/ Money

Will the Autumn Statement impact your pocket?

George Osborne’s first Autumn Statement comes amidst an encircling financial crisis and fears of a double-dip recession. Will any of his plans make a difference to the man and woman on the street?

The Chancellor’s Autumn Statement arrives in austere times. Growth rates have been revised down for this year and the next, while borrowing in the UK has increased. In short, we’re not making much money and we’re still spending loads of it.

So George Osborne intends to continue cutting Britain’s debt, and to try and kick-start our ailing economy. But will any of his plans make a difference to you and me? Here’s our round-up of his major announcements.

Rail and road – tackling fares and fuel

Rail fare increases frozen: From January 2012, regulated rail fares will be capped at 6.2%, a fall from the existing cap of 8.2%. This means rises will be at the inflation rate plus 1%, rather than inflation plus 3%.

Since this returns to the previous more modest annual increases, we won’t see the feared double digit increase in rail fares. Is this enough to keep commuters happy? We’ll have to leave that to you to answer.

Fuel price rises: The Chancellor also performed a u-turn on fuel prices, with the proposed 3p rise in January and the further 5p increase in August being shelved. In its place, a one-off increase of 3p will come into force in August.

According to George Osborne, ‘families will save £144 on filling up the average family car by the end of next year’.

Help for current and future home owners

George Osborne announced a new-build mortgage indemnity scheme, with the intention of helping 100,000 families buy their own home with just a 5% deposit.

Additionally, £400m will be devoted to encouraging contractors to persevere with new and stalled housing developments. The question is whether any of this will be enough to get first-time buyers on the housing ladder.

Osborne also announced the reinvigoration of the Right to Buy scheme, helping tenants buy their council home at a discount.

Boosting Britain’s infrastructure

The government plans to pump money in to the UK’s infrastructure, with more than £1bn being earmarked for motorway improvements, notably the M3 and M6.

We’ll also see a £100m invested in high-speed mobile coverage and broadband with the intention of creating up to ten ‘super-connected cities’. Perhaps this will be enough to bring universal superfast broadband to all Brits?

Business loans and initiatives

The government wants to cut the cost of borrowing for smaller businesses. In essence, since the government can borrow money cheaply, it wants to pass these savings on to businesses.

Its new scheme (called the National Loan Guarantee Scheme) will underwrite loans to businesses and make borrowing cheaper, using the government as a backstop.

Public pay and state pensions

Public sector pay caps: The government also announced that, from 2013 onwards, it will limit pay increases for public sector workers to just 1% a year. At the moment, public sector employees have had their salaries frozen.

Changes to the state pension: The state pension will increase by £5.35 to £107.45 per week in 2012. And finally, the state pension age will rise from 66 to 67 in 2026, ten years ahead of the existing schedule. George Osborne expects this will deliver £59bn in savings over the long term. But will you really be happy to work until you’re nearly 70 years old?

So, what do you think of George Osborne’s Autumn Statement announcements? Is there enough in there to help consumers, or are the announcements too focussed on businesses rather than the needs of you and me?

Economical Man says:
29 November 2011

George appears to be a slow learner. Growth? Was that something that was damaged by a Royal Wedding no work day? Surely he will now have to scrap the extra Bank Holiday slated for the coming year. It would be economic madness to go ahead with it? The Madness of King George?

Good news for commuters who will have a lower rise in train fares – already incredibly cheap on a season ticket compared with the unregulated fares. No doubt the train companies will try to win back on the swings what they’ve lost on the roundabouts and put up the unregulated off-peak advance and walk-on fares by even higher percentages. And a sensible employer will peg back any planned rise in London Weighting to reflect the brake on commuter rail fares.
Good news too for people wanting to buy a new home but I keep wondering why first-timers are looking for brand new poperties which are almost always less affordable than the equivalent amount of accommodation in existing houses. It’s interesting that the Financial Statement reported that the Stamp Duty Land Tax relief scheme for first time buyers had been ineffective in getting people onto the first rung of the property ladder; this might be because in metropolitan areas the entry price of housing is absolutely unaffordable and that in provincial or rural areas the SDLT threshold is above the entry price for modest properties [or in certain designated ‘disadvantaged’ areas there is a higher SDLT threshold – £150k instead of £125]. The government has confirmed that the relief scheme will be terminated as planned in April 2012. The Mortgage Indemnity Scheme will only apply to new-build homes so it won’t have the breadth of scope of the SDLT relief and it remains to be seen whether it will be any more effective. Presumably the existing Zero Carbon Relief [SDLT threshold = £500,000] will continue but this is unlikely to make much impact on the housing shortage since the cost of the measures necessary to get a structure down to zero carbon will price it beyond most budgets.
Another aspect of the Public Sector Pay Cap mentioned by the Chancellor is the idea of trimming public sector pay to be more in line with equivalent local private sector norms. An extremely sophisticated job comparison and evaluation scheme would have to be devised because a lot of public sector staff are doing unique jobs [e.g trading standards, town planning, tax inspector] that have no match in the private sector. Perhaps some benchmarks will have to be established [e.g. accountancy technician, clerical assistant, legal executive, cleaner, cook, general labourer] from which pay scales can be extrapolated. As if the government hasn’t got enough on its hands with the TU’s without opening that can of worms!

Rev G Hancocks says:
29 November 2011

We have possibly the worst chancellor in history handling the economy in perhaps the most diffiuclt period since the 1930’s. The man is out of his league and his side kick, Danny Alexander, even more so. We need people who understand economics, not 2.1 history graduates and Cairngorm’s national parks spokesmen.

Second worst after the clunking fist that got us into this mess.

What about having people who aren’t crooks? Don’t hold your breath…..

The rise in the pension age to 67 probably reflects the fact that a high percentage of people nowadays do not start pensionable employment and make pension contributions until they are 22. Maybe the point when people can get a state pension should be related only to the number of years of pension contribution [forty-five perhaps] so that those who start contributing early could still retire at 63.

Mike says:
2 December 2011

What! Why not just retire at 60 leaving a 7 year gap, maybe i just got to go on a tour around euope, I just plan to stop at 60 years old.

At least we have a chancellor who knows some of his George Orwell. “Families will save £144 on filling up the average family car by the end of next year”. Petrol’s going up, not down, isn’t it?

Sagitarius says:
2 December 2011

Too little. Too late. It looks as though we are doomed to hyperstagflation until public sector pay and pensions are brought back to what the private sector can afford to fund. That means massive belt-tightening for all of us over the next decade and more. Dig up the lawn and plant vegetables.

Michael Maher says:
2 December 2011

Osborn, like the rest of his government havn’t got a clue everytime the Tories get into power they start upsetting the country, cutting everything they think fit. They seem to be scared of having people in full time jobs causing strikes. You have got Cameron who hasn’t got a clue what he is doing trying to be like Thatcher. If he wants to be like Thatcher he want to try dreessing like her.
This Tory government couldn’t run a bath, never mind a country.

My advice is to let it all wash over you…my one consolation is a vague hope that when it all goes down the plug-hole, those financiers who caused it along with the crooks in the cabinet, will be caught in the swirl.

Bob H says:
2 December 2011

As a pensioner there appears nothing for me. OIf had announced a furthe petrol tax increase in September that he was now going to scrap then he could have announced a £288 saving for motorists. The cap on public servants wage rise after a couple of years of wage freeze will have a negative effect on our income because of my wife’s job.
If the chancellor had announced a tax on land banked by builders that would help with house prices and availability.
The increase in flight duty whilst not putting it on private planes makes it look like a “hit the lower and middle classes” tax

I didn’t hear much complaining from the public sector workers when their Chancellor Brown started raiding the private sectors pensions to the tune of over 5 billion per annum since 1997 to pay for their gold plated pensions. I didn’t hear anything from them 2 years ago when the private sector and businesses were going through what they have been asked to do now. Under Labour the public sector always becomes over-staffed to make unemployment figures look good. If a private company can’t afford to keep going under its present circumstances, it downsizes or closes. It is the same now with the public sector. Labour emptied the savings and sold the gold reserves for next to nothing, thank them for badly running the economy, as they do every time they are in power. Then it takes a strong Tory government to get us back on track.
Everyone has had to forfeit wage rises and lower pensions. it is now the turn of the public sector to shoulder their share of it, so stop whingeing or carry on with your militant strikes (which a small minority voted for) and bankrupt the country aka Greece.

Natalie says:
2 December 2011

Your comments are all well and good but are MPs and House of Lords peers also going to pay more into their pension and get it later? We can’t one rule for one part of the civil service and another for the other. Aren’t MPs also civil servants, I’m sure you know that MPs are entitled to a pension after only serving one term and get a massive pay off if they are not re elected?

I was a civil servant and now work in the private sector where I have a better pension, non contributory. Why do we keep turning it into a them and us battle we are all employees we should support each other.
Even you don’t like an opinon we are all entitled to one.

DaveG says:
2 December 2011

I think Joeninety is forgetting who sold the Gas,Electricity,Water,Railways,and many others,usually to Foreign concerns,Now his strong Tory government is looking for anything else they can sell.How about Air,its free like water used to be.

Bechet says:
2 December 2011

Why on earth is he planning to underwrite sub-prime mortgages with our money ? How will the “beneficiaries” cope if interest rates return to normal levels ? Why is he (and the Tories at large) so preoccupied with home ownership when so many people simply need somewhere to live ?

In 1870 the Ottoman Empire declared bankruptcy and by the terms of thye Decree of Mouharrem signed in 1881, the European-dominated Ottoman Public Debt Administration had control of all revenuesraised throughcustoms and tax collectionin the empire, from monopoly duties on salt, silk,and tobacco production to sales taxes on alcohol and stamps. No less than four-fifths (80% to you younger ones) of the revenue collected from these duties went to payment of interest on the Ottoman debt.
If Banana Boy and his sidekick Saul Balls took over, how long would it be before we had a load of Frogs and Krauts running No 11, Downing (or would it be Drowning?) Street?

And DaveG is ‘unaware’ of how those ‘socialist’ industries were bankrupting the UK. Just as the Blair/Brown era did. War mongers who threw money at state employees and failed to understand let alone regulate, the bankers.

Now we have to pay the price for socialist ideology and ignorance. .

GordonP says:
2 December 2011

Why is anyone surprised. Various right wing groups had on occasions running up to the election proposed the kind of policies now being implemented. The country then votes to have a government run by the Bullingham Club and they start to implement those policies. They are of course millionaires and not really bothered about poorly paid and unemployed as long as the “elite” from the public school system continue to get key jobs, get elected, maintain the status quo. Remember it was these people who caused the current crisis wrecking the banking system and rewarding themselves with fat bonuses. They have created a very dangerous situation where people no longer have faith in any political party and are to put it mildly fed up with the increasing divide in the rewards available. That’s enough for now.

Dr.Norman White says:
3 December 2011

Most of my life I worked or was on call for 36 hours two or three times a week, sometimes with peoples’ lives in my hands.
I worked a rota with my colleagues but we were not paid for the time or the responsibility. I paid extra superannuation for ten years to increase my pension. These young lads in government should put us on a “war” footing and instead of whining get people back to work. if EU regulations forbid these actions then we should leave them to sort their own difficulties out. Our citizens should take priority over everything else. incidentally, why are all our imports from China? Can’t we make anything ourselves? Where is the “Churchill” inspiration to solve our problems?

GordonP says:
3 December 2011

I can’t resist another comment. The Public Sector pensions are, according to a right wing commentator, affordable to too generous compared with the Private sector. Ho Hum. Thinks–there are two possible routes to solve this. The one the Government choses ie cut back on the public sector or improve the private sector. admittedly this appears to be difficult in the current climate brought about by the cavalier attitude of the bankers and top executives. Hang on aren’t these people the same people granting themselves bonuses on top of the av salaries for the top execs in the footsie 100 of over 3 million quid a year. Now where could the money come from for the pensions in the private sector. Any suggestions?

Leslie says:
3 December 2011

I agree with all of the above!

Inequality Watch says:
4 December 2011

When there is such a housing shortage, why should council houses be sold at a knock-down price to sitting tenants who have been lucky enough to obtain one in the first place? Two alternative strategies should be followed:
1. Existing , privately-owned ex-council houses should only be able to be bought back by the council for re-rent. The market price should be reduced by the amount of discount the owner obtained to buy the property in the first place.
2. No further council houses should be sold. Instead, those who wish to buy should be encouraged onto the open market. How else are the younger generation ever going to be able to have affordable rents or mortgages?