LAST week's budget brought positive news and a strong sense that the country has well and truly turned the corner. There was good news for Cornwall and some radical ideas to reward those who save for their retirement. George Osborne announced at the beginning of his speech that the economy was going to grow even more than at first thought, with growth this year set at 2.7 per cent, the biggest revision in the budget forecast for more than 30 years. Not only that; it is now predicted our deficit will be down by a half next year and by 2018 the country will even be running on a surplus.
There is still plenty more to do and no one is saying these forecasts mean we can rest on our laurels. That said, economic growth means the Government can now feel more confident in offering further economic incentives and help to those hit hardest by the downturn. Some of the measures the Chancellor announced do just that.
Firstly, the personal tax allowance will be raised even further to £10,500, starting next year. This should lift almost 30,000 people in the South West out of tax altogether and, importantly, it will make sure low and middle earners are hit by as little tax as possible.
Secondly, savers will see some crucial changes to how their savings are taxed and how they can invest their hard-earned money. The 10p starting rate on savings income will now be abolished and replaced with a 0p rate, helping expand savings of up to £5,000. As well as this, a new pensioner bond, in which people can invest more than before, will also offer better returns than any on the market today, and people will be able to invest more in ISAs. I am often approached by savers who have felt that the economic recovery is passing them by despite their efforts, and these new measures are a step in the right direction.
Finally, there will be more flexibility in the pension system, which is news that will be welcomed by many. If you pay a certain defined amount into your pension, no longer will you be forced to buy an annuity, unless you have decided you want to. On top of this, if you have pensions savings of £30,000 or less you can now take these pots as a cash lump sum, which is double the threshold it is now. There will also be a cut in the amount of income you need to access your pension's savings flexibly, down from £20,000 to £12,000. All these changes will make it easier and cheaper for people to withdraw money from their pension pots, and they represent some pretty fundamental reform.
George Eustice can be contacted at george.eustice.mp@ parliament.uk or 1 Trevenson Street, Camborne, Cornwall, TR14 8JD, or by telephone on 020 7219 7032.