Personal Finance: C&G? I told you first

SUDDENLY the world is divided between between those who have Cheltenham & Gloucester accounts or mortgages and those who have been left out of the downpour of pennies from heaven promised for next year.

More than a million people are contemplating a windfall. Members get a minimum of pounds 500, with large savers receiving a bonus of over 10 per cent on their savings, if all goes well.

Last July I recommended in this column putting money into C&G's London share account, which carries membership - not for the rather ordinary interest rate, but for the chance of sharing in any payout when the society gave up being a mutual.

Savers who took my advice have to keep the account open for another year, when the deal is expected to come to fruition. They can even let it run down. But to get the maximum benefit the sum should be pumped up again by the unspecified conversion date next year, to match the level on 31 March 1994, as the payout will be pegged to the lower of the balances on the two dates.

There is still time for borrowers to jump aboard this gravy train. Anyone contemplating taking out a mortgage will find the fact that the pounds 500 on offer to all C&G borrowers on the takeover day alters the arithmetic to make C&G almost irresistible.

On a pounds 30,000 mortgage, C&G's five-year fix at 8.49 per cent (8.9 per cent apr) is brought down to a winning 6.7 per cent by the pounds 500 windfall. And anyone with a 20 per cent deposit who is eligible for the 3 per cent one-year discount on the standard variable rate of 7.64 per cent, will be paying an effective rate of 2 per cent for that first year.

It's not difficult to see that the greed factors are nicely in place and put the Abbey National give-away in the shade. Those free shares are still worth only pounds 445 nearly five years after the event.

But assuming that the whole deal is not scuppered by the court case where the Building Societies Commission is challenging the legality of the payment from an outsider, Lloyds Bank, to all and sundry - not just the voting members who have been on the books for at least two years - then perhaps we should pause and ask if the whole thing adds up.

Or to put it another way, has mutuality and the idea of co-operative ownership had its day? The larger building societies already act as commercial-minded organisations - at least the best ones do. And the smaller ones with a more local philanthropic bent just cannot compete on rates and services. So what are building societies for?

The idea of membership carries so litle weight now. It is clear that shareholders, in theory, carry more sway.

Any C&G 'member' who feels aggrieved at becoming a mere customer should use the windfall to go out and buy Lloyds shares. While the rest can make merry with the money, look for the next society to convert, and hope the commercial impulse that made C&G a good society holds firm.

THE GREAT Miras muddle has been resolved.

Just a month ago the Inland Revenue was saying that anyone with a loan over pounds 30,000 whose lender operated mortgage tax relief at the new lower 20 per cent rate for the whole of April would be entitled to reclaim the pounds 1.60 overpaid.

But it turns out that there is no question of chopping up April into the old tax year at 25 per cent relief for the first five days, with the rest of the month at 20 per cent.

The Revenue now says that if your mortgage payment is due before the sixth of the month, you get 25 per cent relief for the whole month. Anyone with a later date gets the new rate for the whole month.

What a farce. It does not inspire confidence in institutions' ability to handle our affairs - a timely reminder, as the first monthly pay cheques of the tax year arrive, to check the coding carefully.