The rabbit that roared – the Chancellor’s PF revolution
For a Budget which was trailed beforehand as steady-as-she-goes, yesterday’s annual speech by the Chancellor of the Exchequer to the House of Commons was nothing short of stupendous for those involved in personal finance.
From money writers making sense of PF issues for their readers, to financial advisers and product providers at the coal face, the whole occasion took an enormous twist at about 1.20 yesterday afternoon. At that moment George Osborne produced a walloping great rabbit out of, if not his conjuror’s hat, then his Budget box (a suitable substitute given the occasion).
Subsequently, the word which has most summed up the day has been ‘revolutionary’. Quite remarkable for a sector which normally gets all hot under the collar over a 50 basis point change in fund charges, or a 2p move in the price of fuel at the pumps.
Here’s a round-up of how today’s national newspapers have covered George Osborne’s mind-blowing PF announcements.
The front page of the Daily Mail is in no doubt about the magnitude of the impact that the Budget is going to make. It splashes with ‘PENSION POWER TO THE PEOPLE’. ‘Finally, the Chancellor stands up for savers!’ runs the accompanying strap before James Coney and Ruth Lythe explain more about ‘George’s pension revolution’ inside the paper across a double-page spread high up the book on pages four and five.
‘Retirees will be given the power to decide how to spend their life savings for the first time ever in the biggest shake-up of pensions in almost half a century,’ the pair report. Barbara, 54 from Stroud in Gloucestershire, describes the Chancellor’s decision to ditch next year the obligation to buy an annuity with accrued pensions cash as “brilliant” news. Meanwhile pensioners Richard and Ruth tell the paper they can’t wait to take up the new pensioner bonds also announced in the Chancellor’s speech.
The Mail’s coverage doesn’t end there. Page seven is dominated by a story from Coney explaining how it will now be possible to save £15,000 a year in a ‘super ISA’. There’s also news of a second monthly £1 million prize care of Premium Bonds and the titbit that bank customers may soon be able to keep their old bank account number when they switch providers.
Inside The Guardian’s 16-page Budget supplement, the news that people are to be trusted with their own finances instead of being press-ganged into buying an annuity at retirement prompts fears of a ‘new buy-to-let boom’. Such reforms, combined with a further extension to the Help To Buy scheme ‘could make house prices surge again’, report Patrick Collinson and Harriet Meyer. ‘It is a strong case for concern that the chancellor could be unleashing extra buy-to-let demand into the housing market and driving up prices,’ Pricedout.org’s Duncan Stott tells the pair.
Elsewhere within the supplement, Rowena Mason and Angela Monaghan analyse key sections of the Chancellor’s speech in an attempt to unveil what’s really being intended for fiscal and monetary policy, welfare, tax, et al. Such speech analysis items are becoming increasingly commonplace across newspapers nowadays. Flim flam or not, Patrick Collinson’s comment column comes straight to the point. ‘Welcome to generation rent – forever,’ he writes on a Budget he goes on to describe as ‘a bonanza for well-heeled Tory voters… but not for the young and poor’.
While The Sun splashed with ‘WIN-GO!’ and even the Financial Times managed a front-page lead referring to a ‘Pensions revolution as Osborne woos the silver-haired and savers’, The Independent opted for an arguably gentler stance with ‘Osborne helps the aged’.
Inside The Indie’s 12-page Budget special Simon Read suggests that George Osborne’s announcements amounted to ‘good news for savers and pensioners – if they’re rich enough’. The revelations are also ‘good for financial advisers’, Read pointed out ‘as more people are likely to want professional help in deciding what to do with their pension pot, despite the Government promising that retirees will be given free face-to-face guidance’.
In a separate feature Read points out that Budget beneficiaries this year include those who ‘have savings, a fat pension pot or a liking for beer and bingo’, the latter point referring to the surprise halving in the amount bingo companies pay in duty on winnings.
The Financial Times’s Budget special runs to 24 pages although three of these are dedicated to reporting Chancellor Gideon’s speech to Parliament in full. Its front-page homes in on the biggest shake-up to the pensions market for almost a century. Later in the book Sam Fleming, David Oakley and Josephine Cumbo team up to explain how shares in insurers tumbled on the news. ‘The retirement industry normally concerns itself with multi-decade trends – but George Osborne’s Budget transformed the landscape in an afternoon,’ they wrote. ‘With the words “No one will have to buy an annuity”, the UK chancellor dropped a bombshell on the insurance sector as he responded to mounting anger over the measly returns and poor choice in the market,’ the trio added.
Specifically on the personal finance front, Emma Dunkley reported how ‘the government has increased taxes on “luxury” homes wrapped in corporate envelopes, hitting properties valued at £500,000 or more, to deter investors from avoiding stamp duty, inheritance tax and leaving mansions in the UK empty’. Elsewhere, Sharlene Goff reports that ‘peer-to-peer lending will be allowed within tax-free individual savings accounts for the first time in what providers have hailed as a “seminal moment” for the industry’.
It wasn’t just the FT getting all revolutionary on Budget day. The Times’ front-page also referred to ‘The savings revolution’. Inside its 16-page Budget special (soon-off-to-Sky’s) Ian King writes how George Osborne’s Budget is an attempt to keep core voters sweet.
With regards consumers, David Budworth warns how more people are being dragged over the higher rate tax threshold. ‘Tory backbenchers, led by former chancellor Lord Lamont, were snubbed by George Osborne yesterday when he refused to bow to demands for an inflation-busting rise in the higher rate tax threshold,’ he pointed out.
In an interesting take on case studies, Mark Bridge canvasses the views of people living in marginal constituencies around the UK. Mike and Celia from North Warwickshire were Labour voters at the last election and have no intention of swapping sides next time round despite the contents of the 2014 Budget box. Gemma from Thurrock, however, suggests that ‘the new childcare vouchers are excellent’. Having abstained from voting in 2010 she says she’ll vote Tory next year.
One paper that will never tow the Conservative line is the Daily Mirror which counters all the upbeat reporting about revolutionary changes to the retirement landscape with a double-page splash dubbed ‘PENSION POTTY?’. ‘George Osborne yesterday launched a high-risk pensions revolution in a Budget designed to buy votes in Tory heartlands,’ Jason Beattie and Tricia Phillips reported. Reacting to the news, the pair explained that ‘the added danger is that people may withdraw large chunks of their pension and end up running out of cash as they live longer than expected’.
As you might expect, The Daily Telegraph saw things rather differently. The paper splashed with the headline ‘You have earned it, you have saved it’ adding ‘And now, after years of lean times, Osborne’s pensions revolution will reward you too’.
As part of The Telegraph’s 18-page Budget special Richard Dyson recounted how ‘in the final minutes of his speech, Mr Osborne delivered one of the most rewarding Budgets in private investors’ memory’. ‘Not since the introduction of Peps and Tessa under Thatcher has the savings landscape been so comprehensively reformed. Even the word “revolution” is not too strong,’ he adds.
The Sun carried on the Che Guevara theme when Tom Newton Dunn and Steve Hawkes teamed up to write: ‘A savings revolution was sparked by George Osborne yesterday in a bid to turn borrowing Britain back into a thrifty nation again’. The Chancellor announced major tax changes and threshold rises to nest-egg savings accounts, the pair explained. ‘The package helps savers who have been whacked by record low interest rates for the last five years’, they added.
In a separate item Dunn suggested that the Chancellor has become the key politician at the heart of the Coalition government. ‘Mr Osborne has privately always had sights set on Number 10. Yesterday, he took a big step closer to his dream’, Dunn wrote.
The Daily Express was in a similarly upbeat mood. ‘Millions of savers and pensioners were given a boost yesterday in a feel-good Budget dedicated to helping those who have “worked hard and saved hard all their lives”,’ wrote Macer Hall. Meanwhile, Sarah O’Grady reported on pension reforms described as ‘the most radical for almost a century’ as well as an ISA boos for ‘silver savers’.
The Daily Star limited its Budget coverage to a front-page news story reporting how the Chancellor had cut tax on booze, plus a double-page spread canvassing the views of a handful of individuals including a single mum, an entrepreneur and a white man van.