While the Spring Statement was intended to be a relatively low key update on the country’s finances, there is growing pressure on the Chancellor to address some of the immediate challenges posed by the increased cost of living.
While the rise in fuel bills will be central to this, there are other issues to consider.
Build the stock the country needs
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “More balance in the housing market will help keep property prices in check; as we emerge from Covid restrictions, anything that encourages new supply is helpful, particularly that of affordable housing to buy or to rent.
“What is happening in the sales market is being mirrored in lettings – there is a shortage of stock, so rents and prices are going up, and it’s important not to lose anymore landlords.
“We don’t want to see further deterrents for landlords because as we have already witnessed, this accelerates the selling up of properties, negatively impacts supply and means higher rents.
“Some assistance to help ease the backlog in the courts system in terms of possession and anti-social behaviour would be welcome. We want to look after and support Generation Rent but equally landlords need to be able to remove difficult tenants.
“Some resolution of the cladding crisis would help release more properties onto the market, as owners who wish to move can finally sell up. These are so often the more affordable properties, particularly flats, which appeal to first-time buyers.
“Stricter anti-money laundering rules would be a popular move but there are plenty of good rules out there which are not being enforced. We hear of so little action under the present regime.
‘There is likely to be a focus on heat pumps, with subsidies almost certain but there is no point in doing this unless there is sufficient consumer buy-in and confidence in the product, which isn’t there at the moment. Consumers worry about the maintenance and servicing of heat pumps and there needs to be more confidence around their operation.”
Pensioners – is the triple lock sustainable?
Jamie Jenkins, director of policy and external affairs at Royal London, said: “It’s not just workers that will see pressure on their incomes this year. Those receiving their State Pension, the bedrock of a retirement income for many, will also be worse off as a result of the suspension in the triple lock, the formula that sets the yearly State Pension rise.
“From next month, pensioners will receive an increase of 3.1% in their State Pension, instead of the 8.3% they would have received if the earnings component had been included. This will impact older people who will already be spending a higher percentage of their income on food and fuel.
“The Government has committed to resuming the triple lock this year, but rising inflation could present a similar dilemma to the earnings figure last year, if it reaches the levels some have predicted. This would almost certainly lead to further pressure for the triple lock to be reviewed.”
Time to defrost the Lifetime Allowance?
Justin Corliss, senior pension technical manager at Royal London, said: “In the last few Budgets the pensions lifetime allowance rose each year in line with inflation, but the Chancellor then froze it at £1,073,100 until 2025/26. In a low inflation environment this freeze has less of an impact, but with inflation rising significantly, the impact could be much greater.
“Many more people could be caught by a tax charge, including a greater number of NHS doctors. This could lead to more early retirements and reduced working hours to avoid the charge, at a time when doctors are in very high demand.
“So a tax charge, designed to impact only a small number of individuals, will be felt more broadly by society and there will be pressure to reinstate the inflation link.”
Paying more with less – National Insurance increase on top of rising prices
Sarah Pennells, consumer finance specialist at Royal London, said: “At a time when 95% of adults in the UK are worried about the cost of living, next month’s increase in National Insurance contributions is set to take many by surprise.
“Just as energy and other household bills are rising steeply, workers will see a fall in their take home pay as a result of the chancellor’s increase in National Insurance contributions to pay for social care proposals. The increase of 1.25% may seem relatively low, but in reality an individual on a salary of £30,000, will see an extra deduction of £214 a year, or £464 for someone earning £50,000.
“While two fifths (43%) of workers say they’re aware of the increase but unprepared to cope with it financially, bigger deductions in their pay slips from next month will be completely out of the blue for a fifth of workers.”
