RECEIVING A HELPING HAND.....

There's a country just south of Zimbabwe, the inflation capital of the world - its called South Africa. I was born, bred and educated there, in and around the coastal city of Durban. This had a fairly relaxed lifestyle, unlike one of its inland counterparts, Johannesburg. There the pace is faster, the distances travelled further and originally the crime was worse. But it didn't matter where you lived - everyone paid the same income tax.

I paid income tax from the day I started to work. With my after tax income, I bought things on which I paid VAT (value added tax). I also filled my car up with petrol on a regular basis and the lion's share of this expenditure was made up of taxes. When I bought my house I paid rates to the local municipality for services rendered - refuse, sewage etc. Cutting a long story short a lot of money went to the government's coffers.

I also paid for the services of a private security company to keep my family and possessions safe at home, I paid for private medical cover and I paid for my children to go to school. Security, medical and education - I'm sure some of my tax contributions should have covered some of these services that should have been provided by the state?

Then my new life started in the UK. My wife is a British citizen and they and their family's certainly seem to get a helping hand from the English/British government.

My oldest son has been at school since the second week after we arrived and there are no school fees. The entire family has had at least one visit to the doctor and not once have we had to pay a bill. My wife receives a Child Benefit payment to assist with the costs of our kids and this was back dated to a week after we arrived. She's also just received a £250 voucher to set up a Child Trust Fund. This is a government sponsored scheme to help provide savings for your children which becomes theirs once they turn 18. Also our neighbourhood is exceptionally safe. We don't have to pay for third party security to protect our family and possessions and we don't even have a wall around our premises!

I know these are two entirely different countries with entirely different systems. Both have good and bad points, but one of them seems to have its priorities right, providing a helping hand and the feeling that one is getting a little value for the taxes one pays.

INTEREST RATES, INFLATION AND MORTGAGES

Interest rates have recently been cut, again, by the Bank of England. The cut was only by 25 basis points (0.25%) but it was a cut nonetheless. So the cost of money to the main banks and lenders is now cheaper. Normally this is great news.

It's not that simple, however. While the average "man-in-the-street" Englishman with a mortgage hopes that his monthly mortgage payments will come down - they probably won't. This is mainly for 2 reasons.

The first - the way many people have structured their mortgages. I'm not an expert on the types of mortgages the English banks and other lenders offer their customers but I do understand the basic concepts. The problem is that a lot of people have fixed rate mortgages. Here they have chosen to fix their interest rate for some period of time - usually two years. So any interest rate changes - either up or down - will not result in any change to the monthly repayments.

The second - major lenders are not compelled to reduce the rates they offer their customers. So while the Bank of England does it's best to aid the man in the street some lenders will use this as a window period to make more profits. Their costs have come down but they haven't dropped their price to their customers.

It's certainly an interesting time that I have chosen to start my new life in the UK. Normally an interest rate cut by a country's central bank would happen during a period of stable prices, however at the moment, in England, the current government appears to be losing the fight against inflation. Dropping interest rates normally increases the money supply, which in turn drives up the rate of inflation.

It's going to be a very interesting next couple of months. Will the major banks tow the line and pass on the interest rate cuts to their customers and how will the interest rate cut further fuel inflation? Only time will tell.