Britain's Band Aid Budget

Wednesday 8 March 2017

  • Chancellor using sticking plaster solutions, rather than making difficult decisions
  • Over 50s will be disappointed with no long term solution to care crisis, housing or savings rates.

Saga calls on Chancellor to be bolder to help nation’s over 50s.

 

Saga director, Paul Green, commented:

"The Chancellor has pulled off a Band Aid Budget for Britain.  It kicks the can down the road with several welcome but short -term fixes.  But there are no long-term solutions to some of the biggest issues facing today's over 50s - such as care funding, housing and saving for retirement."

 

Social Care

A mark of a civilised society is how it treats its elders and we have a system that lacks compassion and lacks cash. 

Whilst today’s announcement to boost funding for social care is a welcome down payment – this will barely scratch the surface of the funding shortfall our local authorities are facing leaving even more people without the care and support they desperately need. In order to do more to solve the funding crisis, public and private money is needed to improve the system.  The Government can help by enabling more families to pay for care; by enabling people to save tax free for care – allowing tax free withdrawals from pension savings, by making it easier for people to look after their own family either by paying for care for them and making it tax deductible or giving other incentives to people to take time off to care themselves for their loved one. 

Another solution to care funding is equity release, which enables people to make their home work for them, using equity release means people can remain in their own home for longer which is of great importance to many older people.

In addition, the announcement of a Green Paper to be published later this year on long-term funding options for care feels like yet another Chancellor who is not willing to tackle this thorny issue, preferring instead to kick this tricky issue into the long grass.

 

Pensions

The fact that the Chancellor did not take the opportunity to simplify pensions could well put more people off saving for their pension.  Pension saving lifetime and annual limits are complex and deter people from saving for their retirement and we feel this regulation should have been abolished in the Budget. 

The Government could take a leaf out of the UK’s most successful marketers – the supermarkets, and introduce a pension saving BOGOF – buy one get one free; or three for two offer. This would encourage more pension saving. This moves away from the current system which disproportionately benefits higher rate taxpayers.  If Middle Britain can be encouraged to save they will live a better life in retirement, be more independent, and, less dependent on the state’s safety net.

Savings

The Budget has given no comfort to Britain’s older savers many of whom rely on interest from their savings to boost their retirement income.  There was no reassurance for them that their savings income would start to pick up again any time soon.  The confirmation of the new rate for the NS&I bond at 2.2% is alongside some of the best in the market, but with an investment limit of just £3,000 this is not going to provide any significant income for anyone.

Tax Free Dividend Allowance

The reduction of the dividend allowance from £5,000 to £2,000, means people should be looking to hold more of their investments within an ISA or even invest more into their pensions to make the most of the tax free benefits.  Tax tweaks such as this highlight the importance of ongoing financial planning to ensure people are making their money work as hard for them as possible.

Housing – Stamp duty

 

It’s incredibly disappointing that the Chancellor failed to use this budget to really get the housing market moving. Whilst many experts have recognised the need for an inter-generational solution to the housing crisis they have again been gazumped by a Chancellor who has missed the opportunity to encourage family housing to be released to the housing market.

Saga have long  been calling for incentives to be introduced to ensure the UK housing stock is used effectively. Downsizing is an important part of this solution and we have long called for the Chancellor to consider One stamp duty free move for those ‘right-sizing in retirement and for those buying age restricted properties.  Research commissioned by Saga suggests this policy would release an additional 111,000 family homes on to the market and encourage more age appropriate housing to be built.  Economists at the Centre for Economic & Business Research (Cebr) estimate that the net cost of such a measure to be modest and predict the Exchequer could see a net gain in Stamp Duty revenue.

In addition to downsizing we believe that families should be incentivised to make the most of their homes, creating  a 'housing magic roundabout' where granny annexes become first homes and vice versa.  Inter-generational living has benefits - enabling older relatives and/or younger children to live in the same property and provide support for each other through different stages of their lives.  

It might be older children living in adjoined flats that could later become an annex for an older relative or alternatively 'house-swapping' when homeowners who are living in a house that they consider to be a little too big for their needs swap homes with their children who are outgrowing their own space.

The future of our housing needs a variety of new thinking and a Chancellor who is willing to take action.

 

Ends

 

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