/ 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?

Comments
Guest
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?

Guest

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!

Guest
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.

Guest

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

Guest

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

Guest

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.

Guest
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.

Guest

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?

Guest
Sagitarius says:
2 December 2011

Too little. Too late. It looks as though we are doomed to hy