Category Archives: UK Economy

Changes to pensioner benefits mooted during the general election now appear ‘in limbo’

Pensioners have been left in limbo by the hung parliament election result, with any proposed changes put on hold until a government is formed.

The Conservatives, who were expected to win a solid majority, wanted to scrap the Triple Lock which that the state pension would rise by whichever is the highest of inflation, wage growth or 2.5%, and replace it with a ‘Double Lock’ which would remove the 2.5% annual rise. Under a Conservative government, the state pension age would increase with life expectancy.

They also planned to means-test the Winter Fuel Allowance, which is worth up to £300 a year for older people to help with their heating costs. However, now that the party has failed to win a majority, they may find it difficult to proceed with any of these plans.

Triple Lock and Winter Fuel Allowance

The Conservatives are working towards doing a deal with Democratic Unionist Party (DUP) to form a government, who want to maintain both the Triple Lock and the Winter Fuel Allowance.
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Soft or Hard Brexit- what is the answer ?

The choice of hard or soft brexit

We here at the Bus passes Blog are simple men, but are already getting tired of the seemingly pointless discussions on this topic. This arises from the foolhardy notion of voting in a referendum on the following questions:

The EU Referendum ballot paper.

It has as much sense as asking someone “would you like to sell me your car? – decide yes or no.” Any sensible person would respond to such a question “what are you offering to tempt me to part with my car?” and would laugh out loud if the response to that was “we’ll tell you that once you have made a decision.”

All the government can do now, having induced the voters to agree to leave the EU club, is try to negotiate the best terms possible, knowing that the other side is aware that you are going to leave anyway. So why should we offer you a special price – other than that European businesses want to sell their goods in the UK just as much as the reverse.

Squeeze on wages puts UK on par with Greece

Britain’s households suffered a squeeze on wages in the past eight years only matched in the advanced world by Greece, according to a TUC analysis.

Between 2007 and 2015 wages fell by 10.4 per cent after adjusting for inflation. It was the sharpest decline of all 35 members of the Organisation for Economic Co-operation and Development with the exception of Greece. Across the OECD, real wages increased by 6.7 per cent on average.

British households endured the most severe decline in livings standards in more than a century after the financial crisis and many economists believe they are on the verge of another squeeze following the vote to leave the EU.

“Wages fell off the cliff after the financial crisis, and have barely begun to recover,” Frances O’Grady, the TUC general secretary, said. “People cannot afford another hit to their pay packets. Working people must not foot the bill for a Brexit downturn in the way they did for the bankers’ crash.”

In Germany real wages grew by 13.9 per cent and in France by 10.5 per cent. Portugal was the only other OECD member apart from Greece and the UK to suffer a fall over the period.
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Political parties pursue pensioner pogrom ?

We seem to have arrived at a point where many people seem to have accepted that everything must be done to cut cut cut, (except MP’s pay that is) in a way in which we all know the cost of benefits,  but not the value. Having successfully manoeuvred a substantial proportion of the public into regarding those on benefits as scroungers the signs are that some elements already appear to be plotting a similar fate for pensioners, despite the life long payment of tax by pensioners from earnings by most. A consensus seems to be building that pensioners have never had it so good and that they can be cut back further,(remember the elimination of age allowances in the last budget?)  and the focus is on pensions, winter fuel allowances, free TV Licences and bus passes.  All this of course assumes that pensioners are one homogeneous group with equal capacity to receive less.  Let us be clear that Winter Fuel Allowance would be a big miss to those whose income doesn’t stretch beyond the State Pension.  (In this blog we have suggested treating Winter Fuel Allowance on the same basis as the State Pension – i.e. taxed if your income is high enough.)

The health and economic impact of bus passes in particular seem to be overlooked,  and also the ever growing pensioner power at the ballot box.  The Conservatives, Labour and Liberal Democrats are all saying that pensioner benefits will remain untouched until the next general election,  but that no promises will be made beyond that date,  which is less than 2 years away.  This sounds very unrealistic,  as for sure politicians are going to be exercising their minds on how to tempt pensioners to vote for them, and can they really remain uncommitted to continue pensioner benefits?   At this stage however it sounds that UKIP may play a more significant role at the forthcoming election,  and there is much uncertainty about their position on many issues.  We have therefore contacted UKIP for clarification on benefit issues,  and understand that Neil Hamilton, UKIP’s  Welfare and Benefits Spokesman is to respond to us.  We eagerly await hearing from Mr Hamilton.

We also remain uneasy about the fudge that was made by the coalition government on tax relief for charitable donations.  We fully appreciate the work done by charities in this country,  and that they need our support to be able to continue.  But surely there is a world of difference between those of us who support in a modest way charities such as Oxfam, Barnardos, RSPB, National Trust  etc etc etc and the very wealthy who can deprive the taxman of tax on all or most of their income through donations to charities in this country and overseas.  We realise that it isn’t popular to stick up for the taxman,  but as we have seen if he doesn’t get it in one place he is going looking for it in other places,  hence the threat to well earned benefits.

So if not pensioners, who should bear future cuts in spending? – well let us be clear that most of the deficit faced by the government results from a big drop in income into the government’s coffers resulting from the credit crunch and its effects on the economy at large – so lets have a focus on getting the economy moving, which won’t be achieved by encouraging pensioners to stop at home.

What spending review could mean for transport – Campaign for Better Transport view

In under a month, George Osborne will set out the next wave of cuts to spending. What will it mean for transport?

The spending review will be announced on June 26 and will set out further cuts needed for the Government to meet its deficit reduction targets. This one is being called a “spending round” rather than a review as it will just cover 2015/16 in detail, though it will also include commitments for longer term capital spending (ie investment in infrastructure) and an indication of how cuts will be made in following years.

The big story is about further cuts to “resource” budgets in order to boost capital spending. For transport, this means pressure on support for bus services, the Local Sustainable Transport Fund, Highways Agency road maintenance and Transport for London’s grant. A boost to capital spending could mean more road building but also more for rail or a boost to programmes like the Green Bus fund.

For buses, LSTF,highway maintenance and London, the picture is made worse by the fact that much of the Department for Transport’s resource budgets are tied up in rail franchise contracts and PFI deals. This means that the Treasury desire for departments to cut budgets by 10% is amplified into a cut of 15% for those areas which aren’t in contracts.

Much of our work on the spending round is focused on the threat to bus services, particularly the bus service operators grant (BSOG) which supports all bus services. My colleagues Stephen Joseph and Martin Abrams are meeting Treasury officials today to discuss the importance of bus funding. While BSOG isn’t perfect, changes to funding could lead to more uncertainty and if combined with big cuts, lead to the collapse of many local networks outside the bigger towns and cities.

Bus services are also under pressure if local authority budgets are cut signicantly. It was reported yesterday that DCLG has agreed its settlement with the Treasury but this is only for spending outside grants to councils. The Local Government Association’s modelling suggests some councils could cut all support for bus services as budgets are squeezed between cuts in funding and rising costs of their legal obligations to provide social services.
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UK economy shrinking again as triple-dip spectre looms

Britain faces the possibility of an unprecedented triple-dip recession after the economy shrank 0.3% in the final three months of 2012.

The Office for National Statistics (ONS) said this morning the negative GDP growth seen in the fourth quarter was unlikely to be corrected back into positive territory.

Labour instantly tore into the coalition's deficit reduction agenda, calling for George Osborne and David Cameron to abandon their programme of harsh spending cuts which the opposition blames for the faltering UK economy's performance.

That means another quarter of economic contraction in the first three months of 2013 would leave Britain facing a third recession. With disruption caused by heavy snowfall in January, analysts believe that is a distinct possibility.

Several high street names have already paid the price for a disappointing Christmas period. The first few weeks of 2013 saw a number of household brands going under with Jessops, HMV and Blockbuster following in the wake of Comet just before Christmas in calling in the administrators.

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So much emphasis on cuts and so little on growth

Every day brings a new slant on what some see as the urgent need to scrap benefits such as Winter Fuel Allowance, Free Prescriptions, Bus Passes, and regrets from members of the coalition government that so firm a commitment to preserving benefits for the elderly and disabled were made at the last general election. We have put forward ideas for bringing the payment of Winter Fuel Allowance in line with State Pensions by taxing the allowance.

We are very concerned however that each of these measures which will reduce spending power yet further in the economy is in itself self defeating, since government income from VAT and business profits will be brought down further, unemployment levels will rise (and employment benefits rise) so increasing the deficit – all with the opposite effect to that which the Government is said to be trying to achieve.

The UK badly needs an alternative approach based on growing the economy, and reducing the deficit , not deflating it. Are politicians out there listening ?

Service sector figures prompt UK economy fears

Activity in the UK’s services sector fell for the first time in two years in December, a survey has suggested, raising fears of yet another recession.

The PMI services index from Markit/CIPS fell to 48.9 in December, down from 50.2 in November. Any score below 50 indicates the sector is shrinking.

Markit blamed the surprise contraction on a fall in new business.

It said the numbers suggested the UK economy shrank by 0.2% in the final three months of 2012.

The UK emerged from a double dip recession last summer with growth of 1% in the three months to September.

“The first fall in service sector activity for two years raises the likelihood that the UK economy is sliding back into recession,” said Chris Williamson, chief economist at Markit.

The last time the index was below 50 was in December 2010, when it stood at 49.7.

A slight reduction in incoming new business was cited as the main factor behind the fall, with a reluctance among business to commit to new spending, and budgets reportedly being tightened.

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