AFTER all the millions and billions of pounds that were tossed around by chancellor George Osborne on Wednesday, many Brits will be left wondering what impact the coalition government’s spending review has on them.
Some measures, such as the removal of child tax benefit for families with at least one higher earner, were widely expected. Others, such as the state pension age rising faster than expected, had been less well trailed. So where will City workers be hit hardest?
Chancellor George Osborne announced that the state pension age would rise faster than expected to 66, meaning that millions of people will have to work even longer before collecting their pensions.
As a result, everybody will have to review their retirement plans, even if their company or personal schemes allow them to draw their pension from 55. Those City workers currently without pension provision should make sure they opt into their company scheme or make their own arrangements to ensure they are well-provided for in retirement.
Getting to work certainly won’t be cheap for those living in Greater London and the Home Counties as rail fares are set to rocket over the coming years.
Osborne announced that train operators will be able to raise the capped regulated price of train tickets by 3 per cent above RPI inflation from 2012. They are currently restricted to an increase of just 1 per cent and City commuters’ season tickets could jump by as much as £1,000 a year
And it won’t be much use jumping off the train and into your car. Motorists will be hit by the planned increase in the Dartford crossing charges and the increase in the congestion charge to £10 from the current £8. But more Londoners will be able to get on their bikes – the Boris bike scheme is to be extended eastwards.
Londoners will also eventually benefit from the continued investment in Crossrail, Thameslink and the upgrade of certain Tube lines.
Children – or rather their parents – were one of the biggest losers from Wednesday’s announcements. About 1.5m higher-rate families will be hit by the removal of child benefit from 2013 while Child Trust Funds are also on the way out, leaving a significant gap in the marketplace.
It is also going to become increasingly difficult for the Bank of Mum and Dad to foot the bill for university tuition. Funding for higher education will be slashed by 40 per cent and the fee cap of £3,290 is likely to go.
Martin Shaw, chief executive at the Association of Financial Mutuals, says that the effect of changes in tuition fees is such that parents now have an even greater incentive to save for their children. Plans for a Children’s ISA or equivalent are being mooted while friendly societies offer 10-year tax efficient savings plans that may fill the gap.