The advice people take about how to use their pension savings will influence the most important financial decisions they will ever make.
The advice people take about how to use their pension savings will influence the most important financial decisions they will ever make. Read more
The start of the new financial year today is when the rich get richer and the poor get poorer under this government.
Today marks the start of the “two-child policy” for new claimants of tax credits. That means that families with more than two children will get no extra support through tax credits – however hard they are finding it to make ends meet.
Among the worst hit will be around 300,000 families with four or more children. On average, they will be entitled to around £7,000 a year less, according to the Institute for Fiscal Studies.
In another element of the £5bn of benefit cuts that will hit low-income families hardest, the “first child” part of the child tax credit – worth £545 to some families – is being ended
But it is a very different story for wealthy families when it comes to tax changes being ushered in today.
In one of the government’s most blatantly unjust policies, chancellor Philip Hammond is pushing ahead with his predecessor’s plan for a £1bn giveaway to wealthy families with a big cut in inheritance tax.
From today, the current £325,000 inheritance tax threshold for an individual will gradually be lifted to £500,000. That will allow wealthy couples to pass on a £1m home to their children entirely free of inheritance tax by 2020.
These two tax changes are emblematic of Theresa May’s government and its “two nation” attitude to this country as it channels money away from those struggling to get by and towards the rich.
There can be no clearer evidence of the prime minister’s priorities at a time when claimants are suffering from rising inflation on the benefits frozen for four years by George Osborne.
The Resolution Foundation estimates that changes at the start of this new financial year will mean a net giveaway by the Treasury of £1bn but one that is “highly skewed across the income distribution”.
When it comes to business, there are yet more cuts in the rate of corporation tax – something that should be far lower on the government’s priority list.
Contrast that cut with what happens to some people receiving universal credit. The way it is tapered means that some people face an effective marginal tax rate of 63 per cent as they lose 63 of every £1 they earn above a certain threshold.
From Monday, some new claimants of employment and support allowance (ESA) will get around £30 a week less, only receiving £73.10 in a move that will see around 500,000 lose an average of £1,400 a year.
Despite fears it could add to the number of homeless, another change this week means that 18 to 21-year-olds will be denied housing benefit.
Among the raft of new austerity measures that do nothing to help the “just about managing” people Theresa May used to talk about are cuts in bereavement allowances.
Under the rule change coming in today, families with a terminally ill parent are set to lose thousands of pounds.
Previously, families were eligible for a £2,000 lump sum followed by a taxable benefit of about £112 a week until the youngest child leaves full-time education that could stretch over 20 years.
From now, the lump sum will be £3,500, but the payments will be cut to around £80 a week – with a much shorter time limit of 18 months.
On top of all this, we learn this week that one in three of the 3,632 Sure Start centres set up by Labour have closed since 2010.
The start of a new financial year should be a time of optimism when working people hope they will be better off and the vulnerable and the sick hope they will be protected and cared for.
This government’s has confirmed its true colours today with more tax cuts for the rich and more austerity for low-income families.
It’s time for a change that reflects the priorities of the whole country, not just a wealthy few, which is why we need a Labour government.
Tory tax changes and benefits freeze means struggling families forced to fund new handout to the rich
The start of the new financial year today is when the rich get richer and the poor get poorer under this government. Today marks the start of the “two-child policy”...
THE gig economy, which sees temporary or freelance jobs replacing people taken on as full-time employees, has contributed to a rise in self-employment of 14 per cent over the last five years – and 25 per cent over the last decade.
THE gig economy, which sees temporary or freelance jobs replacing people taken on as full-time employees, has contributed to a rise in self-employment of 14 per cent over the last... Read more
This plan to help the wealthiest will entrench the north-south divide. Philip Hammond should dump it and channel the money to early years childcare
This plan to help the wealthiest will entrench the north-south divide. Philip Hammond should dump it and channel the money to early years childcare Read more
The gig economy and speedy growth of firms like Uber and Deliveroo have contributed to a rise in self-employment of 14 per cent over the last five years and 25 per cent over the last ten years.
But the percentage of self-employed workers saving into private pension schemes has dropped from 23 per cent in 2009/10 to 16 per cent in 2014/15 as many struggle with the insecurity and low wages that often accompany work as an independent operator.
Fewer self-employed people can buy their own homes and getting a mortgage can be much harder. Some enjoy the freedom of working independently, but it is a precarious lifestyle for many others.
A group of entrepreneurs I met in Leeds highlighted the numerous challenges they face, including poor access to funding for small businesses and start-ups and a complex tax regime.
Yet, it is clear the growth in self-employment looks set to continue and could soon overtake public sector employment when it comes to the size of its share of the UK labour market.
In 2011, there were 1.5 million more people working in public sector than those who classed themselves as self-employed.
But the Office of Budget Responsibility estimates that by 2021 the two sectors will be of equal size, due to a shrinking total of public sector jobs and the surge in self-employment which is growing far quicker than private sector employment.
These seismic changes to the nature of our economy and employment market come with a series of important challenges for the government, employers and those who work for themselves.
We need to examine ways we can make sure the self-employed can better save for the future and their retirement, buy their own homes, and benefit from basic workers’ rights.
That’s why I am publishing a pamphlet today with the Social Market Foundation that seeks to address some of these challenges and present potential solutions.
We need to develop policies and create an infrastructure around self-employment that safeguards economic inclusiveness and encourages entrepreneurship, while recognising there is no one size fits all solution.
Perhaps the single biggest challenge is how to ensure workers’ protection in the form of social security and issues like how they cope with sickness and or the need for time off to have a baby.
One option would be to level the playing field between the employed and the self-employed when it comes to national insurance contributions (NIC) and strengthen the argument for the self-employed to receive other state benefits.
Yet, for many, a mandatory increase in NIC would create significant financial difficulties. And, a voluntary system whereby a self-employed person could make contributions that covered, for example, sick pay and maternity pay might see people only contribute if they believed they would directly benefit.
But the government must not shy away from finding a solution just because it is a tricky area.
I would like to see the government to look at whether a voluntary NIC contribution system could be extended to cover sick pay and parental leave for the self-employed.
Ministers should also re-order their priorities when it comes to business and boosting our economy. The government’s plan to cut corporation tax does nothing for the self-employed.
Instead of cutting corporation tax further, the government should prioritise help for small businesses and the self-employed with targeted reductions in national insurance for small businesses employing the first worker or business rate cuts for new firms.
On pensions, I think the services of the workplace pension scheme NEST should also be targeted at the self-employed so that they have the option and ease of contributing to a pension.
And, we should be seeking to ensure more self-employed people can get affordable mortgages. The Council for Mortgage Lenders should look at how self-employed people can be helped without a return to the self-certification mortgages that created havoc during the financial crisis.
Another important step would be to reform universal credit so it better reflects actual earnings for a self-employed person, rather than an assumption that they are consistently earning the “minimum income floor”.
The government should seek to embed entrepreneurship in our education system and encourage more training opportunities.
There should be mentoring schemes at universities to help those thinking of working for themselves. Job centre advisers should also be trained to help people who are interested in self-employed work.
Yet, what is clear is that policy in Westminster cannot solve all the challenges alone. We must ensure the self-employed are supported locally – from shared space buildings to help them cut costs to support from businesses, the third sector, trade unions and co-ops.
Trade unions and co-ops can help with advising the self-employed, lobbying for them nationally and providing support and advice, whether on pensions and mortgages or on assisting self-employed people who are forced to chase late payers.
The problem of late payers was highlighted by self-employed people I met at the Camden Collective for start-ups in north London. They said the issue was a major difficulty because they did not feel in a strong enough position to press clients for the money.
One solution could be an escrow system that would see an agreed sum into an account before the work starts. The cash is then released to the independent contractor when the work is finished.
These are just a few of the ideas we should be looking at to bolster the prospects of self-employed and improve the rights of those working in the gig economy.
We must have a balanced, growing economy that offers the same fairness and opportunities to the self-employed as workers in other sectors.
Tories want to cut taxes for big business but growth of the gig economy demands we hep the self-employed now
The gig economy and speedy growth of firms like Uber and Deliveroo have contributed to a rise in self-employment of 14 per cent over the last five years and 25 per...
The major banks make over £1bn per year through the charges they impose on unauthorised overdrafts. The majority of that money comes from financially vulnerable customers.
The debt charity Stepchange estimates there are 1.7 million people in the UK trapped in an overdraft cycle that forces them to consistently use their overdrafts to meet both essential and emergency costs.
And, new research today from Which? shows that customers with unauthorised overdrafts could be repaying up to 180% of the value of the loan. Their research found that customers needing as little as £100 could be charged up to £156 more by some major high street banks than payday lenders are allowed to charge.
These are people who are already in difficulty, trying to manage debt day to day, and for whom the banks should have a responsibility to help manage their finances, and to help them out of the cycle of debt - rather worsening their problems with extortionate charges.
We urgently need Government action to deal with these rip-off charges and that’s why I am campaigning to cap these unfair and unjustified overdraft charges.
Huge progress was made on the charges imposed on those who borrowed money through payday lenders with the introduction of a cap in 2015. So, why are the banks still being allowed to get away with their excessive charges?
The Competitions and Markets Authority (CMA) recognised the issue when it conducted its review into the Retail Banking Market - but it failed to deliver any real solution in its report published last summer. It fell short of proposing an independently set maximum cap on charges – instead allowing banks to set a cap themselves, at a level of their choosing.
This cap as proposed by the CMA looks like it will be “business as usual” for the banks, and will likely do nothing to stop the deepening of a person’s debt crisis with punitive and disproportionate charges.
We need a proper effective cap, set by and enforced by the Financial Conduct Authority (FCA), for it to have any impact on helping — rather than worsening — the situation for those people most in need.
The CMA passed the buck firmly to the FCA which has, thankfully, agreed to recognise the issue as part of their review into High-Cost Short-Term Credit.
However, in the meantime, financially vulnerable customers are still being pushed further into debt by these unwarranted borrowing charges.
That’s why, in a Westminster Hall debate today, I am calling on the Government to take action now.
I want the Government to set a maximum cap on overdraft charges to stop this exploitation by the banks and to protect the most vulnerable customers.
The major banks make over £1bn per year through the charges they impose on unauthorised overdrafts. The majority of that money comes from financially vulnerable customers. The debt charity Stepchange...
The death of Jo Cox seven months ago left an unfillable hole in the hearts and lives of her family, friends and colleagues.
But we promised to keep the legacy of her inspirational work alive and now we are launching a new campaign to take on one the causes closest to Jo’s heart – the silent epidemic of loneliness.
The death of Jo Cox seven months ago left an unfillable hole in the hearts and lives of her family, friends and colleagues. But we promised to keep the legacy... Read more
AFTER the death of my friend and colleague Jo Cox, it fell upon the rest of us to carry on her inspirational work.
One of the causes that Jo felt most passionate about was her campaign to tackle the crushing loneliness felt by so many people.
AFTER the death of my friend and colleague Jo Cox, it fell upon the rest of us to carry on her inspirational work. One of the causes that Jo... Read more
By introducing comprehensive schools, she fulfilled her dream of improving working-class children’s lives.
By introducing comprehensive schools, she fulfilled her dream of improving working-class children’s lives. Read more
Philip Hammond has abandoned his boss’s now famous “jams” (just about managing) families in the worst of all possible worlds.
With a small softening of his predecessor’s cuts of £3.4bn to universal credit (UC), the chancellor has conceded the government should help those who are just managing.
But the changes to the UC taper rate – which will be cut by just 2p in the pound from 65 per cent to 63 per cent – are a tokenistic gesture that will do precious little to incentivise work. The cuts to UC still amount to more than £2.5bn.
And, the chancellor has staunchly refused to do anything to ease the misery of the thousands of people who have a health condition or disability which limits their ability and stand to lose almost £30 a week from their employment and support allowance (ESA).
People knew that from the chancellor’s own lips that borrowing was going to be far higher, growth much slower and prices would rise.
But a clear picture has now also emerged of what the Autumn Statement will mean for household budgets as others have examined the numbers.
It’s not just my view that the chancellor did precious little to help my constituents in Leeds, and those in the rest of the country, who are finding it harder than ever to pay the bills.
The Resolution Foundation’s conclusion is that the lowest paid households will be the hardest hit over the next five years.
According to its analysis, a couple with two children where the main breadwinner is working full-time on the national living wage will be £1,780 worse off overall – and that’s despite other measures that increase their income by £190.
Average earnings are now predicted to be £830 a year lower than forecast in 2020 with this decade shaping up to be one of the weakest for wage growth at just 1.6 per cent between 2010 and 2020.
There was a similar verdict from the independent Institute for Fiscal Studies (IFS). It warned that real wage levels in 2021 are still expected to be below the pre-recession levels of 2008.
IFS director Paul Johnson described the prospect of more than a decade without any real earnings growth as “dreadful” and said Britain had not seen “a period remotely like it in the last 70 years”.
Yet, the chancellor and prime minister seem oblivious to how they have betrayed the “jams” whom Theresa May stood outside Downing Street and promised she would help.
It’s as if the two of them are standing on the shore and refusing to throw a lifebelt to people they can see are drowning.
Despite the pain their financial measures are inflicting, and their failure to help those on low wages and those receiving in-work benefits, the chancellor is forging ahead with help for the better off.
Inexplicably, George Osborne’s plan to raise the inheritance tax threshold for a couple to £1m is still on that table – a £1bn handout to the wealthy that would be much better spent expanding childcare which would help many of the families the government says it wants to support.
And, the chancellor went ahead with raising the higher rate 40 per cent income tax threshold to £50,000. Given the bleak outlook for the economy, this should not have been a government priority.
When it came to pensions, rather than simplifying the system with a flat rate of 33 per cent tax relief on contributions as I have proposed, the chancellor left millions fearful the triple lock on the state pension could be axed.
With the national debt set to soar to nearly £2 trillion, extra borrowing of £122bn and a £58.7bn “Brexit hit” on the cards, the Chancellor has left the economy in a perilous state.
But his Autumn Statement is equally bleak for ordinary households and the jams the Government promised it would look after.
I fear many of those families will find that, instead of just managing, they will be struggling to survive.
It’s time Theresa May and the chancellor listened to their SOS and did far more to help them.
Philip Hammond has abandoned his boss’s now famous “jams” (just about managing) families in the worst of all possible worlds. With a small softening of his predecessor’s cuts of £3.4bn...