Jeff Salway: After the No 10 love-in, it's time for some serious money talk

JOINT accounts can be a political minefield at the best of times, but early evidence points to a surprising de- gree of compromise over the control of the public purse.

It was nauseatingly clear in the No 10 garden on Wednesday that David Cameron and Nick Clegg are enjoying a blissful honeymoon period. The first days of their political marriage were characterised by whispered sweet nothings, exchanged vows and what seemed like an equal say over the joint finances.

The harmony cannot last, but the signs are that it may not be the sensitive subject of money that spoils the fun. The details in the coalition document were often sketchy, but it had a bigger Liberal Democrat stamp on it than many had anticipated. It was most apparent in the proposals to increase personal allowances to 10,000, although this will presumably be phased over at least three years and will be funded partly by savage spending cuts.

This could be a profoundly positive development in terms of helping low earners and a move you can be sure would not have been considered by a solely Tory administration. The Lib Dems were also behind the re-linking of the state pension with earnings next year.

Likewise, the absurd Conservative plan to raise the inheritance tax threshold to 1 million (retaining this while attempting to convince voters of the Tory appetite for cutting the deficit was ridiculous) has been ditched. Clearly, the coalition battle lines will be drawn elsewhere – immigration, Europe and voting reform, most obviously.

But there are concerns over some issues. There is huge pressure on the government to outline its plans for the pensions industry as soon as possible. The removal of compulsory annuitisation is a positive step, because, although it will affect only a minority, it acts as a greater incentive for pension saving. Of greater import, however, is the administration's attitude towards the national employment savings trust (Nest), also known as personal accounts. The biggest single challenge facing the government over the coming years is boosting pension contributions, and the focus should be on the workplace. With Nest being introduced for some employers in just two years time, companies urgently need clarification of the new government's attitude towards the scheme – the Conservatives have in the past expressed a desire to scrap it.

Encouraging people to save more is also the key argument in favour of retaining child trust funds. These are an obvious target for cuts and a reduction in the value of the vouchers is reasonable, but to abandon them entirely would be another blow for the younger generations picking up the bill for baby boomer indulgence.

ARE mortgage lenders anticipating a fresh housing market slump? Nationwide has hiked its fees, and now Lloyds Banking Group has introduced new restrictions on interest-only mortgages.

It is easy to see why Lloyds is concerned about the risks of interest-only mortgages – and its focus on affordability is sensible if several years too late – but why wait until now to act if there are reservations?

If they are expecting a new downturn, they are probably on the money. The latest employment figures are one reason and, as the new government takes a scythe to the public sector, it seems the jobless numbers will only rise. Not only that, but cutting spending too early and by too much could result in a double-dip recession – and the government shows few signs of heeding those warnings.