/ Money

The Coalition’s mid-term Review falls short for consumers

Downing street sign

Now that the current Coalition government has been in power for two and a half years, the two party leaders have set out broad brush proposals for the rest of their term in office. But do their proposals go far enough?

In the government’s mid-term Review, Prime Minister David Cameron and Deputy Prime Minister Nick Clegg have declared their aims and goals for the rest of their time together.

There’s scant detail in terms of policy, but there are plenty of changes ahead that could affect your finances in the future. But will you be better or worse off after another two and a half more years of Coalition government?

Benefits and pension changes

Soon after millions of people saw their child benefit payments cut, the government has confirmed its plans to introduce Universal Credit. This will condense a range of benefits, such as income-based Jobseeker’s Allowance, child tax credits and housing benefit, into a single payment. The scheme is currently being piloted in a few parts of the country, with a full roll-out expected later this year. Many could see their benefits cut as stringent new rules on eligibility kick in.

The government reaffirmed its intention to increase the personal income tax-free allowance to £10,000. It also vowed to simplify the state pension provision, in a bid to combine the basic and second state pensions into a single payment. This should decrease complexity, but it could leave some people missing out on enhanced state pension payments.

Long-term care, affordable homes and trains

In keeping with the government’s commitments to protect older people, it announced a scheme to defer payments for residential care, which may prevent people from needing to sell their homes to pay for it. The government may also announce plans to cap the cost of long-term care, with a suggestion that this could be higher than the £35,000 recommended by the Dilnot review into funding long-term care.

Given the hikes in rail fares, the government also announced that fares would not increase more than 1% above inflation in the future. Too late for the commuters hit by double digit increases earlier this month, but it’s a welcome commitment nonetheless.

Finally, the government announced a debt-guarantee scheme of up to £10bn to support increased building of new and affordable homes for private renting. It will also continue to champion the NewBuy and FirstBuy schemes that seek to help people onto the property ladder.

Review falls short of protecting consumers

Although promising, we don’t think the government’s Review is ambitious enough. Reforms to the sectors that matter most, like banking, energy and telecoms, do not yet go far enough to protect people from uncompetitive prices, shoddy service and bad practices. Which? executive director Richard Lloyd commented on the Review:

‘Confident, empowered consumers are good for the economy and good for driving improvements and innovation in business and public services. Consumers should be at the heart of the Government’s reform agenda, and although the Consumer Bill of Rights is likely to be a step forward, today’s Review falls short of setting out a compelling vision to make this happen.’

So, what would you like to see the government tackling in the next two and a half years? Do you think the measures it’s announced put you and other consumers on a path to prosperity?


1. EU withdrawal

2. Abolish income tax

3. No Benefits without payment into system first

v.surprised about the -ves, you mean no one wants to leave the EU to fester.

… and why benefits should not be capped? Hmm, explain?

Like a household budget, we need to spend within our means and not live on unsustainable debt. Two things I’d like to see happen that Govt could control:
1. Public employee contracts revised to ensure that they get the same redundancy terms as the private sector, that they preclude excessive sums paid when employments are terminated, that “gagging” clauses are outlawed in contracts, that incompetence and inefficiency is not rewarded, and that pensions are dealt with just as in the private sector.
2. Allow first time buyers to get indemnified motgages (as the Newbuy/first buy schemes) on all housing up to a set value – say £250k – and not only on new builds from specified builders. We should help those with the means of repaying a mortgage to get into property ownership without having to chase a spiralling deposit. This would still increase housing demand but without restricting where the houses are available.