Autumn Statement 2014: missed opportunities

Pensioners and low income families have been left high and dry by the Autumn Statement

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Autumn Statement

When George Osborne sat down after delivering the Autumn Statement, there were plenty of people applauding the surprise announcements - like stamp duty reform and income tax changes. However, that doesn't mean Osborne can rest easy, because there are many more who see the speech as a major missed opportunity: particularly older people and low-income families.

Pensions

An AOL poll revealed that 40% of people identified pensioners as the group who were most in need of help from the Autumn Statement, and there was little or no joy for them in the announcements.

There was every expectation that Osborne would outline the missing piece of the pensions reform puzzle: the guidance people get on retirement. However, as Chris Williams, CEO of Wealth Horizon says: "Once again, we are promised there will be guidance on pensions but given no steer as to how the government plans to deliver it. The ambiguity of this commitment will come as no comfort to the thousands of people who will be given access to their pension pots but who desperately need proper, tailored advice about how best to proceed."

The deafening silence on the subject during the statement will leave many pensioners even more concerned that they will be left to deal with a bewildering array of choice on retirement, with little or no help to ensure they make the right decisions.

Tax on pensions

For those receiving a spouses pension from an occupational pension scheme, a new anomaly has emerged after the Statement, and not been addressed. We knew the 'death tax' on unused pension savings was being axed, and the statement informed us that this rule was being extended to payments made to a spouse under a joint-life annuity.

However, there was nothing similar proposed for those receiving a spouse's income from an occupational scheme. As Zoe Murphy, a partner at Sackers, says: "It seems hard to justify the difference in treatment between a pension paid from a scheme and one paid as an annuity by an insurance company."

IHT

Many older people were also hoping for good news on the inheritance tax front - namely a sizeable increase in the threshold at which it becomes payable. This was something the Conservative Party made promises about, but have so far failed to deliver on.

With no increases announced to IHT to take account of the massive growth in house prices, more and more people are falling victim to this punitive tax. Ben Shaw, founder and director of HNW Lending said: "The IHT threshold has been too low for too long. With house price inflation many families have ended up with estates valued way more than £325,000 but are 'cash poor' and unable to pay their tax bill and release the proceeds of their relatives' wills."

Household costs

Commentators are also concerned about the lack of assistance on household costs. Gillian Guy, Chief Executive of Citizens Advice pointed out: "A freeze on fuel tax, exempting children from air passenger duty and increasing the personal tax threshold are small gains for households. But today is a missed opportunity to address some of the larger costs families face, particularly around childcare and energy bills and some people are still without access to basic banking services."

She adds that the freezing of Universal Credit work allowance is going to make the situation for people in work worse rather than better.

Guy had wanted to see more help with energy bills. She says: "Energy bills are up by over a third since 2010 and many people live in homes which haemorrhage heat. Urgent investment is needed to make homes more energy efficient, particularly to help low income and fuel poor households get on top of their bills."

Complete failure

Some were altogether more damning. Mark Littlewood, Director General at the Institute of Economic Affairs, said: "This was an Autumn Statement filled with gimmicks. Many of the Chancellor's policy announcements will do little more than fiddle around at the margins. The fact is the deficit is still so bad that the room for tax cuts is virtually zero."

The organisation claims that the entire speech was a politically-motivated stunt, and is so unimpressed that it is calling for an end to the statement in its current form.

But what do you think? Were you satisfied with the statement, or did you feel there were glaring gaps? Let us know in the comments.

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