The fallout from Wednesday’s budget continues…and it’s not good.
As much as I hate to say this, the country appears to be heading toward the shock absorbers: plagued by anemic economic growth, burdened by a bloated and inefficient public sector, and undermined by a creaking business community now under siege by a tsunami of new labor taxes. and costly regulations.
Maybe I’m being too pessimistic and they’ll prove me wrong (it won’t be the first time). But even the country’s leading economic think tanks are now questioning the merits of Rachel Reeves’ spending and borrowing spree, paid for in part by a £40bn tax hit on businesses and households.
Rachel Reeves leaves 11 Downing Street with the red box before revealing her budget on Wednesday
After the Budget, the Institute for Fiscal Studies (IFS) warned that the country was facing a “decade of higher taxes”, adding that “the State has grown and looks unlikely to contract again in the short term”.
Chillingly, it said the Chancellor would probably have to go back to households and businesses for even more tax revenue.
For businesses already reeling from the impact of the £25bn National Insurance tax, that would mean lower profits, higher prices and a reduction in their workforce. For working households, this would result in modest wage increases (if their jobs still exist) and even more taxes on their savings and investments. One more step towards financial dystopia.
Wearing my personal finance hat, my big worry after Wednesday’s sobering Budget is that Mrs Reeves is in serious danger of destroying the country’s savings culture.
Last Wednesday’s anti-savings measures – a terrifying inheritance tax (IHT) hitting pensions and an increase in capital gains tax on investment gains – were pretty terrible in their own right. But given the IFS’s view that the Chancellor’s thirst for tax revenue is far from quenched, it is obvious that our pensions (private, not public) will come under attack again in the near future.
Edward Hughes, a 71-year-old retired shoemaker from Ware in Hertfordshire, speaks for many. He has been a saver all his life, but fears that the propensity of Chancellors (past and present) to repeatedly dip into our pensions will be hugely damaging.
On Friday he told me: ‘As pension savers, we put money into a long-term savings vehicle that we can’t access until our mid-50s. The least we deserve in return for a long-term commitment is a guarantee from the government that the tax treatment of our pensions will not change, especially to plug holes in the public finances.’
Edward believes that the IHT raid on legacy pensions – on top of all the other attacks dating back to Gordon Brown’s £5bn-a-year tax raid on company pensions in 1997 – has made private pensions are “unattractive for current and future savers.”
He fears that the result of this growing antipathy will be that more people turn to the State in old age, “creating a huge social problem for the future.”
Edward’s vision is more financially dystopian than mine, but he makes a great point that the Chancellor should pay attention to. Modifying pensions does not benefit anyone, not even the public treasury.
Above-inflation rail fare increases buried in documents released alongside budget
Fares rise, but the train continues to fail
Wednesday’s announcement of above-inflation rail fare increases – hidden in documents published alongside the Budget – will depress many commuters.
The 4.6 per cent increase in the price of many tickets, effective from March, would be tolerable if there was evidence of an increase in the reliability and quality of rail services. But I don’t see any, despite the generous pay awards recently given to railroad employees.
SWR and GWR, the providers of the services I rely on for my daily commute, constantly frustrate me.
Delayed and canceled trains (especially on Monday mornings) are the norm. However, the pain they cause (including damage to my ears due to constant reminders on board that anyone traveling without a ticket could face a fine and criminal prosecution) pales into insignificance compared to that regularly inflicted on me by the Arriva CrossCountry over the weekend.
I use their service from Bournemouth to Manchester to travel and watch my football team, the WBA, play. However, it’s like playing the lottery: winning (punctual service) is a rarity.
My last trip was a nightmare. Despite being warned when booking tickets that the train would be busy with Bournemouth fans heading to their team’s match against Aston Villa, CrossCountry ran a four-car service instead of eight. Because? It meant that when everything shook in Reading it was packed to the rafters, with people standing in the hallways. My partner refused to go up and went home.
Somehow, I managed to sit in my reserved seat, but only after kicking someone out of it. It was a really horrible and claustrophobic trip.
To compound the misery, the return train arrived more than 30 minutes late. Trips to the Third World at premium prices. My compensation claim has been recognized, but has not yet been paid.
PayPal is second class at scams
Online scammers don’t give a damn about controversial Budgets. Their only goal is to scam us.
Doug Brodie, founder of London-based Chancery Lane Retirement Income Planning, receives his fair share of scams and always alerts me to them. Most are fake corporate bonds that offer ridiculously high interest rates.
But the latest was in response to your online postage request to Royal Mail so you could send an envelope to the US.
Everything, he says, went wrong: he paid online and organized the collection of the letter. But later that day, he received an email, supposedly from Royal Mail, saying delivery was “pending” and a £23 fee was due. A link took him to a PayPal page where he was asked to make the payment. Doug has been in the scam business too long to be fooled by such a ruse (the fact that PayPal’s payment request was $23, not £23 as in the email, was a clue).
As a good citizen and fearing that others might fall into the trap, he tried to report the fraud to PayPal. But he was not allowed to do so without providing the username of the PayPal account to which he had been directed. It is understandable that the scammer would not have provided that detail.
“It’s very frustrating,” Doug said. “PayPal should crack down hard on scammers and listen to those who have received fraudulent payment requests.”
On Friday, PayPal said it took payment security “very seriously.” Any recipient of a fake email, it said, should send it to: phishing@paypal.uk. Royal Mail said it would never email a customer requesting payment. So if you receive such a demand, it is a scam.
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