Autumn Statement offers consumers little respite
The Chancellor George Osborne today delivered his 'Autumn Statement' - the coalition government's latest plans for taxing and spending.
Key points included the scrapping of a proposed 3p-a-litre increase in fuel duty planned for next January and an increase to the basic state pension, now set to rise by 2.5% next year to £110.15 a week.
Child benefit is also to rise by 1% for two years from April 2014, while the basic income tax threshold is to be raised to £9,440 – around £235 more than previously announced.
The major savings announcement was the confirmation that the new cash ISA limit will be £5,760 from April 2013, with the total ISA limit raised to £11,520.
Consumers continuing to cut back on essentials
Michael Ossei, personal finance expert at uSwitch, commented: “While many consumers will let out a sigh of relief following the decision to freeze fuel duty and increase the income tax threshold, many more will feel today’s measures simply don’t go far enough to help households cope with rising living costs.
“Worryingly, one in four (23%) consumers are struggling to break even at the end of each month and a further two in five (39%) have been forced to cut back on essentials – with 28% even having to cut back on food. At the moment households are seeing everything shoot up in cost, while their income remains static or is even falling.
“The decision to increase the ISA limit to £11,520 is good news for those who are still able to save and will obviously help boost people’s tax free savings. However, the Chancellor has not bowed to pressure to allow savers to put the full amount into cash savings schemes, instead opting to keep the current system.
More change needed on savings
Mr Ossei continued: “In a low interest rate environment and with the highest cash ISA rates just topping 3%, savers are likely to see little return on the extra money they save.
“And the move isn’t as generous as it might seem – if the new full ISA allowance was invested in the highest paying cash ISA deal currently available, the level of interest gained would increase by only £3.72.
“If the Chancellor is serious about getting Britain saving again more needs to be done to create a long-term savings culture.”