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Today the Chancellor finally announced what the measure would be to compensate people who have lost out due to the income tax changes. They are going to give all basic rate taxpayers an extra £120 by raising the personal tax allowance by five times that amount. That was the solution to the problem that I suggested nearly two weeks ago.

I’m glad the government have seen sense, and are rectifying their mistake in this way, rather than introducing some new, complex system of benefits or credits. They are also adjusting the 40% tax band so that higher-rate taxpayers won’t receive extra money. However, they aren’t going to lower the threshold so as so bring enough people into the band to pay for the tax cut at the lower rate. Instead, the tax cut is going to cost £2.7 billion.

Ominously, the BBC report that people will gain £120 this year. We should be under no illusions that this will be a permanent tax cut. Next year, the personal allowance won’t increase nearly as much as it would have done, and over time, further reduced increases in the allowance will mean that the £2.7 billion is eventually clawed back. But as no-one can know what the increases would have been without today’s announcement, they won’t be able to complain about losing out. The amount of tax collected will be the same in the end, but I suppose at least low earners won’t be hit with a big increase in tax all at once.

Unfortunately for the Labour Party – and Brown and Darling in particular – I don’t think this measure will do anything for their electability. They are already badly damaged by the original policy error. Maybe a change in leadership is needed before the next election.

Last week the government seemingly did a u-turn over the scrapping of the 10 pence rate of income tax, although it is far from clear what form the compensation will take for people on lower incomes who will lose out under the new tax regime.

It’s difficult to see how the government could have thought it a good idea to change taxes so that everyone gains except those who earn £15,000 or less a year, who will lose out by anything up to £150. This is obviously very unfair, and hits those people for whom £100–150 is a lot of money.

The desire to simplify the taxation system is a worthy one. However, removing one band of income tax wasn’t really the best place to start. What makes the tax system too complex is the system of tax credits, which is supposed to compensate people who have been failed by the system in the first place. Surely it would be far better to have a fairer base system of taxation, rather than having tax credits as corrections – which are so difficult to understand that millions of pounds go unclaimed each year. Unfortunately, the “compensation” which the government has promised people who have lost out following the abolition of the 10p rate will undoubtedly be yet another type of tax credit (if it materialises at all).

Perhaps a better solution would be to raise everyone’s tax-free personal allowance by £750. That would mean everyone would gain £150 that would otherwise have been paid in tax at the 20p rate. To recoup the loss in revenue, the government could lower the threshold at which the higher rate of tax is paid – the actuaries will have to figure out that one, as it requires knowledge of the distribution of salaries across the whole population. This solution would result in an equally simple system of tax thresholds (0, 20p, 40p) but be fairer in that those on the lowest incomes would pay a little less, and high-earners a little more.

Monthly bank charges would hit low earners

Also in the news this week was that UK banks have lost the first stage of the case against account penalty charges. The judge has ruled that the Office of Fair Trading can decide on the fairness of charges. As I have said before, if penalty charges are outlawed completely, the banks might respond by introducing monthly account charges, which would be bad for all customers.

As has been reported in the last week, people on low incomes would be hit hard by the abolition of the 10p starting rate of income tax. For those people, the loss of £100 or so per year is highly significant. Therefore, if they suddenly had to pay £10 per month simply for having a bank account, that would hit them just as hard. Yet that could be the result of the “crusade” against penalty charges. The result could be that people will be forced to close their bank accounts, dividing the population into two classes: those who can afford bank accounts, and those who can not. That seems far from fair.

It simply isn’t the case that people on low incomes currently pay penalty charges and those on higher incomes don’t. Many people on low incomes manage their money extremely carefully and avoid going overdrawn, just as their grandparents did before living off credit seemed the norm. It isn’t fair to penalise people just because others have been careless enough to incur account fees.

I still hope that a ruling against penalty charges by the Office of Fair Trading will not result in monthly account charges for everyone. However, if it does, we could see people on low incomes being hit just has hard as they have been by the abolition of the 10p income tax rate.

I received my copy of the Spring 2008 University of Leicester Graduates’ Review today, and was quite surprised to find my photo of Leicester Prison accompanying an article on TV and internet in prisons.

They have credited the photo to “http://jonathan.rawle.org/gallery/using/”, which is actually my page of terms and conditions for using my photos. At least they have included an acknowledgement, and the Graduates’ Review counts as a non-commercial publication, so I’m happy for them to use the image. I only wish they’d asked me for a higher-resolution version, as it’s quite pixellated if you look closely.

Today is Mothering Sunday in the UK, on which people honour their mothers, often giving gifts and cards. However, unlike the American Mother’s Day, which is celebrated on the second Sunday in May and is a 20th century invention, Mothering Sunday has much earlier origins as a date in the Church calendar, when people returned to their “mother church” – the nearest large church or cathedral – on the fourth Sunday of Lent. As such, the date moves with the date of Easter, so can fall any time from the start of March to mid-April.

Despite its historical significance in the UK, it is now almost impossible to buy a card that says, “Happy Mothering Sunday”. Almost all cards now say, “Happy Mother’s Day”. This is at least partly because people are looking for a celebration that is the exact equivalent to the entirely American-invented Father’s Day, but also reflects the general trend to pick up American words and phrases to displace our own, which is then compounded by the media using the same expressions.

This erosion of our culture is unfortunate, particularly as it’s happening without people realising. Most people don’t realise the term they are using is American. While many people in the UK are not religious and don’t consider themselves Christians, even the famous athiest Richard Dawkins has said that Christian traditions form an important part of our nation’s heritage. Almost everyone celebrates Christmas, but few go to church, and many people are non-believers. Christmas is an important festival during which families get together and people show seasonal goodwill towards other, even if it has little or no religious significance to most people. Anyway attempts to rename Christmas have quite rightly been subjected to ridicule. So why should we rename Mothering Sunday? If people prefer to celebrate the American holiday, they can do so in May. But changing the name of Mothering Sunday to its American counterpart is the equivalent of British people deciding to celebrate Thanksgiving on 25 December. Using the name Mothering Sunday is in keeping with the British tradition of retaining historical dates from the Church calender, but giving the festivals a modern, secular meaning that’s inclusive for everyone.

Another good reason for avoiding “Mother’s Day” is that it removes the dilemma of where to put the apostrophe. I have seen all three possibilities this year: Mother’s Day, Mothers Day and Mothers’ Day. The first is by far the most common, yet it could actually be argued that any one of them is correct. Unfortunately, many people won’t even think about what the apostrophe means, which is probably why it’s generally put before the “s”, where they think an apostrophe is automatic. It’s far better to use a name for the day that doesn’t require an apostrophe at all.

The irony is, I have an American-made calendar on my wall, and it manages to correctly identify today as Mothering Sunday. It shows Mother’s Day as being 11 May. The Americans themselves appear to have no problem accepting different countries’ conventions and culture, it’s just that the British seem to have no idea about their own.

It has emerged that customers in Northern Ireland who bank with the Nationwide building society, and who used cash machines belonging to Northern Bank, did not have the sums of money they withdrew debited from their accounts. The fault has existed since November, and 7,500 customers have been affected, withdrawing a total of £375,000 between them. However, it has only just been discovered, and Nationwide have written to all the affected customers to tell them that the amount owed will be deducted from their accounts on 10 March.

Nationwide have apologised for the error, and have, quite rightly, said that if anyone goes overdrawn as a result, they will not be charged. Yet some people still aren’t happy, and have complained that it’s too much money to take from their accounts at once. Yet if they don’t have the money still in their accounts, it’s money they’ve spent twice over, which rightly belongs to the bank.

Why didn’t people notice that the money hadn’t been taken from their accounts? If people are in real hardship because Nationwide are claiming their money, the amount in question must be a significant sum to them. So why weren’t they suspicious when they suddenly had that extra money to spend? If on the other hand, the cash withdrawn is only a small amount to a particular customer so that they didn’t notice, it’s also too small an amount to make a fuss over when it has to be repaid.

This had been going on for more than three months, yet it seems none of the customers affected reported it to Nationwide for a long time. Surely they will all have received at least two monthly statements during that time, so should have noticed the discrepancy? Some of them must have been hoping the bank wouldn’t find out, and they’d get to keep the extra money. As for the rest, they probably don’t even look at their statements. People should really get into the habit of checking their bank statements – after all, next time around, it could be that the bank has debited the withdrawals twice. It’s in the customer’s interest to check that all the transactions are correct.