those round robins you got with Christmas cards, filled with fake news, such as grandchildren doing brilliantly at school, Dad’s dahlias winning prizes, while we have just bought a gem in Broadstairs for peanuts.

Fake news is everywhere in the world of politics and economics, business and celebrity gossip, because all the people who really care about such topics are sitting all day on Facebook making it up. And if they can’t be arsed to make it up, they pass on rubbish they know is made up.

Fake news has long been with us. Instead of dropping stuff on the internet, they used to drop it from the skies. I have a copy of a leaflet that the German propaganda machine dropped over our brave lads on the front line during the war. It shows what was happening back in Blighty – handsome US soldiers in bed with the wives and girlfriends of our Tommies stuck at the front.

So does it happen in football? At this time of the year, the tabloids and Sky are obsessed by transfer rumours, or rumours of transfer rumours, working themselves into a frenzy of self-perpetuating excitement, until the final minute of deadline day, when the climax comes at last, uh hum – all over the studio, what a mess.

In Reality, which is where I live, just off the North Circular – no, down a bit, move left, got it – there is no such thing as fake news in football. We are immune from fantasy facts. OK, there is gossip about the main players – will they move or will they not, will they be sued/prosecuted/dropped?

Football is concerned with facts. You have to get more goals than the other team, then you win the game. Fact. Because all the Prem games are live on telly, we millions of supplicant fans can see with our eyes who won. No point putting out a story saying that Chelsea got stuffed 19-1 by Spurs. Who would believe it, even if Donald Trump tweeted it?

I suppose the Russkis could hack into the Sky transmissions, making the ball bounce back out of the goal again, or manipulating the replay so goals get scored from impossible angles, or fiddling the electronic scoreboards.

Hmm, now I think about it, all facts can be fiddled, in this electronic age. The Premier League table could be total fiction. Bring back pigeons. You could trust them for the latest news. Oh, one has just arrived. Ronaldo’s romance  with the Herdwick is off! And so am I. Off to Barbados and Bequia
for two weeks.

Hunter Davies’s latest book is “The Biscuit Girls” (Ebury Press, £6.99)

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 12 January 2017 issue of the New Statesman, Putin's revenge