Chancellor Philip Hammond has delivered his first Spring Budget speech today. This will be the last one to take place in the spring and spring budgets will become autumn ones - unless he changes his mind! Here's what he announced:
1. A 3-year NS&I bond with 2.2% interest rate
The bond will be available for 12 months from April 11, 2017. The government announced the NS&I Investment Guaranteed Growth Bond in last year's Autumn Statement. It will be open to everyone aged 16 and over with the flexibility to save between £100 and £3,000 and you will have to lock your money away for three years.
Expert comment: Andrew Hagger at MoneyComms says:
The chance to earn 2.2 per cent in today’s depressed savings market may look appealing at first glance but it’s not that generous in the scheme of things.
With the maximum balance set at just £3,000 and having to lock your cash away for three years it’s scant reward for savers who have had to endure rock bottom rates at the expense of borrowers for far too long.
You can already earn 2.0 per cent with Secure Trust, 1.90 per cent with Vanquis Bank and 1.87 per cent with Charter Savings Bank (all FSCS covered) in the current savings market so the much heralded 2.2 per cent rate from NS&I doesn’t deliver a great deal extra when you crunch the numbers.
For example compared with the 2.0 per cent best buy deal from Secure Trust the NS&I Bond will deliver a mere £6 extra per year in interest.
The bond will no doubt prove popular as savers are desperate to grasp any opportunity in the current low rate climate; particularly as the option of high interest current accounts are no longer really viable since the banks slashed the rates on offer.
The government knew it had to do something to appease savers but this is little more than a token gesture.
Find out more about the fixed-rate bond.
2. The Lifetime ISA will be available from 6 April this year
The Lifetime ISA will allow younger adults to save up to £4,000 each year and receive a bonus of up to £1,000 a year on these contributions. Funds can be withdrawn tax-free to put towards a first home or saved until a person turns 60.
3. New ways to protect consumers
The government will investigate ways to protect consumers from unnecessary costs and inefficiencies, including preventing consumers being charged unexpectedly when a subscription is renewed or a free trial ends.
Expert comment: Rose St Louis at Zurich says: "If you've ever signed up to a gym membership or subscription, you’d be forgiven for not reading through every single term and condition. There have been many cases where people have been over-charged – simply for ticking an extra box. Now, the Government has announced plans to address confusion that can arise out of the small print. In any case, use this opportunity to review what subscriptions you have previously signed up for: are you still using them and could they be cut down to save you more?"
4. £425 million investment in the NHS
Hospitals will get £325 million to implement Sustainability and Transformation Plans (STPs). STPs are the NHS’s plans for improving patient services in local regions and another £100 million will go to A&E departments to help them manage demand ahead of next winter, and help patients get to primary care faster. For example, it will provide more on-site GP facilities and more space in A&E units for assessment of patients when they arrive.
5. Marking International Women’s Day
A new £5 million fund will go to projects celebrating the 100th anniversary of the Representation of the People Act next year, and to educate young people about its significance. The Representation of the People Act (1918) was the first legislative step towards equal voting rights for men and women.
Working with businesses and the public sector, the government will also invest £5 million to increase the number of returnships, helping people back into employment after a career break.
And another £20 million will support organisations working to combat domestic violence and abuse or supporting victims. This increases the total funding for implementing the government’s Ending Violence Against Women and Girls Strategy to £100 million by the end of Parliament.
Expert comment: Karen Barrett at Unbiased.co.uk says: "This was a timely reminder of the issues many women face when they take a career break – not just a loss of immediate earnings, but of NI payments and private pension savings too. A career break can lead to a major shortfall in one’s pension savings, so anyone in this position should seriously consider taking financial advice to help mitigate the long-term effects.
6. Investment in technical education for 16 to 19 year olds
New T-levels for 16 to 19 year old technical students will be introduced from autumn 2019. Students will be able to choose from 15 different routes such as construction, digital or agriculture.
The government will also provide maintenance loans for students doing higher-level technical courses at National Colleges and Institutes of Technology – like those available to university students.
7. Money for education
- £320 million will go to new free schools. Free schools are funded by the government but set up by groups like parents, charities or community and faith groups. £216 million will be invested in school maintenance.
- Children aged 11 to 16 who get free school meals or whose parents are on the Maximum Working Tax Credit will get free transport to their closest selective school, if it is between two and 15 miles away from their home. Children aged 8 to 16 are already entitled to free transport to their closest suitable school, if they live more than three miles away.
8. Tax-Free Childcare to be available to working parents
Tax-Free Childcare will provide up to £2,000 a year in childcare support for each child under 12. Parents will be able to receive up to £4,000 for disabled children up to the age of 17.
Parents of younger children will be able to apply for the scheme first, with all eligible parents able to access the scheme by the end of the year. Working parents in England will also be able to apply for an additional 15 hours of free childcare for three and four year olds, bringing the total to 30 hours a week.
9. Improving transport
The government is funding improvements to transport infrastructure, including:
- £690 million for new local transport projects, to improve congestion on roads and public transport
- £220 million to improve congestion points on national roads, with £90 million going to the North and £23 million to the Midlands supporting local projects in the next 12 months like improvements on the A483 corridor in Cheshire and on the Leicester Outer Ring Road.
10. Improve communications
£16 million for a national 5G Innovation Network to trial new 5G technology. And £200 million for local projects to build fast and reliable full-fibre broadband networks.
Expert comment: Hannah Maundrell at Money.co.uk said; “It’s about time more was done to get British broadband sorted out. Anyone that lives in a rural area that’s off the regular broadband grid will be delighted by the news. Choosing life in the country shouldn’t come with a penalty, but because good internet is such an integral part of getting a good deal many households have been losing out and this will have cost them.
“It’s really important that people in rural areas are given a choice of broadband provider once access is opened up so they can switch and save like everyone else.”
11. Tax for self-employed
Higher paid self-employed workers are to pay an average of 60p a week more in National Insurance contributions as part of changes to raise an extra £145million by 2021-22.
12. Cigarettes and alcohol
There was no change to previously planned upratings of duties on alcohol and tobacco, but a new minimum excise duty will apply to cigarettes based on a packet price of £7.35.
13. £2 billion for adult social care over the next three years
This will help councils to provide social care to more people and help to ease pressure on the NHS.
14. The economic forecast
Growth in the UK economy picked up through 2016. Employment has reached a record high of 31.8 million people.
The Office for Budget Responsibility (OBR) now forecasts that the UK economy will grow by 2% in 2017. The OBR also forecast that the economy will grow at a slightly slower rate in 2018, before picking up to 2% in 2021.
In summary: Les Cameron at Prudential, said: “We should remember that 2017 has a further budget to come in the autumn. In the meantime, savers should make the most of tax reliefs and allowances available on their savings and investments.”
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