Our personal finance campaigner Myron Jobson examines what was and what wasn't announced.
£5 billion to address cladding crisis
Myron Jobson, Personal Finance Campaigner, interactive investor, says: “Leaseholders who purchased their homes in flat blocks affected by dangerous cladding can breathe a little easier following the announcement of a levy on property developers with profits over £25million at a rate of 4% to create a £5billion pot to address the issue.
“Many faced being saddled with huge cost for remedial works or fire patrols to address a problem that was not of their making. Thousands of people trying to sell flats in clad blocks have discovered that there is little to no interest in their property because of the crisis – and even if a buyer is found, some mortgage providers have view flats with claddings unfavourably.
“It is only fair that those responsible for the crisis, which came to prominence with the tragedy at Grenfell Tower in 2017, should be made to pay their fair share. Some may argue that more money is needed to fully address the issue.”
Employment - unemployment to peak at 5.2% - which means "over two million fewer people out of work than previously feared”
Myron Jobson says: “On face value, the unemployment projection suggests the job market is recovering well from the Covid malaise, with employment and wages on the up. However, this doesn’t tell full story. The concern is around quality. What percentage of young people in employment are on temporary contracts for example?
“In addition, a mismatch between skills supply and demand is underpinning employers’ inability to fill their vacancies – most notable HGV drivers. Vacancies has reached a record high at over 1.1 million, indicating that many enterprises are finding it difficult to attract talent to help them return to business as usual amid the pandemic.”
Cut to the universal credit taper rate
Myron Jobson says: “It is good news for the nation’s lowest-paid workers which could soften the blow of the loss of the £20 uplift to Universal Credit for some. It essentially goes some way of righting a wrong.
“The worry is whether this will be enough to keep claimants financially afloat amid the uptick in the cost of living, with inflation forecast to peak at 4% before year end, as well as rising energy bills. However, a pledge to cut the taper rate from 63% to 55% by December could help support people through the brunt of the financial pinch this winter.”
Myron Jobson says: “The Budget attempts to satisfy the ‘Grow Back Better’ campaign for a green economic recovery which continues to gain momentum, with the announcement of numerous green projects ahead of COP26 next week.
“However, for green conscious consumers who want to help fund the nation’s prominent green projects as part of the government's drive to hit net-zero carbon emissions by 2050, the 0.65% rate of interest on the recently launched Green Savings Bond offers little incentive to do so. It pales in comparison to top paying fixed rate savings accounts.”
What wasn’t announced
Myron Jobson says: “What wasn’t announce in the Budget is just as telling as what was. Sunak’s Budget speech was peppered with the word ‘sacrifice, ’suggesting that the worst might be yet to come – although the chancellor said the government aims to reduce taxes.
“The only mention on Capital Gains Tax was in the Budget document and is not what many expected. From 27 October 2021, the deadline for residents to report and pay CGT after selling UK residential property will increase from 30 days after the completion date to 60 days. For non-UK residents disposing of property in the UK, this deadline will also increase from 30 days to 60 days.
“This will ensure that taxpayers have sufficient time to report and pay CGT, as recommended by the Office of Tax Simplification.
“But proposals to increase CGT to align with income tax, made by Office of Tax Simplification last year, remains unrealised for now. However, the government has done little to dispel the impression that nothing is of off the table to balance the books. That means inheritance tax, income tax and even the pension tax relief could be in the firing line among others.
“It is no secret that the government needs to raise a significant amount of money to foot the World War Two sized bill to foot the cost of its coronavirus economic support packages. The reality is we will have to pay for it some way or another - either by taxes going up or by spending being cut or, most likely, a combination of both.
“Another notable omission that was heavily touted to feature in the Budget is the reduction of the earnings threshold on student loan repayments, which would have been a kick in the teeth to prospective university students, many of whom are still reeling from the effects of the pandemic on education.”
interactive investor pre-Budget poll
- When asked measure Rishi Sunak should announce in the Budget, a poll* taken before the Budget among 2,751 interactive investor website visitors, found that there was an even split between respondents.
- While 16% of investors want taxes leaving alone for the rest of this parliament, and 15% want taxes cut to give the economy a boost, some 14% want to see taxes rise to pay for the pandemic.
- A further 14% want to see extra funding for the long-suffering care sector. And with an impending COP26, and a climate emergency, some 12% want to see more green initiatives. And on of the wish list for 8.5% of respondents was the preservation of the lifetime allowance on pension contributions.
Notes to editors
*Poll conducted between Friday 22 October and Monday 25 October amongst 2,751 interactive investor website visitors
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