SIPPs fiasco shows total incompetence

It was an act of gross incompetence. A move that defied belief. We are of course talking about chancellor Gordon Brown\'s amazing U-turn on placing residential property in self-invested personal pensions.

In his pre-Budget statement last week, Brown ruled that tax relief would not be allowed on residential property going into SIPPs.

For over a year lenders, brokers and property companies have been putting costly plans into place to capitalise on this now lost opportunity. It’s impossible to calculate a figure but it doubtless runs into millions of pounds that have been wasted by providers in setting up products and promoting services.

It was astonishing that a Labour government introduced such a scheme in the first place. But to pull it so late in the day? It was, quite frankly, shameful and disgraceful. Indeed, it was nothing other than cowardly. And this from a would-be Prime Minister. Coming the day before David Cameron was elected to lead the Conservative Party some could also call it brave.

As Ray Boulger, senior technical manager at Charcol, says in this week’s pre-Budget coverage starting on page 7: “To change plans at the 11th hour, four months before the new rules are due to start, is gross incompetence. Brown should have done his homework properly before announcing the plans. If we can’t trust what the chancellor says it calls into question his suitability as the next Prime Minister.”

Also related to the pre-Budget statement, there is growing concern that the government’s shared equity scheme could have serious implications for the economy if there were to be a housing downturn. Just three lenders have signed up to the scheme to help first-time buyers which effectively allows the government to play property investor – and thus expose itself to the risk of negative equity at a cost that would be borne by us all.

Come 2009, it surely must be time for a change.