ePolitix stakeholders respond to the tax and benefit announcements in Gordon Brown's Budget.
Stakeholder Response: Help the Aged
Mervyn Kohler, head of public affairs at Help the Aged, said: "Help the Aged has long campaigned for free local bus travel for older people throughout the country, so today's announcement comes as a welcome surprise, and addresses a situation where there was a postcode lottery before.
"Gordon Brown can fairly claim that during his stewardship, the Treasury has found £10bn per year of extra money for pensioners from the position the Labour government inherited in 1997.
"Seldom can so much largesse have reaped so few rewards.
"Over nine Budgets, and against a backdrop of data emphasising the success of the economy, the chancellor’s policies have been skewed towards means-tested benefits, which are inefficient at reaching those most in need and unpopular because people need to plead poverty in order to claim them.
"He has produced a number of one-off payments which are valuable, pain-relieving measures, like winter fuel payments and this years council tax refund, but which do little to build self-esteem and self-confidence in our older population.
"A brave Budget might have invested in our ailing social care services, or could have flagged the need for an urgent reform of our pensions system, which is widely called for by employers, trade unions, voluntary organisations and the financial services industry.
"Instead we have the usual cash bribe, and older people will recognise this for what it is: a grand gesture to an increasingly restive older electorate. Bluntly, this is not an adequate response to the legitimate needs of our older population."
Stakeholder Response: Age Concern
Gordon Lishman, director general of Age Concern England, said: "The chancellor could not afford to ignore older people in today's Budget. Older voters are most likely to turn out and their votes have the power to determine the outcome of the general election.
"Free local bus travel will be very popular with pensioners and will help many people to stay in contact with their friends and family more easily.
"Many pensioners will be hugely relieved by the chancellor's announcement on council tax. Inflation-busting rises in recent years have been a major headache for many pensioners and the £200 payment will help to ease the strain in the short-term.
"But what is really needed is a fairer system of taxation in place of council tax, which is linked to people's ability to pay, so that older people don't have to rely on one-off payments.
"But the reality is that two million pensioners are still in poverty and these measures do not solve the root cause of the problem. The basic state pension is disgracefully low and small annual increases are not good enough. The government must increase the basic state pension to at least £109 per week and move away from mass means-testing."
Stakeholder Response: Association of Chartered Certified Accountants
Glenn Collins, head of advisory services at ACCA, said: "On stamp duty, rather than purely raising the threshold from £60,000 to £120,000, the system really needs a root and branch revamp to become similar to the Income Tax system, where only the amount over each threshold band is subject to tax at that rate, not the full property price.
"For example, under the new band threshold, a home costing £121,000 will be subject to one per cent tax on the full property price, resulting in a stamp duty liability of £1,210. A fairer system would be that only the £1,000 over the £120,000 threshold would be subject to the duty, resulting in only a £10 charge.
"Similarly, the chancellor's decision simply to raise the inheritance tax threshold from its current level of £263,000 to £275,000 fails to go far enough. The threshold should now stand at £390,000 if it had been increased in line with house price inflation and we are disappointed that the government has not chosen that figure.
"In its tax manifesto published this week, ACCA urged the government to extend to inheritance tax the exemption that applies currently to the individual's main residence under capital gains tax. Making the main residence exempt from inheritance tax would remove one of the greatest inequities of the inheritance tax system and reduce the burden on ordinary taxpayers and their families."
Stakeholder Response: Institute of Directors
Miles Templeman, director general of the Institute of Directors, said: "The business way to improve the productivity and efficiency of the public services is via greater choice and competition. So far, government policy has been back-to-front. Radical reform of the public services should have preceded the spending build-up. Instead, marginal reforms have followed.
"The IoD would also have liked to have seen greater encouragement for pension saving, particularly for those on low and middle incomes."
Stakeholder Response: GMB
Debbie Coulter, acting general secretary of the GMB, said: "This is a budget GMB members will welcome, renewing Labour's support for pensioners and for working families with young children. It also offers hope for young people as they enter the world of work, and a foot on the ladder for future homeowners.
"GMB members will heartily welcome the £200 council tax rebate and the universal free bus travel for pensioners. We can also welcome the planned increase in pension credit, but we must acknowledge that pensioners would rather see these increases coming through their universal basic state pension instead of a complicated mean-tested system with disappointingly low take up."
Stakeholder Response: ARPO50
Don W Steele, director of social policy, ARP/O50 said: "The announcement by the Chancellor that he is to increase Council Tax grants by £150 for households who pay with at least one person over 65 and also enable free off peak local travel for those of State pension age and disabled people, is welcomed not only by those concerned but by ARP/050 and others who campaign to raise the quality of life for older people. There continue to be questions however about the long term strategy of the government in relation to income and security in retirement.
"It is still a fact that the older generation is expected to depend upon incremental handouts rather than a radical reformation of what many see as a failed system. Nothing has been done to reduce the stigma of means testing or the less than satisfactory take-up of Pension Credit. There is also vagueness about what 'local' means in relation to free travel. Many will wait to see what it means before jumping for joy.
"Those who hoped for a significant increase in the inheritance tax threshold will be very disappointed with a change that merely matches RPI inflation.
"Older people vote and every party is aware of that fact. What they must also learn is that older people are as interested in justice and equity as they are in personal gain. Politicians need policies which are fair and sustainable in the long term if they are to convince an increasingly wary older generation. They are looking for genuine commitment and change rather than a handshake and a handout on the doorstep."
John Ball economist at ARP050 said:"ARP050 joins beneficiaries and other pensioner orientated organisations in welcoming the two measures announced in the Budget. The nationwide extension of free off peak local bus travel for over 60s and increase in council tax rebate will be good news for pensioners who benefit.
"However, most pensioners will be very disappointed by the content of the pre election budget.
"Hopes of some steps towards the reduction of the stigma of means testing were completely dashed. The Chancellor did not mention pensions merely reannouncing his intention to increase the means tested pension credit in line with earnings.
"Those who looked for some for some relief from the ever greater intrusion of the tax man into bereavement were also let down. In his speech the Chancellor made great play of a boost to the Inheritance Tax Threshold but the actual uplift he announced was exactly in line with the latest increase in the RPI. This will be especially discouraging to homeowners living in London where even modest houses fall into the death duty trap.
"We should be grateful for the "lollipops" which the Chancellor has handed pensioners but they were not very generous, do not amount to a strategy and will do nothing to encourage today's workers to save towards their futures."
Stakeholder Response: Forum of Private Business
Nick Goulding, FPB chief executive, said: "Inheritance tax remains a tax on the moderately wealthy which reduces the ability of families to raise the hard cash to actually start a business."
Stakeholder Response: Council of Mortgage Lenders
Peter Williams, CML deputy director general, said: "The stamp duty concession is naturally welcome, and will help some first-time buyers - although its effect will be muted in southern England where affordability is worst.
"The starting threshold would be over £150,000 if it had been index-linked since Labour came into office. We continue to urge fundamental review and reform of this tax in the life of the next parliament.
"The other Budget measures announced today will be modestly positive or neutral for the housing market. We are pleased that the CML's work to provide an extension of equity loans for first-time buyers through private finance is being pursued, and believe further progress can be made in this area."
Stakeholder Response: Royal National Institute of the Blind
Steve Winyard, RNIB's head of public policy, said: "We welcome this Budget, which contains measures that will be warmly received by the two million people in the UK with sight problems, 90 per cent of whom are aged over 65.
"In particular, free local bus travel, the abolition of benefit deductions when staying in hospital and increased help with council tax bills will all make a difference to tackling poverty, isolation and lack of mobility."
Stakeholder Response: Which?
Mick McAteer, principal policy advisor, Which?, said: "It’s good to see the government put its money where its mouth is by committing to promote stakeholder products, including pensions. But with ten million people not saving enough for retirement, this is a drop in the ocean and falls far short of the radical solutions needed to address the problem."
Stakeholder Response: Local Government Information Unit
Dennis Reed, LGIU chief executive, said: "The £200 council tax discount for pensioners will on the face of it bring welcome relief to many pensioners. However, this ignores non-pensioners on low and fixed incomes who also suffer from the unfairness of the existing council tax system and the excessive burden that has accumulated upon it.
"Moreover, if the government does not announce radical reforms to local government finance in Sir Michael Lyons' Balance of Funding review later this year, aimed at lightening the load on domestic council tax-payers, this gain for pensioners will be more than wiped out by future increases in the council tax, especially for those finding themselves in a higher band from 2007 as a result of the property revaluation process."
Stakeholder Response: Institute of Chartered Accountants England and Wales
Frank Haskew, head of the ICAEW’s tax faculty, said with regard to stamp duty: "The increase in the threshold is a very sensible move given the steep rise in house prices over the last decade. The Chancellor has done very well out of house price inflation, but the current £60,000 threshold bears no relationship to the cost of the average property. The increase in the stamp duty threshold should help to encourage first-time buyers to take the plunge, although those in the South will still struggle.
"Rampant house price inflation has landed many people with huge inheritance tax bills, which has added to the Chancellor’s coffers, but penalised the next generation. The proposed increases in the threshold will ensure that those with reasonably modest homes have more to pass on to their children."
Anita Monteith, Tax Manager at the ICAEW, said: "Whilst we welcome the immediate increases to Child Tax Credit and Education and Maintenance Allowance payments, together with the proposed extension of Child Trust Fund payments, we are concerned that this may create an even greater overpayments problem for the future."
Stakeholder Response: Construction Products Association
Michael Ankers, chief executive said: "The increase in the stamp duty threshold will undoubtedly help first time buyers get on the property ladder, although the real need is to ensure the speedy release of more land for housebuilding."
Stakeholder Response: Association of British Insurers
Peter Vipond said: "The government is right to freeze Insurance Premium Tax. This is entirely justified by the fact that the government took £2.4bn for the current tax year, charged on insurance products that provide protection to policyholders and their families."
Peter Montagnon, ABI director of investment affairs said: "There is a substantial underlying demand for these products and our members argued for assets that provide an appropriate match for long-dated pension and annuity liabilities in the recent consultation paper. Ultra-long bonds are structurally right; they reduce risk for investors who otherwise must choose between mismatching their liabilities or accepting low investment returns, while providing the prospect for the government of securing very long-dated finance at attractive rates of funding."
Chris Kenny, ABI director of life and pensions said:"We welcome the government’s decision to promote saving actively. It is important that they continue to give this priority in the medium-term. This is vital if we are to close the £27bn savings gap. But the jury is still out on whether the regulatory framework for Stakeholder products is too tight to enable them to meet the government’s aspirations."
Stakeholder Response: Nationwide
Philip Williamson, Nationwide Building Society's chief executive said: "We are pleased that the Chancellor has announced an increase in the stamp duty threshold, something for which we've been campaigning since 2003. This will be a welcome boost to the housing market.
"However, this won't help first time buyers in London, the South East and other metropolitan areas, where average prices paid by first time buyers are considerably more than £120,000.
"The average house price in the UK is now more than £152,000 so this increase in the threshold will mean that 48 per cent of first time buyers, that's nearly 260,000 people in 170,000 households, will still have to pay stamp duty."
