How the Budget statement affects you
Chancellor George Osborne has delivered arguably the toughest speech of his political career, his Autumn Statement.
While many of the major announcements around infrastructure and youth employment were already leaked in advance of the speech, there were some new measures unveiled.
The Chancellor said that the independent Office for Budget Responsibility has not forecast a recession. However, it did downgrade its economic growth forecasts for the fourth time during this coalition government.
In what resembled something of a mini-Budget, rather than a simple statement, there were measures announced that affect public sector workers, pensioners, motorists and commuters who use public transport.
Here’s a round-up of the main measures and who they affect:
Public sector workers
One of the most controversial announcements was that public sector pay will only rise by an average of 1% for two years after the current pay freeze ends in 2012.
There will also be a review into the possibility of variable pay rates for public sector jobs, depending on where those jobs are situated. In the Chancellor’s words, he wants to see whether “public sector pay can be made more responsive to local labour markets”.
And, tucked away on page 95 of the Office for Budget Responsibility’s Economic Forecast, is the news that 710,000 public sector jobs will be lost by 2017, compared to their March forecast of 400,000 jobs to go between 2011 and 2016.
The child element of the Child Tax Credit will be uprated by the Consumer Prices Index measure of inflation, meaning it will rise by £135 a year from April 2012.
The number of two-year-olds receiving 15 hours’ free nursery care is to be doubled to cover an extra 130,000 children. This is to be focused on children from disadvantaged backgrounds.
People receiving benefits and tax credits
Most working age and disability benefits will be uprated in line with the Consumer Prices Index measure of inflation (currently 5.2%), from April 2012.
The disability elements of tax credits will also be uprated, but the couple and single parent elements of the Working Tax Credits will not be.
The 3p fuel duty increase planned for January has been scrapped. There will be a 3p rise in August instead. In a small fillip for people living in the Humber, the Humber Bridge toll will be halved.
Pensioners and future pensioners
The State Pension age increase from 66 to 67 is to be brought forward to 2026, which the Chancellor says will save £59 billion.
The State Pension is still protected by the so-called triple lock. This means that the basic State Pension will rise by £5.30 to £107.45 a week from April 2012. The full couple rate for people whose entitlement is based on their spouse’s or civil partner’s pension will rise by £8.50 to £171.85 a week.
The Pension Credit is to rise to £142.70 a week for single pensioners and £217.90 a week for couples. The threshold for Savings Credit will be raised to £111.10 for single pensioners and £177.20 for couples. Both these measures come into effect in April 2012.
The Government has also signed a deal with two groups of UK pension funds to provide £20 billion of investment for the infrastructure projects they have earmarked.
People who want to buy a home
There was confirmation of the already announced mortgage indemnities to help 100,000 people struggling to buy homes (which we covered in this article).
And the ‘right to buy’, a flagship policy of the last Tory government, is to be ‘reinvigorated’ with discounts of 50% offered to current tenants of social housing. The Government claims that it will provide an additional affordable home for every one that is bought from the money raised by the sell-off.
However, the stamp duty exemption for first-time buyers will be scrapped on 24 March 2012 as it has been “ineffective”.
As widely trailed, the Government is to introduce the Youth Contract, £940 million-worth of support to help young people into employment. This will offer 160,000 wage incentives of £2,275 for private sector companies to employ young people.
Other key developments include a £50 million fund for a programme to help disadvantaged 16-17-year-olds and additional Jobcentre support for 18-24-year-olds.
And, finally, some good news for water customers in the South West of England
The Government is to subsidise South West Water customers so that their bills are cut by £50 a year.