Dear Listener

It has all been very amusing. Three u-turns on different routes by the Chancellor in as many days.

First, the so-called pasty tax which introduced the notion of taxing hot food sold above ambient temperature as a way of adding VAT to take-away pasties and sausage rolls. Now, at a cost of 40 million pounds a year of tax, the test will be simply if they are -sold to be eaten hot - VATable - or are hot but cooling down naturally – non-VATable. Even after the u-turn, extra VAT on hot food sold to be eaten - for example rotisserie chickens sold by supermarkets - will still raise £70 million

Second, the VAT on static caravans – previously exempt as homes made from bricks and mortar are – will now be 5 per cent from April 2013 rather than the full 20 per cent from October 2012. Another £30 million of tax that would have been raised has been lost.

Altogether the Government hoped to raise an extra £270 million pounds a year in VAT by correcting anomalies and closing loopholes. But now £70 million of that has gone – plus another £15 million given back to churches in grants to pay the new VAT on repairs to listed buildings. The rest will have to come from such measures as adding VAT to the rental of hairdressing chairs, self-storage units and sports drinks.

Third – slipped out two days after saying there would be no change – the Government announced it would not impose a cap on the amount that people could give to charity and get full income tax relief. It had wanted to limit the tax relief to donations made by an individual to 50,000 pounds a year or a quarter of their income if that was more. Someone with an income of £2 million would be able to give half a million and still get full tax relief on the gift. That plan has now been scrapped at a cost of between £50 and £80 million a year. HMRC will separately be tackling the misuse of charitable funds.

Despite these revenue losses of up to 150 million pounds a year ministers insist the Budget overall remains fiscally neutral i.e. gives back as much as it takes away. And the country will still need to borrow £121 billion in 2012-13 to cover the gap between what we spend and what we take in taxes. And to be fair, the taxes lost through these three u-turns are barely 0.1 percent of that extra borrowing.

These changes have serious implications for the future quite beyond what is or is not taxed. In the past, Budget u-turns have been a very big deal – usually needing a parliamentary rebellion. Details may be amended slightly or trimmed round the edges but what the Chancellor tells Parliament on Budget Day is almost a sacred text. But three u-turns in a week will surely mean the Budget next year is seen less as a blueprint and more as a draft, with any measure reversible if the press and public launch a sustained campaign.

***IN MONEY BOX THIS WEEK***

Money Box has discovered that the NHS fined more than 8000 people over a million pounds last year for making mistakes such as claiming free dental treatment when they got the wrong sort of jobseekers allowance. Or claiming a second free eye test within two years. There is no formal appeal against these civil penalties. Should the rules be more clearly explained.

A major insurer refuses to refund the holiday costs of a woman who suddenly became too ill to travel. The problem - her illness was mental rather than physical.

The financial regulator has decided that investment firms must cut back on the returns they use to illustrate their sales literature. Instead of showing growth rates of 5, 7, and 9 per cent they must use 2, 5 and 8 percent for pensions and ISAs and the rates for investments that do not attract tax relief will be cut similarly. We discuss if it is too much, too little, or too late.

Do you pay to pick up your voicemail on your mobile phone? If so how do you stop it?

And the Office of Fair Trading decides to begin to take the first steps towards asking another Government body to consider acting over the growing cost of car insurance. Phew.

You can Have Your Say on one of these topics through our website www.bbc.co.uk/moneybox.

We will try to squeeze in all five of these top items into our 24 minutes of prime time Radio 4. See how we manage by listening live at midday on Saturday, tune in to the repeat on Sunday 9pm, or catch up anytime online at www.bbc.co.uk/podcasts/series/moneybox. Remember you can put in a regular order for our podcast. More than 200,000 listen that way each week. It is free.

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Money Box Live is on Wednesday at 3pm when Vincent Duggleby takes your questions on annuities.

Best wishes,

Paul

PS I am on Breakfast on BBC One on Saturday around 0845 trailing one of the items from Money Box. And I will be back on Breakfast on Thursday morning with another money story, probably at 0640 and 0820. But times can and do change at short notice.

e-mail Paul Lewis