Thursday, 24 November 2016

"Reverse...Reverse...Austerity Lite's Failed Us" The view from 4 working class "JAMS" in Lincoln on the Autumn Statement 2016

So the Hammond (not Mr Top Gear) delivered his first (and last) Autumn Statement as Chancellor of the Exchequer. I was expecting a few surprises, a double dose of fearmongering and doom and not much substance that would interest a working class graduate Millennial such as myself. How wrong I was! The Autumn Statement economic figures were much more severe than I'd initially expected. I saw my parents mouths literally drop as Monsieur Hammond announced that the Government finances forecast was that we were going to be  £122 billion worse off in the period Nov 2016-Nov 2021 than had been forecasted in March's 2016 budget. This means that the vote taken by millions of UK Citizens on June 23rd will potentially have hurt Government finances that need to be healthy in order to keep public services such as Comprehensive Education and the NHS afloat. There will be no extra funds available to improve Mental Health services for young male professionals who have tried phenomenally hard to support themselves and their families and end up contemplating suicide after having to take out payday loans they can't afford just to feed and clothe their kids. There will be no extra pounds to help fund more carers for disabled elderly people who rely on them to cook meals, wash and clothe them and ensure their medication is provided in the correct doses on a daily basis. There is no extra cash to get physiotherapists into primary schools in working class inner city areas where dyspraxic pupils are often left to suffer from poor hand-eye coordination and lack essential motor skills needed such as handwriting to succeed in academic subjects at secondary level and in the workplace.

UK debt levels are also forecasted to increase under the Brexit May administration; it was 84.2% in 2015 and is expected to rise to 87.3% this year and peak at 90.2% in 2017-18. To me this demonstrates that austerity measures imposed primarily by Cameron and Osborne were the wrong way forward in the first place and the Brexit impact has only magnified their failure to get a hold of the debt. I feel that I can't trust the Conservatives on the economy, despite borrowing figures being predicted to decrease during May's term- currently predicted at £68.2 billion this year but to fall to a (slightly unbelievable) £20.7 billion by 2020-21. The problem with reducing borrowing and public spending is that we will not be able to invest as much in the NHS or the Education system. Whilst I accept that we do need to decrease the national debt levels, do we do this at the expense of much needed investment in Housing, the NHS (especially Mental Health and Social Care Services) and in the Education system? I'm not so sure. It will depend on whether the our GDP will grow as a result of leaving the EU due to increased exporting to non-EU countries such as China and India and whether our services industry can be even more productive and help to increase domestic tax receipts to offset borrowing decreases. A very fine balancing act that I'm not sure Hammond can achieve. Universal Credit taper rate cut to 63% from April 2017. (For every £1 earned over the work allowance, UC will be reduced by 63p instead of 65p).

Main Budget Measures:
I decided to scrutinise Autumn Statement measures with 4 of my Millennial professional friends from the Lincoln area. They pretty much fall into Hammond's rather derogatory category of "JAMs" -the Just About Managing voters who can barely afford to pay bills but have just enough disposable income to afford a few treats in the year (such as attending the local Christmas market).

The voters are all 28 years old (same as me) and have different political affiliations and voted differently on Brexit in June.
  1. Administrative Assistant at a Care Home. Labour voter who voted to Remain in the EU.
  2. Sales Assistant at local Plant Hire company. UKIP voter who voted to Leave the EU.
  3. Primary School Teacher. Labour voter who voted to Remain in the EU.
  4. Accountant with a local Practice. Conservative voter who voted to Leave the EU.
Here's a few summary points (for those who don't have time to read whole table):

  • All of the voters were impressed by the Cold Caller Ban on “exotic Pension Investments”, Fuel Duty cancellation, £23 bn for research and development, £1bn digital infrastructure spending and the new Savers Bond.
  • Most voters were happy with the banning of “up-front letting fees” (although there is concern that letting agents may demand more money from landlords which could increase rents) and the announcement of £7.6m to renovate Wentworth Woodhouse (despite “tokenism” undertones).
  • There is some concern shown as to whether some funding increases announced would actually benefit Lincoln residents-for example, will there be allocations from the Local Growth Fund, Housing Infrastructure Fund, or the Transportation Infrastructure Fund. More detail needs to be offered by the City of Lincoln Council and Lincolnshire County Council on this as they begin to assess what the Budget will mean for Lincoln and Lincolnshire.
  • Voters expressed disdain for the lowly increase in the National Living Wage, questioned whether the taxable benefit in kind changes should also include cycling and cars in addition to computers and gym membership and are worried about the low number of prison officers being recruited and the fact that the increase isn't expected until April 2018. The Ban on Letting fees only being penciled in as “ASAP” also led to some questioning whether the policy is truly implementable at all.
  • Voters were mostly against the Insurance Premium Tax rise, with one arguing that pet owners may be less likely to insure their pets and may choose not to fully insure their household contents. Only the firmly Conservative voter was prepared to pay the tax rise here and blame it on the “whiplash” claimants.
  • Voter intentions seem to remain unchanged following the Autumn Statement but Voter 2 is continuing to follow Conservative policy in the hope they announce more on immigration costcutting measures.

Here's the results below:

Autumn Statement Proposal
Voter 1:
Voter 2:
Voter 3:
Voter 4:
Income tax threshold rise from £11,000 to £11,500 from April 2017.
Good to see a rise in the Income Tax threshold but want to see it increased further to £14,000 next year.
Great proposal announced by Hammond; it shows that he cares about working class professionals.
Good start but would like to have seen a £1000 increase as opposed to £500.
Not enough of an increase in the Income Tax threshold. Should have been at least £13,500-£14,000 after Brexit.
Tax savings on salary sacrifice and benefits in kind to be stopped (except childcare, cycling, pensions and ultra-low emission cars).
Technological adaption provision to disabled employees-will that now be a taxable benefit in kind? Silly that health screening will be taxable but cycling/cars will not be taxed.
Fair of Hammond to address benefits in kind. I think that cycling and cars should have been made taxable too.
I heard that gym membership and health screening will now be taxable. I don't understand why cars or cycling should be tax exempt.
Small detail in the Budget but I agree that benefits in kind that seem “perky” like gym membership should be taxable. Not many people took advantage of it in my last organisation anyways.
National Living Wage rise of £0.30 from April 2017.
Not enough of a rise to offset food and clothing inflation (possibly 5% next year). I think the NLW should rise by £1.00 at least next year to compensate.
I think £0.30 rise was very fair. I can't believe those under 25 are moaning about not being paid the same as over 25s-it is the way it has always been. You don't want people to lose their jobs in Lincoln because companies decide to outsource to China or India to reduce wage costs?
I couldn't imagine surviving on £7.50 an hour and pay a mortgage or rent and make sure the children are fed and clothed and warm. I really support Labour's proposal to increase the NLW to £9 an hour when they get into Government. Perhaps even more if they don't get in till 2020?!
£0.30 seemed a tad low. I know some SMEs would struggle to pay an extra £1.00 an hour so maybe £0.75 would have been a better offer so working class families can prepare for possible food inflation.
Equalise NI contributions for employee and employers at £157 a week from April 2017. Class 2 NI to be abolished.
This helps raise funds for the Treasury-costing the employer an extra £7.18 per worker. Will it deter them from hiring more employees?

At least the Government will raise money so equalisation is a fair measure.

As a primary school teacher Serco ensures that I get the correct amount of pay, including paying the correct amount of NICs. My husband is concerned about the abolition of Class 2 NICs and how this will affect his entitlement to state benefits.
Class 2 NICs paid by self-employed individuals allow them to access state benefits such as Employment and Support Allowance. With them being abolished, they can only really do Class 3 voluntary NICs which are £14.10 a week. Class 2 was only £2.80.

Rise in insurance premium tax from 10% to 12% from June 2017.
Why should we pay more for those who defraud the insurance system with phoney “whiplash claims”? Seems unfair to me! The tax will affect house insurance and pet insurance too! Working Class Cheapshot tax!
I'm unhappy about this policy; why should we pay more when most of us hardly ever put in a claim? Surely banning fraudsters from taking out further policies is a better way forward?
2% rise in Insurance Premium Tax is steep. I'd have been OK with 1%. Will people be more reluctant to insure their cars properly? Will pet owners refuse to insure pets at all?
I'm happy to pay the tax rise. I hope it will discourage people from making fraudulent claims and that the money could be used to help fund the NHS post-Brexit.
Ban on “up-front” letting fees ASAP.
My co-workers cheered when this measure was announced by Mr Hammond. This means that fees such as charging for references, to secure tenancies or deposit for pet owners will be scrapped. I'll be looking for a tenancy soon so I am happy about this measure!
Letting agents will lose income as a result of banning fees...will landlords increase rents to compensate for any increase in fees they may get charged?
Very pleased that “up-front” letting fees are being scrapped. I have two cats and I had to pay £250 deposit to my letting agent to secure the property before I moved in. References should be given freely too, as they are employer to employer.
Excellent news for first time tenants that they will no longer have to pay to obtain credible references or to secure a tenancy. Letting agents earn enough from landlords once a tenant is at a property anyways!
£2.3 billion infrastructure fund for housing in “high demand areas” (not areas like Birchwood).
I don't know whether Lincoln has been identified as a “high housing demand” area or not. I think the quality of private sector housing does need to be improved, especially in the inner city areas. Definitely not value for money.
I hope that Lincoln will be identified as an area of “high demand” for housing but suspect not. I've got friends who have been on the Council Waiting list for 3 years or more. We need to build more Council Housing for young working class families.
£2.3 billion will never materialise and neither will the promised level of housing stock. The Tories are all mouth and no action when it comes to housing infrastructure projects, especially in the Lincoln area.
I'm not “green” enough to believe Lincoln is an area of high housing demand; I suspect the money will be diverted to London and the big Cities. Should we be moaning about this? Not at the moment.
£1.4 billion allocation to build 40,000 extra affordable houses.
Great idea but 40,000 homes are not going to be enough. Are some of the affordable homes going to built in the Lincoln area?
More affordable homes need to be built across the UK, especially in areas with high immigration levels. Is Lincoln really in dire need of housing?
I'd like to find out where these houses are expected to be built...on greenfield or brownbelt former industrial land, for example?
Not sure that affordable houses will actually be built in Lincoln any time soon but seems to be a decent policy proposal from Mr Hammond.
Fuel Duty rise cancelled.
Good news but the cost of car insurance will probably offset any benefits from this and if petrol prices rise, I may start taking the bus to work.
Excellent news; more working class professionals may consider buying cars and that would only be good for me and my business. We are a nation of car lovers.
I don't drive but my boyfriend seemed quite happy at the news. I don't think the Tories dare raise the duty whilst prices are low anyways!
Happy that the Fuel Duty rise has been cancelled; I can keep driving to work and filling up to go and see families and friends too! Car drivers will save £130 a year!
£1.1 billion extra investment in local transportation networks.
We need to make sure potholes are fully repaired and that country roads around Lincoln are safe to drive in. Will the funding be there to address it?I need to see whether the Government allocates more funding to Lincs County Council.
I don't know whether transport networks need to be improved in Lincoln; East-West highway has been constructed and we will soon have a new Transport Hub. We could do with more Park n Ride services for tourists I guess?
Again, very much like the Housing infrastructure proposals, I'm not sure we'll ever see the money materialise. I agree with Voter A, we need to repair potholes on country roads and make sure they are safe for my boyfriend and others to drive on.
Lincoln has benefited from key transportation infrastructure projects already; we can't expect any further allocation unless it could be for fixing potholes. I trust Lincs CC to deliver on their promise of upgrading county roads by 2018.
£23 billion extra for research and development (Science, Technology, Mathematics and Engineering).
I'm happy to see an increase in funding for scientific R&D. I hope that such investment will help to find cures for cancer, AIDS, tropical diseases and help to solve world hunger by developing new food cultivation techniques.
I hope the funding will be given to worthwhile projects that help improve the lives of UK Citizens first and foremost. Let's improve engineering processes and help cure cancer over trying to ask people how “happy” they are using app technology.
I'm glad that there will be extra funding for the UK R&D sector but where's the extra funding for Primary Schools in Lincoln? Where's the extra funding for SEN support staff for pupils with learning difficulties? What about funding for Arts based R&D?
£23 billion seems a huge amount to waste on “happy go lucky” science projects. We need more investment in apprenticeships and internships to make them more accessible to working class kids. We need to spend more money on improving IT skills for working class employees too!
£1 billion for digital infrastructure. (5G mobile networks and Superfast Broadband).
Digital infrastructure programmes need to be encouraged but was giving 100% business tax relief to digital firms for fibre cabling the way forward? It seems Hammond and May want to appease big business rather than improve the lives of working class Millennials in the countryside. Will the initiatives be completed by 2020? I'm not convinced.
Digital coverage has to be improved in rural areas and in some parts of Lincoln so I approve of Hammond's investment plan. I hope that it will have been fully implementable by 2020.
This is a great initiative and it seems even Jeremy Corbyn can get on board and support improving digital coverage in rural communities. It doesn't just help farms and rural based SMEs to connect with their customers faster and more securely but will also allow working class rural kids a chance to access benefits connected to streaming-there may be more live Vlogs created in the countryside leading to new Vlogging stars that can paint a more positive, modern view of the Countryside to city based kids. Great opportunities abound!
Fantastic news for rural accountancy firms that get sick of constant buffering when they are waiting to get in urgent contact with farming clients to get information on sales/purchases for the week to update figures to input into their Income Statement for the month which clients use to make decisions about staffing levels and purchases of raw materials.
£1.8 billion for Local Growth Fund for English regions.
What will this Fund actually do for people in Lincoln? Will it allow us to help keep restoring Lincoln Cathedral or pay for community Arts projects?
I hope that Lincolnshire County Council will try and bid or will receive a slice of the Local Growth Fund. Perhaps this money can be used to help fill in potholes?
I didn't know there was such a pot of money known as the “Local Growth Fund” and so I don't know whether Lincs CC can bid for funding or what it can be used for. Can we use it to help fund local Social Care services or Mental Health services? What about community park funding?
I think allocating money to English regions only is a great idea; I need to know more about the Fund but using the money to help fund the preservation of Hartsholme Country Park or fund IT skills courses for working class people would be a good idea. Maybe even build a few council houses from it?
£7.6 million to help renovate Wentworth Wood house-inspiration for Jane Austen's “Pride and Prejudice”.
I believe in the need to preserve our heritage sites for the next generation and it seems the repairs needed to Wentworth Woodhouse are needed urgently. If we're paying £359 million for Buck House we can pay £7.6 for a house connected with our literary past.
I can't believe the Government are willing to spend £7.6 million on a house barely a few English jobless grads have heard about. If they were using the money to help renovate buildings with a purpose, such as Lincoln Cathedral, I'd have been happy.
I do want to see Wentworth Woodhouse preserved for future generations but I do wonder why it was specifically mentioned in the Autumn Statement. It seemed a bit pandering and tokenistic to me. We need to protect all historical sites in the UK, not just those connected to an illustrious ancestor.
We should be pleased the Government takes a strong position on UK heritage preservation. Renovating Wentworth Woodhouse will just be the start of a nationwide renovation programme.
£400 million into venture capital funds through the British Business Bank to unlock £1 billion in finance for growing firms.
I wonder how many startups in Lincoln will be able to benefit from British Business Bank loans. If you only employ 3-4 people and your SME isn't considered “vital” enough for the local economy or your profit figures are too low to be considered a “worthwhile investment”, where do you turn to?
I'm hoping I'll be able to convince my boss to consider applying for a business loan from the British Business Bank. We need to expand our business through opening up new car showrooms and that could only help to increase jobs totals in Lincoln, helping more working class Millennials find work in the city.
My husband is self-employed and hires 10 people in the social media industry. He needs a loan to help expand his business but I can't see his Income Statement or Business Plan impressing any “British Business Bank”. It seems to be inaccessible to growing SME/startups in Lincolnshire.
As an Accounts Assistant I know several local firms are crying out for funding to help them expand into the international markets in China and India post Brexit. I'll be looking into the BBB and see whether my clients can access the funding and whether I can help them improve their business plans to do this. Win-Win for us all!
Funding for 2,500 prison officers.
After the recent round of prison riots and the 24 hour unprecedented walkout by the Prisoners Office Association last week, we need more than just a small increase in prison officer numbers and the numbers need to increase well before April 2018. Having understaffed prisons affects prisoner health and safety as well as officer health and safety. Ticking time bomb.
Prisons need more staff so I'm glad Hammond reaffirmed the Government's commitment to increase staff to 2,500. They also need to address druggie issues and stop drones being used to drop drugs into cells to be bought and snorted. We need to stop mollycoddling prisoners-teach them to look after their own health and obey the rules or allow prison Governors to increase their prison sentences without taking them to a judge to rule on prison offences.
Prison officers are overworked, feel stressed and many want to leave the profession- I see parallels with the teaching profession. Officer numbers need to increased within the next year, not by 2018. More needs to be done to combat stress and depression levels and there needs to be more training and development opportunities for junior staff to progress through the service.
Great news but prison officers need to be more firm in their approach towards prisoners. Don't be afraid to cut a prisoner's privileges if they are caught swearing at an officer. I agree with Voter D -Governors should have power to increase prison sentences for misdemeanors.
£270 million allocation to help expand Grammar Schools.
Expansion of Grammar Schools seems very ideologically grounded...will it really help the working class students achieve their full potential? A comprehensive can offer a fully rounded education and we should be spending more money on retention and recruitment of teachers and encouraging more students to take up STEM subjects.
Grammar Schools are a feature of the Lincs education system and I can imagine some schools need to expand, especially in rural communities. We don't have Grammar Schools in Lincoln so I don't see how we'd benefit from this?
No extra money has been allocated to help improve SEN provision in primary schools, fewer students are being encouraged to study Arts subjects or Modern Foreign Languages. Creativity is being stagnated in primary schools due to lack of funding for musical instruments, artist materials or drama props. All because the Government wants to push an elitist agenda and segregate pupils based on a draconian test system.
We should be establishing a Grammar School in Lincoln so that our brightest students can be nurtured for careers in business and in STEM. Tech talent is needed for the UK economy to keep expanding post Brexit and with possible tightening of tech immigration rules. Nothing wrong with having a fund in place to allow this to happen.
Savers Bond-3 years at rate of 2.2% and can save minimum of £100 and maximum of £3000.
Great idea if you can afford to spare a few £100 to save up for a deposit. Many do not have such a disposable income anymore.
I'm a saver and I'd like to access the Savers Bond. I know it's only available for 12 months but I'm happy to put £3000 in there and get a good return for once.
I'm happy with this proposal; I'll be trying to sign up for it so I can save up for a deposit to fund my Masters degree.
Excellent proposal that I hope to benefit from! I shall be recommending the Savers Bond to my clients too when it comes live in Spring 2017.
Cold Calling Bans on “exotic” Pension investment opportunities.
Glad that Hammond says cold calling marketing firms will be fined if they attempt to target pensioners. It should cover all forms of communication including emails and texts.
Agree with Voter 1 on this; cold callers should be fined if they breach the new rules.
Cold Calling should be stopped altogether; nobody appreciates being called 5 times a day to “claim PPI” or “accident money”. All communications forms should be covered by the ban too.
Agree with Voters 1 and 2 that cold caller marketing companies must stop targeting pensioners.
Best Policy
Digital Infrastructure
British Business Bank Funding Increase
Banning “up-front” letting agent fees.
Fuel duty Cancellation
Worst Policy
Insurance Premium Tax Increases.
Insurance Premium Tax Increases.
Grammar Schools Expansion Fund.
Voting Intention as of 23/11/2016
Undecided  between Conservatives and UKIP.