This week’s Autumn Statement and Spending Review saw a u-turn on tax credits, a small rise in the state pension, and the biggest increase in NHS funding in its history.
Here’s a summary of what Chancellor George Osborne announced, and how the media and other organisations reacted.
The NHS is a critical part of this country, and High50 readers are likely to have relied on it to help them safely deliver their own children, as well as looking after their elderly parents. Writing in The Telegraph, Mary Riddell says that Osborne is ‘flirting with disaster’ because of the focus on the ‘seven-day NHS’ and the subsequent threat to social care provision:
“With junior doctors poised to strike, the government faces a crisis both of personnel and of finances. On the most hopeful reading of the future, the NHS will need an increase of £8 billion a year minimum every year by 2020. The Chancellor has topped that estimate by offering £10 billion by 2020. That however will be offset with the exceedingly hopeful target of £22 billion of efficiency savings.
“The greatest threat to the NHS, however, lies in the demolition of social care. In the absence of a decent provision, the demographic challenge of an ageing population will bring the NHS to its knees as people who could be cared for in their own homes end up in hospital beds,” she writes.
Mental health spending
Osborne also announced an increase in funding for mental health treatments, saying: “In the last Parliament we made a start by laying the foundations for equality of treatment, with the first ever waiting time standards for mental health.
“Today, we build on that with £600m additional funding – meaning that by 2020 significantly more people will have access to talking therapies, perinatal mental health services, and crisis care.”
The Centre for Mental Health welcomed the move, as you’d expect, but is cautious. Andy Bell, chair of the Mental Health Policy Group, says:
“We are particularly concerned about potential cuts to public health budgets in this parliament and continued pressures on social care and housing, which all have the potential to have a major impact on people with mental health problems and their families.
“We are simply not investing enough in preventing mental health problems in the first place, leaving people to become more unwell and in need of more long-term and costly treatment.”
Pensions: a small increase
The state pension will go up £3.35 a week to £119.30 from April 2016 for those drawing their money now, and the new flat-rate pension is £155 a month.
Writing in City AM, Saga’s Gareth Shaw called for a clampdown on fees charged by providers:
“The government must now act on unfair pension exit fees that hit almost 700,000 over-55s when they want to access their pension with their new freedoms. The freeze on the Isa allowance overlooks the way that today’s retirees are funding their lifestyle.
“And while the final clarity on the £155-a-week single-tier state pension is welcome, further work is needed to explain what it means to consumers.
“In addition, charging fees of up to 40 per cent on a pension taken out three decades ago is wildly out of line with the freedom over-50s have been given with their retirement savings. And if their pension company won’t give them access to their money in the fullest, they shouldn’t be stung by fees to switch.”
However, the flat-rate payment has “angered millions who will fail to get the full amount, while it is so complex that nobody knows for sure if they will be better off,” according to Harvey Jones in the Express.
Tax credits and George Osborne’s u-turn
Tax credits are benefit payments for those on low incomes, and this summer, Chancellor George Osborne announced he would cut them by more than £4bn. During this week’s announcements however, he reversed his decision, telling Nick Robinson on the Today programme on Thursday:
“We are moving in the right direction and we are making billions of pounds of savings in the welfare budget. But people raised concerns with me that the speed of getting there was too quick, that we weren’t doing enough to help families in the transition.
“And because the public finances had improved a little I could use some of that improvement to smooth the transition to that lower welfare economy. So we are heading in the same direction, we are just taking an easier path to it.”
Writing in The Guardian, Patrick Wintour was fairly withering: “Osborne has decided to execute a graceful U-turn. But it just underlines how much the original decision in the summer budget to cut tax credits by so much was not just an act of hubris but a precision-guided Exocet aimed at in-work strivers, the social group the second-term Tory party is supposed to cherish the most.
“As a result, Osborne will now have to despatch an employment minister, probably a junior one, to go to the Commons to seek MPs’ permission to break his self-imposed welfare cap for three successive years.”
George and Gordon
Osborne’s ‘increasing’ similarity to Gordon Brown is noted by Alex Brummer on MailOnline, with an image of the two morphing into each other.
“Osborne’s statement was studded with re-announcements of initiatives which had been trumpeted before, ranging from the offer of tuition fee loans to post-graduate students, to the much-delayed improvements to the trans-Pennine rail links between Manchester and Leeds.
And, as with Brown, when such pledges are examined more closely they are not always what they seem.
In order to shelve the threatened cuts to working tax credits (without breaching his promise not to raise corporation tax, VAT or income tax), Osborne has also rediscovered Mr Brown’s speciality – stealth taxes,” he writes.
Meanwhile, The Telegraph’s group business editor James Quinn tweeted: “Tax credits u-turn embarrassing for Osborne in short term but in long term will help ambitions to replace Cameron.”
Property: an increase in stamp duty
If you’re lucky enough to have the cash to buy a second home, there will be a higher tax burden, with a 3 per cent surcharge on each stamp duty band.
So if you are buying a house as a buy-to-let worth £125,000 to £250,000 you’ll pay 5 per cent, versus 2 per cent if it’s not a second home.
This is a blow to those who plan to invest in property as an alternative to a pension and has been widely criticised by landlords’ bodies, as you’d expect.
“If it’s the Chancellor’s intention to completely eradicate buy to let in the UK then it’s a mystery to us why he doesn’t just come out and say so?” says Richard Lambert, chief executive of the National Landlords Association in the Independent.