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Budget 2017: what’s your view?

Budget 2017

The Chancellor has given his first Spring Budget today and maybe, as expected, we’re left waiting for his Autumn Budget to see any big changes. So what do you make of the announcements?

Perhaps waiting around for major changes should’ve been expected today given the Chancellor’s decision to move away from a Spring Budget. This decision means that we’ll have yet another Budget at the end of the year.

In any case, here’s an overview of the key consumer issues that cropped up today.

Consumer and Markets Green Paper

We’re pleased that the Chancellor provided a bit more detail on the forthcoming Consumer and Markets Green Paper. In this the Government plans to tackle T&Cs, in order to make them clearer, simpler and shorter. It also plans to give more powers to enforcement agencies, such as the Competition and Markets Authority.

But we know many of you have been expecting to see tougher action on the issues that you face in critical markets, such as financial services, energy, telecoms and transport.

As per my Conversation last week, Which? revealed that there are millions of working people who are currently struggling to make ends meet.

Many of you shared your stories with us, such as Sharongibbs who explained the difficulty of relying on food banks:

‘My daughter and her family are struggling her partner works and they were on tax credits this has been changed to universal credit and they are getting less money now come the end of the month they are struggling they have had to use the food bank and rely on family to help.’

And for Tony Cave, it’s been a struggle to decide between heating or eating:

‘Just managing for me means spending only what I can afford and living within my means.This means that during the past winter I had to make the choice between eating and heating so my flat was only heated for 2 days at Christmas and not before or after.’

The Chancellor’s continued commitment to making essential markets work for consumers is welcome, but we now need to see comprehensive plans to tackle these markets in the Green Paper.

We also need the Government to urgently set out how consumers will be prioritised in the Brexit negotiations.

Social care

The Chancellor also announced a £2bn investment in social care services in England.

Alongside this, we look forward to seeing the Government’s paper reviewing ways of helping people meet the cost of elderly care. There are rumours that this could include tax-free access to pensions, the launch of a ‘Care Isa’ and a potential cap on the total cost of care.

Savings and pensions

After years of seismic changes to pensions, they barely got a mention in this year’s Budget.

The only major change was announced in last year’s Autumn Statement – a reduction to the amount you can put into a private or workplace pension after you’ve started drawing on your retirement savings.

On the savings front, the Chancellor confirmed something we’ve long suspected – the National Savings and Investments ‘Guaranteed Growth Bond’, which launches in April and will pay 2.2% a year for three years.

Your views

We will continue to track these developments in the coming year.

For now, what are your views on the Budget? Is it ‘see you in Autumn’ or is the Markets Green Paper going to be enough for you to feel that the Government is working to address where things are not working in essential markets?

Comments
Profile photo of Ian
Member

There’s a hole in my budget, dear Treesa, dear Treesa,
There’s a hole in my budget, dear sweetshoes, my dear.

Well fix it, dear Philip, dear Philip, dear Philip,
Well fix it, dear Philip, dear spreadsheet my dear.

But how shall I fix it, dear Treesie, dear Treesie,
But how shall I fix it, dear Treesie my dear?

By increased production, dear Philip, dear Philip,
And building up exports, dear Hammond, my dear.

That means working harder, dear Tressie, dear Troosie,
And the workers must have some incentives my dear.

Then decrease taxation, dear chancy, dear figures,
And raise all their wages, dear Philpots, my dear.

But where is the money to come from, dear premier,
But where is the money to come from, dear Treepsie, my dear?

Why, out of your budget, dear Chancy, dear Philip.
Out of your budget, dear chanc’llor my dear.

There’s a hole in my budget, dear Treesa, dear Treesa,
There’s a hole in my budget, dear sweetshoes, my dear.

With apologies to the inimitable Flanders and Swann

Profile photo of wavechange
Member

The Consumer and Markets Green Paper is what interests me and no doubt others who want increased consumer protection.

Simon highlights the problem of people struggling with energy bills. I believe that Which? should stop urging people to switch energy supplier or tariff and focus on the underlying problem that energy suppliers can legally let their customers pay much higher prices than others if they fail to take action. Obviously the disadvantaged are the main victims but many others are caught out, for example if they have other problems such as family illness.

Profile photo of Simon Markall
Member

Hi @wavechange.

I’m actually quite excited by the Consumer and Markets Green Paper. It is a real opportunity to look at where markets are not working for consumers and see if we can iron out some of those practises that leave consumers feeling frustrated.

Where we probably differ though is on switching. You’re right that often it is left in the handa of the consumer to take action to engage in a market. The market should get to a stage where it makes it easier for consumera to engage, and actually undertake better engagement with consumers. Hopefully as data drives innovations in new services and more information is provided to consumers, then consumers engagement in this complex market and switching becomes easier.

I’d love it where the market could get to a place where just a few clicks of a button and you can switch – imagine a time where you can switch your energy company, in confidence that it will all go through ok, before your morning coffee?

The Which? campaign on standard variable tariffs is looking to address some of the issues where companies are leaving their consumers on tariffs without engaging them, and we’ll be doing more in this space in the future.

On vulnerable customers there maybe more targeted interventions that could be made to help vulnerable customers and we’ll have to see what the Green Paper says on that.

As the paper develops I’ll make sure I keep you all updated on its contents.

Profile photo of malcolm r
Member

I have suggested that we abandon fixed price fixed term tariffs that seem to be subsidised by those on standard variable tariffs. The SVTs can then be reduced in cost so the big disparities begin to disappear. We seem to not wish to consider such an obvious improvement; why is that?

However we all have to take action to run our lives properly; a nanny state will not be there (I hope) to do everything for those who are perfectly capable.

The emphasis on “struggling to pay energy bills” ignores the fact that energy is the least cost in most essential purchases. Food, housing, travel for many cost then much more. I don’t like populist bandwagons. Just address all the costs we have to “struggle” with.

Profile photo of wavechange
Member

Thanks Simon. Regarding unfair practices I think we need to nip them in the bud by taking prompt action or better still prevent them being introduced. It is good that Which? is raising awareness of the many problems that did not exist a generation ago.

One of the best ways to get customers to engage with the energy market might be to sell energy through supermarkets. I certainly did not like the suggestion that energy companies might be allowed to phone us with their deals.

However, I do suggest that Which? looks into the reasons why many are ‘disengaged’ and they would find that the problem is not just people who are too lazy to make the effort. Health and mental issues are becoming a greater problem as people live longer. By playing the switching game, those of us who are able to secure cheap deals are being subsidised by those who cannot, since the companies will maintain their profit margins. It is exploitation of many citizens – and it is legal.

Profile photo of malcolm r
Member

Would not a discussion on energy be better transferred to the “Update: reforming the energy market” Convo? Meantime……………

A comprehensive investigation has already been done, including why people don’t switch and what groups they belong to. No need for Which? to repeat this. One conclusion was that a large number of people who knew the advantages of switching and knew how to switch simply were not bothered enough to do it.

What we should do is concentrate on those who are unable to deal with finding their best supplier and tariff, and look at abolishing subsidised tariffs to make switching less advantageous.

In the meantime, publicising switching to help people save money is worthwhile. The suggestion “Which? should stop urging people to switch energy supplier or tariff” seems a very negative approach until other matters are sorted out as it will unfairly disadvantage those who would gain from switching. Even if tariffs become more equal switching should be facilitated – as Ofgem are doing – to gain a better deal or a preferred supplier as easily as possible. Rather than penalising people who are prepared to switch, we should be helping those who are not able, for whatever reason.

Profile photo of John Ward
Member

If you want to switch to a different savings account or a different mobile phone contract the high street provides plenty of opportunities and every day hundreds, if not thousands, of people are helped by a customer service assistant to move their money or their phone contract onto better terms or a more advantageous bundle. It is possible that many who do so would not have done it unless there was an accessible facility in their locality. Yet energy, which is a vital necessity, has no such point of service for people to visit, pay bills, query their accounts, find out about different tariffs, or switch suppliers. The logistics of doing it in a competitive industry like energy with around fifty companies would not be straightforward but I think the absence of such a convenient facility is certainly one of the inhibitors.

It’s odd that in the days when you had no choice of energy supplier, the high street had shops and showrooms for the gas and electricity boards. Now that there is ample choice we are left to fend for ourselves on the internet and wait several weeks for a changeover to take place.

I accept that switching tariffs within the existing supplier’s range is relatively easy but the suppliers don’t exactly go out of their way to promote their tariffs – nothing will happen unless the consumer takes the initiative. People don’t like to pick up the phone and deal with a gabbling service agent in a call-centre.

Profile photo of malcolm r
Member

The easy way is to go to the Which?Switch site. Minimal information, lots of offers, easy to understand. No need to make a visit to anywhere except your computer, smart phone or telephone. I don’t think it could be made much easier. I wish Which? would advertise this service on TV instead of the peculiar ads with strange people making strange faces on Yesterday, Drama and other channels.

Profile photo of John Ward
Member

I agree with you totally, Malcolm, and that is what I do myself, but, clearly, not everybody likes comparison websites however easy we tell them Which?Switch is. If the problem is a reluctance to engage we have to explore the reasons for that much more deeply and come up with appealing solutions. I must admit I have never seen any of Which? TV adverts but then, like many people, I hardly ever watch commercial television.

Profile photo of alfa
Member

I agree that Which? should make better use of odd ad appearances on TV and could use the time for scam warnings or switching advice.

People still come here totally surprised at getting a call from some PC support person wanting access to their computers when it was being reported here 5 years ago. By now, everybody ought to be aware of this scam but as they obviously are not, more warnings need to be put out there.

Profile photo of John Ward
Member

I hesitate to recommend this, but Which? has a huge e-mail address list and could send a warning e-mail to all its supporters [under whatever guise] suggesting that they forward it to as many of their contacts as possible.

The government should also come out from behind the curtains of its invisible consumer protection function and do a lot more to spread the word.

All sorts of personal misfortunes get featured on the national and regional news bulletins on all the mainstream channels but I have never seen one about someone suffering from the consequences of a tech-support phone scam; if a genuine case cannot be identified for obvious reasons then a story could no doubt still be put together for broadcasting to reinforce the message. Until the ground is made infertile for the scammers the offence will continue. Call blocking phones have been an important step in that direction – and it seems that the perpetrators are therefore becoming more desperate and more objectionable – but people are still being caught out day after day.

People need to be warned that whenever the phone rings they should be prepared for a scammer and terminate the call immediately. All these tales we read [written up after the event] of how people have so cleverly engaged with the scammers and wasted their time, or called their bluff, don’t help, in my opinion. There should be no dialogue; the caller should be cut off, full stop.

Member
Gottleib says:
9 March 2017

Budget goodies…..? Tying up my savings (OK, only £3,000 allowed) for 3 years in an NS&I savings account for a paltry £200 at the end is such a derisory offer to current savers. Is this the best the government can do for savers with shrinking savings? Brexit will still make this account a resulting devaluation. And, remember, Brexit has NOT actually happened yet……..

Profile photo of Simon Markall
Member

Thanks Gottleib.

The point you make about the uncertainty over Brexit is why Which? is looking to Government to start being clear how they are taking account of consumer concerns and views in preparations for Brexit and the negotiations.

We’ve done quite a bit in the area already and had a number of productive meetings with Ministers and others. There maybe more coming out in the future so watch this space as we continue to ensure consumers are a key part of the Government’s thinking around Brexit.

Profile photo of malcolm r
Member

You don’t have to tie up your savings. You could get a better return on stocks and shares if you want the extra risk of capital reduction. You could use peer to peer lending, with risk. You could use your capital to trade on ebay. No one owes you a living, to put it bluntly. When interest rates are generally low I would not expect hard-working taxpayers to fund interest that is significantly higher than the market.

Profile photo of VynorHill
Member

What none of us know, since it is a guarded secret, is how much the banks and building societies are making in trading, using our money. There is always the suspicion that low interest rates are and excuse for excess profits and, of course, the government is no different, in that they can also trade with our savings and benefit. I’m not sure where the hard working tax payers come into that equation. The recent, and possible future, savings schemes from the government offer market leading interest rates, but only for a very limited amount of capital, so no one can invest much with them. ‘Interest’ is an interesting concept, since our money is being borrowed and we are being paid for the fact that we can’t spend it. I don’t see this as greed on our part, or that we are claiming something for nothing because we are retired. We also pay tax. I have lost a good chunk of my income over the past years and I shall be loosing more this year, but I am happy that home owners are able to have mortgages at less than the fifteen percent interest that I paid for mine.
As I said in another conversation, our latest £500 raise in pre-tax income is welcome, but the chancellor should have directed that to those who need it most and given them more. He seems to have recognised the bad publicity around the NHS and his instant cash injection there is necessary but probably inadequate. The social care increase needs to be monitored too and spent on things that will complement the NHS. I don’t have enough information on the Self Employed tax hike to make a sensible comment. The chancellor says it is ironing out an anomaly and others say it’s unfair. He’s left motorists alone for now, and gone for smokers and drinkers.
There are those who are working seven days a week and bringing home an income that doesn’t cover the basics. Students leave higher education with huge debts. Young people see home ownership as something their parents had and they can not have. People hear constant alarm stories about all our public services and they seem to be slipping backwards instead of improving. Pot-holed roads, crowded trains with unhappy rail workers, and crumbling infrastructure add to a sense that we are struggling as a country and on top of all this Brexit adds a few more degrees of stress to the mix. The national debt is astronomic. The chancellor
has a huge task on his hands, but this budget really doesn’t address these issues and the others that worry the population. If Mrs May really believes that this government is a government for everyone she and her chancellor should set about proving it. With the state of politics as it is, they seem to be the only ones in a position to do so at present. Others may be snapping at their heels given time and discontent.

Profile photo of malcolm r
Member

If a government scheme pays interest over the norm that is likiely to be funded by hard working taxpayers. I assume little has changed for banks; if they can borrow enough money on the open markets at attractive rates and don’t need to pay higher interest rates to private deposits, then that is just commercial sense.

My view is that the country needs to earn more money to pay for all the things we need – NHS, social care, state pension, education for example. This needs to be “real” money, not borrowing yet more that will come home to roost on the next generation. A good way to get this is through tax from an increasingly productive business economy. i hope the government continues to support this strategy.

As for student debt, when they go to university they should be considering investing in their future and for many, the money they invest will be repaid in the pay from better jobs. If they go to university to follow a hobby course knowing it will not pay them in their job afterlife I do not see why my taxes should be used to support them. That is more of a luxury choice.

Member
Raymond Jordan says:
9 March 2017

This budget has done nothing to help pensioners

Profile photo of John Ward
Member

A lot of people consider that most pensioners are doing quite nicely with their triple-lock inflation-proof state pension guarantees and various hand-outs. Things could always be better, of course, but investment in public services and the national infrastructure has to take priority at the moment.

Profile photo of malcolm r
Member

John, I’m not sure I would regard someone on the basic state pension as “doing quite nicely” when someone on other benefits can get £23000 a year. Pensioners have little chance of increasing their income at their time of life . Those entitled to the full £8092 a year will not find it goes very far.

Profile photo of John Ward
Member

I was relaying popular opinion, Malcolm, which is often prejudiced and ignorant. I do not share it and I agree that there are some glaring inconsistencies in our treatment of different groups. Relative inequality can be more distressing than absolute deprivation.

The term “pensioners” covers a very wide range of circumstances from abject poverty to enormous wealth. So long as the state retirement pension has to be paid for from the taxes and National Insurance contributions of the working population it will never be enough. I sense a degree of resentment over the apparent relative affluence of the retired population and the fact that we are living too long, blocking hospital beds, occupying excess property, not releasing our homes onto the market to increase supply, and depriving younger generations of their inheritance. I have even heard the phrase “they have never had it so good” used with reference to pensioners. The ‘triple-lock’ itself is now unlikely to be extended past the present Parliament.

Member
Emma C says:
9 March 2017

Does anyone have any news about NIC3s, following the 2017 Budget? I qualify for “unemployed AND not receiving benefits” status that means NIC3s are payable, thus have to find £xx a week I don’t have in Nat Ins contribs to “protect” my laughable pension… I’ve not been working through ill health, and let’s not “go there” on my PIP Assessment application (anyone read The Guardian?) I shan’t expand further, just if any info is out there on this specific figure. Thx

Member
Beryl says:
9 March 2017

I would suspect the extra £2 billion allocated for social care offsets any positive changes to pensions.

I look forward to the Governments Green Paper and its new consumer proposals. This came as a welcome surprise during Philip Hammonds budget speech. It does at least demonstrate ministers are listening to the consumer issues put forward by Which? and it’s members, and in particular, the need to shorten and make clearer the legal terminology of the T&Cs on goods and services provision.

The losers seem to be the self employed and their NI contributions. I agree with Gottleib the 2.2% interest on £3000 savings is more of a damp squib in terms of investment return. I would guess it’s more a bit of a sweetener to help lighten that which lies ahead during forthcoming Brexit negotiations. I sincerely hope some of the money allocated to Local Councils will be put towards lessening the traffic pollution in our towns and cities. Remedies have been put forward and the technology is available to implement this.

The extra money allocated to Scotland, Wales and N. Ireland is a starting point to ensure the ‘State of the Union’ pre our exiting the EU, a crucial part of the Brexit consultations, although it would appear the SNP already have other plans in the pipeline to hold another Scottish referendum next year.

By and large, a composed and understated budget, but I would predict the next one in the Autumn will create a little more cause for concern with Brexit negotiations well and truly underway.

Profile photo of malcolm r
Member

A current budget headline on Which?’s website reads:
“Self-employed workers could see their take-home pay squeezed by hundreds of pounds a year as a result of changes to the National Insurance system announced in today’s Budget.”
Read more: http://www.which.co.uk/news/2017/03/budget-2017-tax-hike-for-the-self-employed/# – Which?

In fact, 60% of the self employed will pay less, the average increase will be 60p a week, and those who will pay more – bringing them better into line with employees and because they now get better parity in benefits – are going to include such people as partners in accountancy, consultancy, legal firms who will be on handsome pay anyway.

So why do Which? publish such a one-sided headline? Simply to gain publicity? They could have written “60% of the self employed to pay less NI” of course. I do wish they would take an unbiased and factual view of such things. I’ll buy The Sun if I want such stuff (no, I won’t actually).

Profile photo of duncan lucas
Member

In relation to this convo and the Budget. As you know I am not politically correct but I do support Women,s issues and have done for decades .One of the organisations I support has emailed me to tell me that Philip Hammond MP is going to “take action ” on a vital item of womens hygiene namely Tampons , I care not if people don’t like me mentioning things like that because I feel women have every right in this world as this monthly cycle is imposed on women so that they reproduce the human race . As such I feel this tax is extremely unfair and if men had periods they would probably have not imposed this tax . he confirmed that the government is still committed to ending it “when legally possible ” . I am sure all men will back this up , just imagine what its like for a woman every month !

Profile photo of John Ward
Member

The Tampon Tax is VAT. Until 2000 the rate was 17.5% but then the UK reduced the rate to 5% where it remains. This is the lowest rate possible under EU law. We are waiting for the EU Commission and Parliament to sanction a zero rate or exemption from VAT which will require the approval of all member states. There is no sign of this happening in the foreseeable future. In the meantime, the UK government decided in November 2015 to give the entire proceeds [£15m] of the VAT collected from the sale of sanitary products in the UK to the Tampon Tax Fund for donation to women’s charities.

Profile photo of John Ward
Member

Chancellor Hammond delivered his Budget.
The question is: Did he botch it?
Some say sole traders must face a tax hike,
Others object and point to facts like
10% extra’s unfair, so watch it!
In the end in he had to fudge it.

Profile photo of Ian
Member

A superb parody in poetry, John. The rhythm has captured the mass-chant perfectly.

Profile photo of John Ward
Member

That was an accident, Ian.

Profile photo of malcolm r
Member

Many self employed would have paid less NI, the well off would have paid more, those in the middle a little more – but for added benefits that the employed all have to fund. As a practical and fair measure, changing NI was the right thing to do. What went wrong seems to be what bedevils all politics – not talking things through beforehand. First, David Cameron should never have made such a populist commitment never to raise taxes in this parliament; they are the foundation of our public spending. Then Philip Hammond should have recognised the problem that would be thrown back at him when appearing to break that irresponsible commitment. Finally, he should have discussed it with Theresa May and gained her support, and others, before presenting the proposal.

It frustrates me that we have inept actions such as this going. . We should be running the country for the benefit of the people, not for the politicians. I include the Labour party in this – too concerned with themselves and not acting as a responsible opposition and of course SNP for trying to put themselves ahead of the rest of the UK at a time when all our energies should be focused on getting the best possible exit outcome in a united way. They can decide on their future when that is concluded.

Just my humble opinion.

Profile photo of John Ward
Member

I don’t think we’ve seen the last of the Class 4 NIC rate change. Although the process was certainly shambolic the Chancellor has effectively put down a marker.

Class 4 National Insurance applies to self-employed people with profits over £8,060. Contributions are 9% between £8060 and £43,000 and 2% above that. As we all know, profits are what’s left after all allowable expenses are deducted so the trading threshold before Class 4 applies could be significantly higher than £8,060. There is enough scope within the rules for a good accountant to legitimately produce an advantageous outcome. As soon as profits exceed £43,000 the average rate of NIC reduces sharply.

The higher [10%] rate announced in the Budget would have been introduced in April 2019. That would have been an increase of a little over 10% in the payments required, and a further one percentage point increase was slated for 2020 – a 10% rise giving a 20% increase in this charge over the space of two years. Notwithstanding the justification, I feel that the severity of the proposed increase was too great and should have been tempered. As is so often the case, a one percentage point increase in a rate is interpreted as negligible when it can be a significant increase in outgoings. The country had better brace itself for this as soon as interest rates move upwards again: a one percent increase in mortgage interest rates could be a 20% increase in the monthly payments. It is unlikely that this will be offset by a comparable rise in nett incomes.

I have been wondering ever since the EU Referendum whether the clear majority in favour of Remain in Scotland was because staying in the EU is the only thing that makes independence viable. I certainly agree that 2019 is far too early to expect people in Scotland to make a final decision, especially since there is no indication that an independent Scotland would be able to remain in membership of the EU or retain significant rights. The First Minister might have shot her only bolt now as I cannot see the UK Parliament overriding the decision if the Prime Minister refuses a Section 30 application for a referendum.

Profile photo of Smike
Member

After the Capital debacle of 2007/8, most Countries moved to repair their balance sheets by a mixture of cutting services and raising takes in roughly equal proportion.
This doctrinaire Government however, especially once freed of Liberal Democrat constrains, declared that this should all be done by reduction in Government spending, AKA cuts in Services.
Osborne tied Treasury hands specifically, by promising no increases in Income Tax, National Health insurance, or V.A.T. for the life of this parliament
Government debt is currently a little over Sixty Thousand Pounds, per household and still rising by nearly three thousand pounds each year. Staggering.
We have clearly already cut services to the bone and beyond, so it is abundantly clear that this policy is inappropriate, and significant increases to taxation are an essential addition to Government spending reductions.
As one of the few relatively sane persons in this financial asylum, Hammond tried to use the little wriggle room left to him to raise a bit of desperately needed revenue by a reasonably sensible measures, to those who ignore the more rabid Press hyperbole.

They should not be rolled back, and the sooner we start properly tackling our parlous finances, the less chance of ultimate catastrophe. On top of that to be visited on us by the mean spirited and financially illiterate Brexiteers.

I suspect that I will not easily be mistaken for a ray of sunshine, but we have to get real.

Profile photo of John Ward
Member

I tend to agree with you, Smike. There aren’t many self-employed traders that cannot make an extra pound a day out of their customers. Coincidentally, this evening I was sitting next to a businessman who provides services to self employed traders and small businesses and I asked him what feedback he had been getting from his clients over the Budget announcement to raise the Class 4 NIC’s and he said that about sixty percent recognised the need to bring the two tax regimes into greater equality and were not opposed to the rise. The other forty percent were against it but some were less opposed once they realised how little the cost would be to their own businesses. I am sure it will come about now the pitch has been rolled.