The Government is delivering a range of measures to provide real help to tackle the pressures people are facing as a result of the global economic downturn.
Welcoming the Budget boost to personal finances, Minister for the East Midlands Phil Hope said:
"I know a lot of people are worried about their finances. The tax cuts that came into effect at the beginning of April and the extra help announced in the Budget are putting money back in people's pockets, and helping people take control of their finances. For people in difficulty, there is help to see them through the worst and get them back on their feet.
"Pensioners on the lowest incomes deserve extra help through the economic downturn. Changes to Pension Credit announced in the Budget will give an extra £202 on average to more than half a million pensioners, by ensuring that savings up to £10,000 don't affect their benefit entitlement."
"There is help to get on the property ladder, help with mortgage interest payments, help for pensioners and people who rely on their savings. The government has also expanded financial advice services and put more into small grants and loans for people in the most difficult circumstances."
Announcements in the Budget and earlier measures they build on include:
Savings and income:
- Tax-free ISAs - on the tenth anniversary of their introduction, the annual tax-free savings limit will be increased from £7,200 to £10,200 for over-50s in October this year, including half in cash. This will benefit around 500,000 of the 1,514,000 people aged over 50 living in the East Midlands (a third of all over-50s have an ISA). The increase will be open to other savers from next year.
- In response to the potential impact of falling interest rates on pensioners with savings the capital threshold in Pension Credit will be increased from £6,000 to £10,000. The £10,000 limit will also be implemented for pensioners entitled to Housing and Council Tax Benefit. Around 540,000 eligible pensioners will benefit by £202 on average.
- In the East Midlands, 650,000 pensioner households will gain from extra money with the Winter Fuel Payment. An additional payment of £100 (making £400) to the 150,000 households with someone aged 80 or over, and £50 (making £250) to the remaining 500,000 households with someone aged 60 or over, will be paid alongside the Winter Fuel Payment in 2009-10. The State Pension is guaranteed to increase by at least 2.5 per cent next year.
- The Budget announcement builds on the 5% increase in the basic State Pension this year, along with the £60 payment made at the beginning of the year to 840,000 pensioners who live in the East Midlands.
- Social Fund - an additional £270 million in total over two years to meet demand for interest free loans for people in times of financial difficulty, available through Jobcentre Plus. The Social Fund is expected to make around an additional two million loans over the next two years.
- Growth Fund - a further £18.75m to help people on low incomes obtain affordable credit and banking services through credit unions and other community-based institutions. This will help to prevent people sinking into a spiral of debt and being driven into the hands of loan sharks.
Housing:
- Extension of interest rate protection for the 220,000 unemployed and pensioner homeowners who get help with their mortgage repayments as Support for Mortgage Interest (SMI) claimants. The most recent figures showed 13,511 SMI claimants in the East Midlands. The Budget announced that the interest rate for repayments covered will be maintained at 6.08% for a further 6 months. SMI claimants with fixed rate mortgages might have lost out if the SMI rate was adjusted down in line with Bank of England interest rates.
- Mortgage Rescue Scheme - the scheme, which helps vulnerable households facing repossession, will be expanded from May 1 to also cover those in negative equity as a result of a fall in house prices.
- Repossessions Prevention Fund - a new fund to provide small loans to homeowners or tenants facing repossession, administered by Local Authorities.
- Stamp Duty - the holiday on stamp duty on purchases of properties under £175,000 to help first-time buyers is to be extended to the end of the year.
- £600 million to unblock stalled private sector house building. The new funding will help restart stalled construction sites by creating new partnerships with the private sector. This will help to deliver 10,000 additional homes, all of which will start on site in 2009-10. This will include up to 5,000 homes to help first time buyers, including the option to rent now and buy later, and up to 1,000 social rented homes.
The housing measures follow this week's announcement of support for homeowners to stay in their home through the Homeowners Mortgage Support (HMS) initiative. HMS will enable eligible borrowers who suffer a temporary loss of income to cut their mortgage interest payments for up to two years to help them get back on track with their finances.
Advice and consumer rights:
The Government wants to help all savers get the best possible income from their savings by shopping around to secure the best interest rates.
To help with this the Financial Services Authority's Money Made Clear service www.moneymadeclear.fsa.gov.uk offers comparative tables of savings accounts. The FSA has recently introduced a telephone helpline where people can get free and impartial guidance on all aspects of personal finance.
Before the Budget, the Government increased funding for the 0808 808 4000 National Debtline until 2011, which means it will be able to help 70,000 more people with their debt problems. The Government increased the amount of funding for the Citizens Advice Bureau this year, so that they can help over a third of a million more people each year with local, face-to-face advice.
The Budget announced a White Paper on consumer rights - this will set out proposals to:
- provide further help to people in difficulty with their finances;
- strengthen the UK's credit regime; promote responsible lending and borrowing;
- raise standards in debt collection;
- and set a longer-term direction for the sector and its regulation that will deliver continuing access to affordable credit, enhanced consumer protection and financial stability.
Tax cuts and benefit increases:
In the East Midlands, the tax cuts and pension and benefit increases that came into effect on 6 April will benefit:
- 1.85m basic rate taxpayers, who will be £145 a year better off, thanks to increases in the amount that can be earned tax free;
- 453,300 families receiving tax credits, who will be £150 a year better off, thanks to an increase in the Child Tax Credit;
- 844,500 pensioners, who will be £260 a year better off, and the poorest 195,000 will receive an extra £312 for single pensioners and £468 for couples.
- An estimated 51,860 mums-to-be in the East Midlands, who will be £190 better off thanks to the new Health in Pregnancy Grant.
In addition:
- 527,105 families in the East Midlands gained from the decision to bring in the child benefit increase 3 months early. Child benefit now stands at £20 a week for the first child and £13.20 for subsequent children.
All consumers are benefiting from the cut in VAT from 17.5 per cent to 15 percent, worth £275 to every household on average.
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