Autumn Statement: A productive debut for Hammond?
So groomed are the British public to expect rabbits out of hats at these occasions in the House of Commons that the only real shock to emerge from this week’s Autumn Statement was that there were no major shocks. Even news that the Autumn Statement itself will be scrapped in future was something that had been quietly mooted anyway, and Philip Hammond’s logic behind putting it into File C probably won’t attract too much condemnation either – least of all from Shadow Chancellor John McDonnell, whose job of rebutting Budget speeches has to be one of the least envied in politics.
That said, there were still plenty of talking points to come from the first Budget address since the Brexit vote, and although many of the Chancellor’s assessments, verdicts, handouts and cuts had been widely predicted, it all made for an interesting, if slightly grim overall picture about the prospects for the British economy in the short run.
Debt, debt and more debt
“Six wasted years!” was McDonnell’s repeated cry in reference to so-called Tory austerity since 2010. Whatever one’s thoughts on the best policy to tackle the national debt, the truth of the matter is that it remains a huge concern, especially when coupled with a decidedly gloomy economic picture and diminishing tax receipts. The figure immediately being thrown around was that Brexit is forecast to blow a £122 billion hole in the public finances, and the Office for Budget Responsibility forecasts that growth is set to fall by 2.4 per cent over the next five years as a direct result of the EU vote.
A boost for tech and innovation
Citing the issue of mediocre productivity when compared with other G7 nations, Hammond has put together a new £23 billion ‘National Productivity Investment Fund’. A significant chunk of this will be earmarked for innovation and R&D, which collectively will rise by £2 billion a year by 2020/21. And for the Fintech sector – among others - there was great encouragement to be taken from the £400 million promised to assist with Venture Capital startup investment, with the expectation that it could unlock around £1 billion for SMEs looking to scale up. And as the cherry on top, Hammond confirmed his commitment to improving digital infrastructure, with £1 billion set aside.
The new savings bond
Perhaps one of the surprises of the day was the announcement of a new savings bond, which will be launched through National Savings & Investments (NS&I) next spring. Those aged 16 and over will be able to deposit anywhere between £100 and £3,000, and earn interest at a rate of 2.2 per cent for a three-year term. Although full details of the scheme have not yet been revealed, it represents some much-needed respite for beleaguered savers.
A day for the JAMs
The May parliament had set its course from day one that it would look to help those who are ‘just about managing’ (JAMs), and Wednesday’s Autumn Statement was the first opportunity to extend some goodwill on this front. A surge in the personal allowance to £12,500 by 2020 – an increase of £1,500 – was a significant boost for all those in the workforce. For higher-rate taxpayers, news of the threshold being raised to £50,000 will have been welcomed too.
The National Living Wage is now also set to rise to £7.50 per hour from April 2017 – the 30p increase potentially resulting in a pay rise of over £500 per year at individual level. In addition, a fuel duty freeze, childcare subsidies and an extra £1 billion that Hammond will commit to welfare should give lower to middle earners some added cushion.
Letting agent fees axed
The good news for the so-called JAMs didn’t end there, albeit that most renters will have taken kindly to the news that fees charged by letting agents will be banned. It has been met with incandescent rage by agents already, while some landlords have vowed to raise the cost of rentals in response. Whether that actually transpires, and if indeed the increases will cancel out the extortionate costs of fees (usually hundreds of pounds) entirely, remains to be seen. However, this should give renters a lift in the short term at the very least.
Since the downturn eight years ago, the UK has faced plenty of challenges, but scarcely has a Chancellor delivered a Budget speech against a backdrop of such strong economic headwinds, uncertainty, and so little fiscal breathing space as a result of national debt. Certainly, the 2016 Autumn Statement won’t go down as a mass vote winner, and it was difficult not to absorb an air of gloom while listening to him speak.
But although there were no ‘giveaways’ of note, the Chancellor did well to tackle certain things head on – not least of all his commitment to tech and innovation, which is so key to the country’s prosperity – and he has laid a platform from which sensible policies can be crafted.
Turbulent times lie ahead; of that there can be no doubt. Yet as Hammond affirmed, our economy is, at its core, a resilient and robust one, and the fastest growing among the G7 in 2016. The Brexit negotiations, and subsequent deal, will be the key determinant as Britain charts its course for the future. But with a strong economy and steady hands at the helm, the uncertain road ahead can be conquered.
There is barely a week to go until the conclusion of the 2017/18 financial year, which means that, as ISA season begins to hot up, time is running out to take advantage of your ISA allowance.
At the Summer Budget in 2015, George Osborne had multiple nuggets of good news for investors in peer-to-peer lending (P2P), most notably the announcement of the new Innovative Finance ISA (IFISA).
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The peer-to-peer (P2P) lending industry is now regulated by the Financial Conduct Authority (FCA). The regulatory framework has been designed to protect customers and promote effective competition.
Loan underwriting is the process that we undertake to analyse all of the information provided by each loan applicant and their credit file to assess whether or not that applicant meets our minimum loan criteria. As part of that process all data is verified, analysed and summarised to paint a picture of each applicant.
When you earn interest from a regular bank savings account, for example, the bank automatically deducts basic rate tax (currently 20%) before paying your interest. With interest earned from peer-to-peer lending, tax is not deducted automatically so lenders will need to declare their income to HMRC.
As 2018 draws to a close, with our bellies full of Christmas turkey, it's only natural to look back on the past 12 months and reflect. No doubt, it's been a turbulent one economically and politically, and not everyone has had it all their own way.