27th May 2015
The Government has pledged that there will be no increases income tax, value added tax or national insurance for the next five years.
At the state opening of Parliament today, the Queen said: “Legislation will be brought forward to help achieve full employment and provide more people with the security of a job. New duties will require my ministers to report annually on job creation and apprenticeships. Measures will also be introduced to reduce regulation on small businesses so they can create jobs.
“Legislation will be brought forward to ensure people working 30 hours a week on the National Minimum Wage do not pay income tax, and to ensure there are no rises in Income Tax rates, Value Added Tax or National Insurance for the next 5 years.
“Measures will be brought forward to help working people by greatly increasing the provision of free childcare.”
Calum Bennie, savings expert at Scottish Friendly, says: “To a large degree, the focus for the new Government is to help people build up their level of personal wealth. By placing a five-year freeze on income tax, VAT and National Insurance, the Government hopes this will naturally alleviate the financial burden of many in the UK. The Government’s support for small businesses could also help stimulate growth and job creation, with the aim of improving the financial lot for many.
“While the Bank of England is keen for inflation to rise to its target level of 2%, the danger is that if the economy grows too quickly, inflation may rise too much, resulting in people’s finances being stretched.”
The Government has said it will maintain the triple lock guarantee, which ensures the state pension goes up by whichever is higher – inflation, wages or 2.5%
Nick Ayton, Managing Director at GenLife commented:“The triple lock protects pensioners from economic uncertainty and has helped those on a state pension to receive regular increases to the basic state pension. But is it enough?
“Continuing the triple lock and raising the current state pension is invaluable to those already on a pension, but it is just blotting paper on the larger issue of how to fund pensions in the long-term given the huge pensions shortfall.
“Disappointingly, there was no mention in the Queen’s Speech of further legislation to help support and encourage young people to put money aside for retirement.
“Success for this Government should be measured on broader pensions reform. It needs a specific plan on how it intends to plug the hole and build a solid foundation from which future generations will be able to access the same level of support that the current generation of pensioners are set to receive. If not, retirement for future generations could just be a myth.”
On the Childcare Bill Which? executive director, Richard Lloyd, says: “Parents will welcome a helping hand with the eye-watering cost of childcare, but this should just be the start of reforms. We want parents to have access to better information about the quality of nurseries and childminders and for it to be made easier for them to complain to put things right when they go wrong.”
Maike Currie, associate investment director at Fidelity Personal Investing, adds : “As it stands, British parents shoulder some of the highest childcare costs in the world. It is important for all families to work childcare costs into their broader financial planning. Cash-strapped parents will no doubt welcome the increase in free childcare for three and four year-olds to 30 hours a week, however the less welcome news is that this proposal is expected to be funded by reducing tax relief on pension contributions.
“Further tinkering to the pensions regime is unwelcome especially if it disincentives pensions savings – few parents will be willing to sacrifice pension tax relief for a brief respite in their child care fees. Pensions must remain attractive for all sections of society if we are to see the full benefit of the reforms.”
The Government said it aims to create three million new apprentices in the next Parliament.
Nigel Benton, of the National Skills Academy for Financial Services, says:“While we welcome the initiative, three million is a highly ambitious target which requires specialist expertise to achieve. It’s only by getting the UK’s flagship sectors like financial services on board that the Government will hit this target.
“As the economy rebounds, the UK financial services sector is well placed to take on more apprentices. Yet the take up of apprenticeships in financial services is low relative to the sector’s size. It’s imperative to get employers on board who will give apprentices meaningful work and support them while they learn their trade. If financial services organisations could be encouraged to use apprenticeships to the same extent as, for example, engineering and construction, it would be a real game-changer.
“The NSAFS is working with financial services employers across the country to get people into apprenticeships in the sector and give them the skills they need to build a successful career and make a valuable contribution to society.”