Budgets can be pretty tedious things – a bit of an adjustment here, a relief there, a slice off something else yonder. But not last week’s.
For the first time in a century, say some, we have seen major reform of our pensions. By allowing people to have their own say on how to invest their pension pot, George Osborne has transformed the pension industry.
Up till now, lifetime pensions savings were committed for 75p in every pound to be invested into a recognised pension annuity. No longer. The annuity would pay a derisory income (about 4p in every pound) until you died and then nothing would be left at all. Now, you can take all the money out and put it to work elsewhere, such as buy to let properties. And the joy of this is that when you die, your heirs can inherit what’s left.
Aside from some rather odd comments that lifetime savers could not be trusted to look after their savings – perhaps one of the most stunningly patronising comments I have heard about pensioners ever – everyone seems to have swung behind this idea.
But whilst the budget was good for savers and pensioners, how does this help people looking for work and who are at the other end of the savings ladder?
The answer is the elements of the budget that add to a raft of previous budgets that help businesses. For us in Wyre Forest, the elements that favour and support manufacturing and exports are a very clear recognition indeed that the government is continuing to help the great industrial heartlands of the Midlands. These measures are absolutely what we need to support local manufacturing and exporting. And with industry given a significant boost, jobs – higher paid jobs – will follow.
There is much more in the budget, but a key tax break is the continuation of the raising of the tax free allowance, to £10,500. From 2015/16, you will pay no tax below the first £10,500 you earn. That reduces taxes for 25.4 million people by, typically, £800 a year since 2010 and takes 3.2 million people out of income tax altogether.
So the budget has some important elements in it. It completely changes the way people view pensions: it will create opportunity in manufacturing and rebalance the economy: and helps people keep more of the money they earn.