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?