On Wednesday Alistair Darling MP, Chancellor of the Exchequer, announced his first Budget. As well as tax rises on alcohol, cigarettes, the most polluting road cars and the introduction of a flight tax, the Chancellor revealed measures to tackle child poverty and help those over-60 with winter fuel costs.
Some key features of the Budget:
From April 2009, rather than April 2010, Child Benefit payments will rise to £20 per week. This action was welcomed by the Campaign to End Child Poverty. Hilary Fisher, Director of End Child Poverty, said: “The measures announced today will make a real difference to the lives of 250,000 children”.
The child element of the Child Tax Credit for families on low incomes will rise by £50 a year, above inflation, from April 2009.
Pensioners will benefit from an increase in the winter fuel payment. Over-60s will receive an extra £250 and over-80s an extra £400.
From 2010, people receiving working tax credits, chid tax credits paid at the maximum rate, income support, jobseeker’s allowance, incapacity benefit, employment and support allowance or severe disablement allowance will be entitled to take part in a new national savings scheme: The Savings Gateway. This scheme will see money saved topped up with, a currently unspecified, contribution from the government. It aims to encourage those on low incomes to save.
You can try out the BBC’s Budget calculator to see if the Budget has made you a winner, for the financial year beginning in April 6, here.
Please read on for a summary of the top personal finance news stories for the week beginning 10th March 2008.
The financial week that was...
Monday 10th March
It’s debt freedom day – This is the point in the year when the average person has earned enough to service their debt (enough to pay off the minimum payments). This year ‘debt freedom day’ has fallen over a month later than it did in 2007. It has fallen 70 days after the start of the year, 39 days later than last year, according to Unbiased.co.uk.
While being able to pay off the minimum payments on debt obligations is no doubt a good thing, only paying off the minimum payments will mean you have to pay a lot more interest than if you worked out how much you could pay per month, and then put that amount aside to pay off your debt.
Tuesday 11th March
Housing market struggle continues – The slowing housing market is getting worse according to the latest figures from the Royal Institute of Chartered Surveyors. In fact, some have suggested that the housing figures are looking similar to those of the early ’90s. However, while the outlook for the housing market and the wider economy generally remains uncertain, it is important to remember that there is still substantial room for the government and the Bank of England to intervene if required. Additionally, there are substantial opportunities for you to take action in helping to avoid financial problems.
At times like these it is wise to think about Saving and putting money away for a rainy day. If you are coming off a fixed-rate mortgage in the near future there is good chance that you are going to have pay more that you did with your previous mortgage. Start planning now by reading our Money Savings Tips and draw up a Budget. Try out the Moneybasics Spendometer to keep track of your spending on your mobile phone!
Wednesday 12th March
What a difference a year makes – In March 2007, 32 lenders were offering mortgages to those with below average credit histories (sub-prime customers), there are now only 20 according to Moneyfacts.co.uk.
The number of products available on the market has also dropped from 6,501 to 1,867 – a drop of 71%. The withdrawal of products from the market is symptomatic of a wider contraction in world credit markets that is currently underway.
As credit conditions tighten and it becomes both harder and more expensive it’s important to be thinking about how you can budget to ensure you can manage your money even if you can’t borrow as cheaply and easily as before.
Prepared for Moneybasics by Jason Taylor, Advocacy Officer (Credit Action).