Teresa Hunter: Forget about America, let's get our own house in order

PRIME Minister Gordon Brown never ceases to amaze me. With our housing and mortgage market moving ever closer to meltdown, and consumers and the industry crying out for leadership and decisive action to restore confidence, he debunks for the US to posture for the TV cameras with George Bush.

Yes, I know it's a global crisis. But the Fed and other US authorities are pulling out every stop they can to solve their own problems. We sure as hell have nothing to offer by way of advice. So what was he doing there?

As the Bible puts it: "Why say to thy brother, let me pull out the mote out of thine eye, but consider not the beam in thine own eye?"

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Fortunately, back at the ranch, the Bank of England has belatedly caught up with the seriousness of the mortgage crisis, and is providing mechanisms which should result in it being easier and ultimately cheaper to get a mortgage, and hopefully put a floor under property values.

But there is still plenty of time to blow it. To prevent a major car wreck in the housing market, the Bank must be prepared to swap a sufficient quantity of mortgage assets, somewhere near 50bn at the very least, and we have to cut interest rates further.

Then, after the economy reaches a new equilibrium, there must be a day of reckoning when those who allowed mortgages to be too cheap for too long are called to account. And it is not just the banks we are talking about.

Stuck in the 10p trap

THE row over scrapping the 10p tax band, thereby increasing the tax burden on the poorest, raged on last week and shows little sign of abating.

As far back as March last year, when the plan was first announced, we said it was a disastrous move which would badly hit young adults, early retirees and part-timers.

I was particularly incensed that women comprise the bulk of those affected: young women working in health and childcare, young mums trying to boost the family income, and elderly women retiring on small pensions.

At the time, no one shared our sense of outrage. Certainly, no parliamentarians representing such constituencies spoke out. Which goes to show wage packets, not word packages, deliver the killer punch.

But it also raises questions about the extent to which MPs and MSPs actually understand crucial financial matters such as taxation and benefits. Many swallowed and regurgitated the Government line that almost no one would see their income cut because what they lost with the 10p band they recouped through higher tax credits.

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The penny only dropped when irate constituents started hammering at their doors. They hammered because they knew that you only get tax credits if you have children, are very low paid and over 25, or have retired on a tiny pension.

The big question now is what the Government does next? Given the national consensus that punishing the already least well-off is plain wrong, it is going to have to make some concession. However, it is extremely difficult to see what can be done.

The cost of reinstating the 10p band for everyone without reversing the 2p cut in the basic rate from 22p to 20p would be prohibitively expensive. The Government must find a way of reinstating the 10p band then clawing it back above a certain level of income through an adjustment.

However you look at it, it's a mess. If you have any better ideas, please send them in.

Sleeping watchdogs

WE APPLAUD Treasury Select Committee chairman John McFall for taking up the issue of funeral plans, after hearing of a Scotland on Sunday reader who is trapped in a contract which can only be described as scandalous.

As Nic Cicutti outlines on this page, not all funeral plans are to be avoided, as some have safeguards which ensure the policyholder enjoys a fair deal. Clearly this is a growing but poorly regulated industry which needs greater transparency and safeguards. Apart from newborns, there is no more vulnerable group than the very elderly. If watchdogs can't be trusted to look after them, they have no right to exist.

Hello and goodbye

TODAY Michelle Slade of Moneyfacts outlines the pros and cons of different savings accounts, and highlights those offering best value.

We extend to her a warm welcome as she is also becoming the new savings guru on our consumer panel, following the departure of AWD's Sue Hannums to pastures new.

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I know readers will want to join me in wishing Sue every success in her future career and thanking her for her valuable contributions.