Spring Budget 2014

[Webbo]

 

 

Any "recovery" is from a very very low point so i really think its too early to say how long lasting  , although it's not looking too bad and hopefully it will continue.

 But I've seen all these "recoveries" and booms before ( most spectacularly and long lasting under Brown's stewardship) Presumably you were a tory voter  back then and found reasons to question the reasons for his success  . Or were you praising his wonderful successes at the time ?

 

 

 

I didn't complain about the economy while it was doing well as there was nothing to complain about, we didn't know at the time that Gordon Brown was just pumping more and more borrowed money into the economy as things started to flag.

 

There was plenty of things I did dislike them for at the time though.

[Zingari]

I didn't complain about the economy while it was doing well as there was nothing to complain about, we didn't know at the time that Gordon Brown was just pumping more and more borrowed money into the economy as things started to flag.

 

There was plenty of things I did dislike them for at the time though.

Yes ,  "we didn't know at the time" is a key phrase  in that Webbo ,

 

What may be tomorrows things that "we didn't know at the time"? 

Thats the whole  point , none of us really  know  what the long term effects will be of these policies today or how the machinations are being oiled  . Even the fookin experts can't agree , so what chance have we got ? 

 

anyway that's it from me i'm off to enjoy my penny off a pint   

[Webbo]

Shame you feel that way Webbo. Certainly don't live to hate, that's stupid. I'll "debate" with anyone. Hard though on Foxestalk as I'm not interested in trying to convert Tories spouting their nonsense. Had 50 years of it and their arguments are just the same..................always the fault of Johnny Foreigner, EEC ruling us, Blacks, Gays, Unions. Shallow "dabating" then and just the same now!   

You deny it and prove my point at the same time.

Yes ,  "we didn't know at the time" is a key phrase  in that Webbo ,

 

What may be tomorrows things that "we didn't know at the time"? 

Thats the whole  point , none of us really  know  what the long term effects will be of these policies today or how the machinations are being oiled  . Even the fookin experts can't agree , so what chance have we got ? 

 

anyway that's it from me i'm off to enjoy my penny off a pint   

Enjoy your pint.

[Zingari]

You deny it and prove my point at the same time.

Enjoy your pint.

i never stop at one , i'll have to drink more now so the government don't lose out on income.  i'm patriotic like that .

[l444ry]

You deny it and prove my point at the same time.

 

As the late, great Perry Mason once said, "I rest my case Your Honour."  

[Strokes]

Shame you feel that way Webbo. Certainly don't live to hate, that's stupid. I'll "debate" with anyone. Hard though on Foxestalk as I'm not interested in trying to convert Tories spouting their nonsense. Had 50 years of it and their arguments are just the same..................always the fault of Johnny Foreigner, EEC ruling us, Blacks, Gays, Unions. Shallow "dabating" then and just the same now!

As the late great Thatcher said 'Of course it's the same old story. Truth usually is the same old story'.

[DennisNedry]

Jesus Christ, how were annuities ever allowed to be compulsory?

 

I'd never really heard of them until Osbourne scrapped them so I asked my dad what they were. They sound like an appalling scheme, so appalling in fact that I can't believe what my dad told me is true. It sounds like my grandad (by dying just a few years after retirement) made a net loss of almost £200'000 through his compulsory annuity. How could this ever be allowed to happen? Confused 

[Webbo]

Jesus Christ, how were annuities ever allowed to be compulsory?

 

I'd never really heard of them until Osbourne scrapped them so I asked my dad what they were. They sound like an appalling scheme, so appalling in fact that I can't believe what my dad told me is true. It sounds like my grandad (by dying just a few years after retirement) made a net loss of almost £200'000 through his compulsory annuity. How could this ever be allowed to happen? Confused 

You get tax relief and a govt contribution on the money you'd saved on the understanding that you wouldn't just blow the money at 65 and then rely on the state, Means tested pensioner benefits are being phased out now though so if you blow all your money you won't be on anymore than the standard pension anyway( I think, they'll be better informed people than me on here who know better).

 

Like everything else there'll be some better off and some worse off because of the change. 

[Alf Bentley]

Good write up Alf. Enjoyable read as always.

 

Osborne smarter than most Tories on here - I should hope so, that's why he's the chancellor, I'd imagine he is smarter than everyone on here!

 

Tacking Tax Avoidance - never going to happen whoever is in charge, the more I read on it the more I realise it's pretty much an impossible job, the existance now of "e wallets" has even brought tax avoidance to the lower and middle classes. If you know the laws and how it works, you can avoid, as soon as you close that another avenue will open, just something that's going to be the way of the World now.

 

Meh! - £100 a year Nothing?! Have you not read Jack Munroe in the Guardian? That can feed a family of five for nearly three months if you do,  seriously though giving low income people more of the money that have earnt is never a bad thing.

 

Pensioners - Nothing else needs to be said, it's their money, it's offensive to suggest the state tells you how to spend it. If people are smart enough to save up for retirement I have the confidence in them that will be smart enough not to blow it. We are backing people here who have made a sound well thought out investment over a long period of time, not the people in the food bank line at DNO.

 

Welfare spending needs sorting out whoever is in charge, I'm glad Labour have finally came round to that.

 

Don't agree on Public services creeking and see no evidence for it, school results are getting better according to latest reports, violent crime is down and as for the NHS, well just ask the Welsh what they think of Labour's handling of that in Wales if you think that's creeking under the Tories, they are having to send people to us for treatment.

 

All in all a good budget though and it appears to have been given a massive thumps up from the general public.

 

Cheers, Matt, and thanks for your considered response. Don't disagree with much you've said - especially not the budget being given a "massive thumps up" by the public. 

 

Fate will tell whether it was a good budget economically (even as a lefty, there was more to like in this budget than previous ones). I suspect that it will prove to be a good budget politically...

 

From personal experience, the NHS, Jobcentre Plus and local councils are creaking, and schools seem to be very stressed-out places. Some of that is down to systems (NHS reform, OFSTED/prescriptive curriculums in schools), but some is down to funding (chaos & over-work at the council where my missus works, job centres operating like malfunctioning sausage machines). Still better than things were 20 years ago, I think, but not sure that'll continue.

 

Re. pensions: Don't necessarily disagree with you, provided that decent advice is available to people who might not be clued up about investing/budgeting pension money. There's a generational issue here, I think. It might be the case now that those taking out pensions are making "sound, well thought-out investments" (while others can't afford to do so!). However, a lot of people my age and older (e.g. those just hitting retirement) just signed up to a pension without thinking it through particularly. Back then, lots more people got long-term jobs with big employers who automatically offered a pension as part of the package. If people like that opt, say, to invest some of their pension pot in property or shares, or to spend it (e.g. on struggling young family members), they need to have access to good advice or, without acting recklessly, they could mess up through a lack of understanding.

 

 

It was also the deepest and most dangerous recession in living memory, set against a back drop of the highest level of debt in proportion to gdp in non post war history, so the speed of recovery is less important than its sustainability. The government could have easily borrowed their way to quick unsustainable growth, or followed America's example of relentlessly pumping in QE but both would have been irresponsible given the debt.

We are the fastest growing economy in europe and are on track to be the biggest eeconomy in europe within a few years. Both the usa and Europe still have a big old mess to clean up, we've had the mop and bucket out for a couple of years already and are in a much better position to now outpace them consistently for the forseeable future.

Help to buy is nothing to do with it, the amount of money that has changed hands because of help to buy is insignificant overall. A more buoyant housing market if just a natural byproduct of a more vibrant economy. What's more important in the housing market is the government's new drive to build hundreds if thousands of new homes. That's exactly what the country needs imo. Increased supply = more reasonable prices. We've been suffering the consequences of the under supply of houses for too long. Full credit to the tories for doing something serious about it. They'll get panned if it causes house prices to fall (which it should) but it is the right thing to do. A very noble act.

 

Glad to see you recognising the scale of the financial crisis, Moose. Too often it just gets blamed on irresponsibility by Blair/Brown, when in fact it was the worst global financial crisis since the 1930s. Blair/Brown can be criticised for all sorts of things, including running a small deficit in a boom, but the state of the nation's finances is mainly due to the financial crash - on top of long-term structural problems that haven't been properly addressed by governments of any persuasion.

 

We may currently be the fastest growing economy in Europe, but only in the last 1-2 years (see the graph I posted). We'll have to see whether that continues or turns out to be a debt/housing bubble. To be fair, Osborne's pro-business measures in the budget should give it a better chance of being sustainable....we still have a very unbalanced economy, though (again, a long-term problem due to poor policy by governments red and blue). "Biggest economy in Europe"? Much of that prediction may relate to demographics (British population sky-rocketing, French stagnant, German population shrinking)...if British GDP does take the lead, will GDP per capita (i.e. living standards) also take the lead or will we just be a big, full country with lots of people on low pay?

 

Re. housing: If what you describe does occur, so that hundreds of thousands of homes come onto the market and house prices fall, I'll join you in applauding that success. This morning, the Mail headline was screaming about a 30% rise in house prices due to loads of pensioners using their freed-up annuities to enter the buy-to-let market, so they clearly don't see that happening - though they do talk a lot of bollocks, particularly about house prices, as it pleases their readership. For the government incentives to work, though, there'll need to be a lot of developers willing to invest because they see demand from buyers remaining high...will that be the case, I wonder?

 

Jesus Christ, how were annuities ever allowed to be compulsory?

 

I'd never really heard of them until Osbourne scrapped them so I asked my dad what they were. They sound like an appalling scheme, so appalling in fact that I can't believe what my dad told me is true. It sounds like my grandad (by dying just a few years after retirement) made a net loss of almost £200'000 through his compulsory annuity. How could this ever be allowed to happen? Confused 

 

I presume that pension fund managers work on an average expected lifespan. Your Granddad got unlucky and got less than the average. My Dad got lucky and got more than the average (he's been drawing a pension for 29 years!). The problem now, though, is that pension fund managers have to assume that, on average, people will live 15+ years after retirement, whereas in the past it was much less than that....hence either pensions have to pay out less, contributions have to be higher or we all have to work longer.

 

I'm not against the idea of people taking charge of their own pension funds, but good sources of advice are needed as there's a lot that could go wrong (investing in shares without sound knowledge/advice, investing in property that loses value or becomes unsellable, not taking account of the fact that you could live to 100 or need to enter a care home...). A bold gamble by Osborne...but gambling boldly is sometimes the right thing to do (and any impact will be medium-term, not short-term). 

[Rincewind]

I was never able to put a great amount into a pension scheme. When I started it I was told i needed to put a quarter of my earnings into it. I could not afford it being on a lower wage. If you can afford it yes use a pension scheme but not everyone can be a good earner. Somebody has to do the shit jobs with shit money.

Anyway Mine is an annuity now. I had froze the pension intending to carry on at a later date but forgot about it until I was reminded by the DWP so had to sort that out and take some. It will help more in a couple of years when I reach 65 as it will be on top of of my pension. That is if the cost of living does not rise too much.

[MooseBreath]

Read today that the average pension pot is only £30k anyway, not nearly enough to enter the buy to let market. I also wonder how many newly retired people are going to have a sudden interest in becoming landlords with all the work and risk that entails. I would expect most sensible pensioners will leave their money invested and take a gradual drawdown. The biggest concern for me is scams. Lots of elderly people in complete control of tens of thousands of pounds is like a wet dream for a scammer.

[Rincewind]

Good post Matt. I actually agree with a lot of you say.

[Rincewind]

Read today that the average pension pot is only £30k anyway, not nearly enough to enter the buy to let market. I also wonder how many newly retired people are going to have a sudden interest in becoming landlords with all the work and risk that entails. I would expect most sensible pensioners will leave their money invested and take a gradual drawdown. The biggest concern for me is scams. Lots of elderly people in complete control of tens of thousands of pounds is like a wet dream for a scammer.

I never had a big pot so won't be investing in housing or overseas properties. Just enough to keep me going until I cease up.

[DennisNedry]

I never had a big pot so won't be investing in housing or overseas properties. Just enough to keep me going until I cease up.

 

Do you mean seize up (as in get old and stop being able to move freely) or cease (die) ?

[Rincewind]

Do you mean seize up (as in get old and stop being able to move freely) or cease (die) ?

cease to exist.

[l444ry]

I'm very surprised that Osborne's pension changes aren't being seen for the scam it is. Agreed, the whole pension industry needs looking into but the budget changes are nothing short of wrapping  five pound notes around the next election's ballot papers. Thatcher was an expert in this via all the privatisation and council house sales. Short term bribes which worked for her but left the Nation worse off collectively. The same is being  repeated here. People will be cashing in on lump sum payments (and who would blame them) and creating a feel good factor but, once again, it'll be the next generation who'll be paying.

[breadandcheese]

I'm very surprised that Osborne's pension changes aren't being seen for the scam it is. Agreed, the whole pension industry needs looking into but the budget changes are nothing short of wrapping  five pound notes around the next election's ballot papers. Thatcher was an expert in this via all the privatisation and council house sales. Short term bribes which worked for her but left the Nation worse off collectively. The same is being  repeated here. People will be cashing in on lump sum payments (and who would blame them) and creating a feel good factor but, once again, it'll be the next generation who'll be paying.

If you're going to attack any policy, the help to buy scheme is rife for it. One of the worst policies in this county's history and one which I fear will be disastrous. The pension changes in the budget however were very good.

[l444ry]

If you're going to attack any policy, the help to buy scheme is rife for it. One of the worst policies in this county's history and one which I fear will be disastrous. The pension changes in the budget however were very good.

Is that because you might be a beneficiary of this change? Millions of people will suddenly be allowed to empty their pension pots, subsidised by the taxpayer, just before the General Election. Never mind though, once again the younger people will lose out again and society will pick up the bill.

[MooseBreath]

If you're going to attack any policy, the help to buy scheme is rife for it. One of the worst policies in this county's history and one which I fear will be disastrous. The pension changes in the budget however were very good.

Either of the help to buy schemes shouldn't be a problem in a properly functioning housing market where excess demand is met by increased supply. The problem in this country is lack of supply, something which this government is seriously addressing. Help to buy is also an ethical policy because requiring young people to find a 25% deposit essentially traps them in rented accommodation and at the mercy of landlords.

Let's not forget it wasn't long ago that labour presided over a time when anyone could walk in and get a 110% mortgage. Equity loans and 95% mortgages are still very risk averse schemes in comparison to the wild debt fuelled free for all of the latter labour years.

[Strokes]

Is that because you might be a beneficiary of this change? Millions of people will suddenly be allowed to empty their pension pots, subsidised by the taxpayer, just before the General Election. Never mind though, once again the younger people will lose out again and society will pick up the bill.

Its money they have saved, why shouldnt they? If they have proved prudent enough to put away thoughout their lives, why would we assume they wont be prudent now?

[MooseBreath]

Is that because you might be a beneficiary of this change? Millions of people will suddenly be allowed to empty their pension pots, subsidised by the taxpayer, just before the General Election. Never mind though, once again the younger people will lose out again and society will pick up the bill.

The state pension isn't means tested l3rry. You know what that means? It means that even if these pensioners blow their whole pot on cruises, they won't cost the tax payer any more or less than thet would have done otherwise.

I appreciate what you're saying though. It does look a bit like a gift. But describing it as a gift just highlights how absurd it was to force people into buying annuities. You can't gift people their own money. Subject to appropriate taxation they should be free to do with it as they wish.

[Strokes]

The state pension isn't means tested l3rry. You know what that means? It means that even if these pensioners blow their whole pot on cruises, they won't cost the tax payer any more or less than thet would have done otherwise.

I appreciate what you're saying though. It does look a bit like a gift. But describing it as a gift just highlights how absurd it was to force people into buying annuities. You can't gift people their own money. Subject to appropriate taxation they should be free to do with it as they wish.

It puts money in the hands of consumers which is great for the economy, fasten your seatbelts its boom time.

[l444ry]

Its money they have saved, why shouldnt they? If they have proved prudent enough to put away thoughout their lives, why would we assume they wont be prudent now?

It isn't that simplistic though is it?  Yes, they paid in but so did the taxpayer. The whole principle was that pensions were saved to buy an annuity and therefore protect your income and protect taxpayers from having to support you in later life. If this continues it is a licence for legal tax avoidance.

[Strokes]

It isn't that simplistic though is it? Yes, they paid in but so did the taxpayer. The whole principle was that pensions were saved to buy an annuity and therefore protect your income and protect taxpayers from having to support you in later life. If this continues it is a licence for legal tax avoidance.

The taxpayer didnt pay in, they havent paid income tax on it. Who benifits from annuity if the pension holder dies early into its life larry?

[DennisNedry]

Is that because you might be a beneficiary of this change? Millions of people will suddenly be allowed to empty their pension pots, subsidised by the taxpayer, just before the General Election. Never mind though, once again the younger people will lose out again and society will pick up the bill.

 

How is it subsidised by the taxpayer? Pensions are paid for by the employer and employee so I don't see how the taxpayer is losing out. 

And if people do empty their pension pots, it is all taxed surely?