Gordon Brown’s decision to abolish the dividend tax credit for pension funds was one of the most calamitous decisions ever taken in relation to the London stock market.
At a stroke, the then newly installed chancellor of the exchequer put the skids under defined-benefit pension schemes, as managers could no longer count on dividend tax credits to support their equity returns. Funds duly reduced their exposure to UK shares, pulling billions out of domestic equities.
The abolition of the tax credit is a well-worn tale, at least to anyone who lived through the ‘Cool Britannia’ epoch. Almost three decades on, Oasis are somehow back in fashion, and Brown now acts as special reviewer on global finance and co-operation to a prime minister with an apparent penchant for the sportswear of the era. Meanwhile, John Healey, a former junior Treasury minister under Brown, and an apparent “safe pair of hands”, has been handed the reins of the UK economy.