The government has been in a state of nothingness since the death of Queen Elizabeth II on Thursday 8th Sept . A mark of respect, absolutely, but quite honestly, personally I have never been busier with cost-of-living work over the past 2 weeks (or the past 12 months to be 100% honest).
The government have been squirreling away silently in the background coming up with a PLAN to save the economy. Okay then lets pick this apart.
Firstly Interest Rates Rise
Interest rates rose by 0.5% on 22nd Sept to a long time high, just look at this graph since 2012. Ten years of Interest rates, bobbing around 0.5%. This meant cheap debt, low mortgage rates and we could spend, spend, spend.
Source Interest rates and Bank Rate | Bank of England
Now rates at 2.25%, the Bank of England wanted (reportedly) to go higher. Interest rates are expected to continue up and up. Higher interest rates curb spending and therefore aim to reduce inflation.
If your mortgage is variable rate this will impact you with increased monthly mortgage bills immediately. Check what mortgage you have, is variable, think about fixing it. If fixed when does your fixed period end. If its less than 6 months lock in a deal now with your mortgage provider or call Trussle (my chosen and recommended independent mortgage brokers) to arrange a fixed deal that could save you money. This link will also get you £200 in gift vouchers of your choice, and I will get the same:-)
I fixed my mortgage in May for 3 years at 1.89%. Damn I wish Ide gone for the five-year fixed deal. But my monthly repayments will stay at £1250 until May 2025.
Your credit card interest rate will likely rise, and a new loan, car, home improvement loan application with have a higher interest rate.
You will eventually get a better savings rate, some banks are quicker than others to implement the savings change. If you have savings, shop around for the best deal. Zopa bank is pretty good, I have just opened a Smart Saver account (full disclaimer I work closely with Zopa bank so do personally have many of their products to experience their customer service). I keep my tax money in there until I need to pay my bill.
Then the Mini budget 23rd September
I have lifted these number facts from the very wonderful BBC website, My source of trusted information. My comments in red and highlighted in blue sections!
Income tax
- Cut in basic rate of income tax to 19% from April 2023
- Government estimates 31 million people getting £170 a year more
- Currently, people in England, Wales and Northern Ireland pay 20% on any annual earning between £12,571 to £50,270 – rates in Scotland are different
- 45% higher rate of income tax abolished
- One single higher rate of income tax of 40% from April next year
If you earn MORE THAN £12,571 you will save a tiny bit of tax. 1%. A chunk of us get £170 a year. The same chunk of people who have just had their energy bills increase by £1200 a year AT LEAST. No help here for those people on lower incomes
National Insurance
- Reverse recent rise in National Insurance (NI) from 6 November
- Workers and employers have paid an extra 1.25p in the pound since April
- New Health and Social Care Levy to pay for the NHS will not be introduced
Again another cut to tax that wont help those on lower incomes.
Corporation tax
- Cancel rise in corporation tax which was due to increase from 19% to 25% in April 2023
This was only ever going to hurt bigger corporation with higher tax bills. This has now been cancelled so puts some tax back into corporation’s pockets. Mrs Mummypenny is a company but my tax rate was always only every going to be 19% because it is a small company. This will not help the general population much at all.
Benefits
- Rules around universal credit tightened, by reducing benefits if people don’t fulfil job search commitments
- Around 120,000 more people on Universal Credit to be asked to take steps to seek more work, or face having their benefits reduced
- Jobseekers over 50 to be given extra time with work coaches to help them return to job market
So they are coming down on benefits cheats? Of which, let’s face facts, there are actually very few. Don’t we have more of an issue with big corporations such as Starbucks and Amazon not paying enough/any tax?
Stamp duty
- Cut to stamp duty which is paid when people buy a property in England and Northern Ireland
- No stamp duty on first £250,000 and for first time buyers that rises to £425,000 – comes into operation today
- 200,000 more people will be taken out of paying stamp duty altogether, government claims
This will help those buying a new house, but the house buying system is so screwed at the moment, a failing system. I know! I tried to downsize in 2021 and lost out on three houses. THREE houses where my bid was accepted, then gazumped despite my house selling within 24 hours of putting on the market.
Energy
- Freeze on energy bills, which the government claims will reduce inflation by 5 percentage points
- Total cost for the energy package expected to be around £60bn for the six months from October
OMG This package of £2500 energy cap. You will pay £2500 for an average three-bedroom house. Any bigger/more people/higher usage then it’s higher. But this is already £1.200 higher than the cap was in September 2021, JUST 12 MONTHS AGO. So what government, this is a help, but it’s not enough.
Bankers’ bonuses
- Rules which limit bankers’ bonuses scrapped
- Package of regulatory reforms to be set out later in the autumn
REDICULOUS
There you go, The mini budget in all its detail, with my views SUMMARY – It is not good enough.
