Our biggest problem yet

There are many aspects of the Labour party’s manifesto that have obvious appeal – to young and old.

An end to tuition fees, no more pushing back of the state pension age, an extension of both maternity and paternity rights, company shares for workers, and a culling of the gig economy and zero hour contracts. 

Even the prospect of a 32-hour working week to look forward to by 2030. 

It is Labour’s proposed changes to capital gains tax and dividend tax that are potentially more damaging

A widespread nationalisation campaign – rail, mail, water and energy – that Jeremy Corbyn claims will result in lower fares and smaller utility bills. Savings, we are told, for the average family of some £6,716 a year.

There are even pledges to address some of the issues I have campaigned on as personal finance editor of The Mail on Sunday. For example, recompense for women born in the 1950s whose state pension age was pushed back without adequate notice, plunging some of them into poverty – and free TV licences for the over 75s. 

Even a halt to bank branch closures, a beefing up of the local post office service, and an end to the charging of fees for withdrawing cash from an ATM. So, something for all. 

Yet, when it comes to the preservation and generation of personal wealth, Labour is a concern.

Analysts have warned that if Labour is elected, it will trigger a run on the pound and a sharp correction – short-term at least – in the UK stock market.

A number of the utility companies, threatened by renationalisation, will see their share prices come under pressure.

Investment bank Jefferies predicts that shares in companies such as BT, National Grid, Pennon, Royal Mail, Royal Bank of Scotland, SSE, Severn Trent, United Utilities and William Hill will all be adversely impacted.

Scary? Yes, although it is Labour’s proposed changes to capital gains tax and dividend tax that I think are potentially more damaging.

A reduction in the annual capital gains and dividend allowances to £1,000 will deal a crushing blow to investors. As will the taxing of any capital gains made or dividend income received above these new ‘de minimis’ allowances at a taxpayer’s highest marginal rate of tax. 

If these measures are pushed through, they will do serious damage to many investors’ portfolios.

They will also dissuade some from building wealth outside tax-friendly wrappers such as pensions and Isas.

Financial planners, I am sure, will be busy if Labour wins, ensuring clients’ portfolios are robust enough to withstand anything Mr Corbyn, and in particular his chancellor of the exchequer John McDonnell, throws at them.

Yet, some financial planners believe the financial press’s obsession with the outcome of the general election has been misguided.

For the past two weeks, I have received coruscating emails from a financial planner concerning my personal finance analysis of Labour and Conservative taxation plans.

They have been received late on a Saturday night – as soon as The Mail on Sunday’s personal finance coverage has gone live online.

The first read: “Seeing you writing the crass stuff that you do about Mr Corbyn is such a waste of the energy and the precious gift you have of being able to inform your readers.

“There is so much good being done by investment companies who are investing sustainably and ethically and you should be blowing their trumpet.”

Another went: “I now see you as a capitalist and a climate crisis denier. You still gush over Boris Johnson when he won’t even take part in a climate change debate.

“You have David Attenborough making the most moving statements about how we are killing this beautiful planet we live on and then you write about investment fund Crux UK that invests in the likes of BP.”

I was initially hurt by the tone of these emails – for the record, I am not a climate crisis denier, although I am more capitalist than socialist.

But on reflection, I think the financial planner in question is right to criticise me (for the record, they have just returned from a trip to Australia where raging fires just outside Sydney forced residents to flee for their lives).

They are right and I am wrong. There is no bigger issue currently facing us all than climate change (Labour’s manifesto makes this very point) and everyone needs to do their bit.

That includes all those involved in wealth creation – be it fund managers, financial planners or journalists.

So, fund managers need to put more pressure on companies to improve their disclosures on carbon emissions and pollution control.

Financial planners need to give their clients’ portfolios a double coat of ‘green’, while journalists need to write more about sustainable investments. 

This is my mission for 2020.

An early Merry Christmas and a Happy New Year to you all.

Jeff Prestridge is personal finance editor at The Mail on Sunday