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Our mid-term review of the Government

Simon Ward
by Lovemoney Staff Simon Ward on 09 January 2013  |  Comments 8 comments

The Government published its Mid-Term Review on Monday. Now here's our verdict on how it's performed against some of its pledges from when it took office.

Our mid-term review of the Government

It’s the halfway point of the Coalition Government’s term of office. It has just published its Mid-Term Review, looking back at what it claims it has achieved since June 2010.

We thought we’d look back on those two and a half years too, to see whether the Government has delivered on its promises from a personal finance perspective. All of the measures we’re examining were set out in the document The Coalition: our programme for government, published when the Government took office.

Banking

“We want the banking system to serve business, not the other way round. We will bring forward detailed proposals to foster diversity in financial services, promote mutuals and create a more competitive banking industry.”

It’s debatable whether this aim has been achieved, apart from an investment of £38 million in credit unions over the three years from 2012. It is also consulting on whether to lift the cap on the interest rates credit unions can charge on loans to free up more money to lend.

The Government would also probably point to the fact that it has sold on Northern Rock’s insurance, mortgage and savings arm to Virgin. But it did so at a loss.

Verdict: fail

Communities and local government

“We will promote shared ownership schemes and help social tenants and others to own or part-own their home.”

A raft of shared ownership and shared equity schemes have been launched, including FirstBuy and NewBuy, although take-up has so far been fairly slow.

The Right To Buy discount was increased to a maximum of £75,000 in England last April, leading to an increase in applications in many areas. There are now fears that there will be a shortage of affordable council homes, particularly in Scotland, where the Government has just consulted on scrapping the scheme.

Verdict: partial success

Consumer protection

“We will give regulators new powers to define and ban excessive interest rates on credit and store cards; and we will introduce a seven-day cooling-off period for store cards.”

Well, it did neither. In fact, the average interest rates on credit cards have hit higher levels during the course of this Parliament so far than they did in the dying days of the Labour administration.

Verdict: fail

“We will oblige credit card companies to provide better information to their customers in a uniform electronic format that will allow consumers to find out whether they are receiving the best deal.”

The UK Cards Association has worked with the Government to produce an annual statement, which shows how much you’ve spent, how much you’ve repaid and any interest and other charges. It’s usually sent out on the anniversary of when you first took out the card.

Whether that is sufficient to allow anyone “to find out whether they are receiving the best deal” is another matter entirely. It might, however, shock some people into changing their spending behaviour.

Verdict: more work needed

“We will increase households’ control over their energy costs by ensuring that energy bills provide information on how to move to the cheapest tariff offered by their supplier, and how each household’s energy usage compares to similar households.”

This has only happened relatively recently with an agreement reached in April last year by the Big Six energy companies.

Of course, since then the Government has tried to go a step further by promising to make energy companies automatically switch customers to a cheaper tariff and to cut the number of tariffs on offer. But this has been widely criticised for raising the possibility that companies will withdraw their cheapest tariffs. We wait to see if it will be implemented.

Verdict: more work needed

Pensions and older people

“We will simplify the rules and regulations relating to pensions to help reinvigorate occupational pensions, encouraging companies to offer high-quality pensions to all employees, and we will work with business and the industry to support auto enrolment.”

Auto enrolment into workplace pensions finally began in October last year. But the timetable for employers to be paying the statutory minimum contribution of 3% of an employee’s salary has been delayed by three years. And how many people will opt out remains to be seen.

Verdict: too early to tell

Taxation

“We will further increase the personal [Income Tax] allowance to £10,000, making real terms steps each year towards meeting this as a longer-term policy objective. We will prioritise this over other tax cuts, including cuts to Inheritance Tax.”

The Government is well on track to reach this (key Liberal Democrat) objective as it will be £9,440 from April. However, it has reduced the Higher Rate Income Tax threshold down to £34,371 in this tax year and it will fall again to £32,011 from April, dragging many more people into the 40% tax bracket.

Verdict: success

Other measures

Of course, since taking power the Government has introduced many other policies that affect our pockets. These include:

  • Increasing the standard rate of VAT to 20%;
  • Reducing the Additional Tax Rate from 50% to 45% (from this April);
  • Changing the method for measuring increases in the State Pension, benefits and Tax Credits to be in line with the (lower) Consumer Prices Index, rather than the Retail Prices Index. The Government is now trying to reduce the annual increase in benefits and some Tax Credits to 1% over the next three years;
  • Cutting the annual pension tax relief limit from £50,000 to £40,000 and cutting the lifetime allowance from £1.5 millon to £1.25 million (both from this April);
  • Cutting fuel duty by 1p a litre and postponing, then scrapping further planned increases;
  • Stopping Child Benefit for people earning over £60,000 a year and reducing it on a sliding scale for people earning over £50,000 a year;
  • Withdrawing Child Tax Credits from higher earners;
  • Freezing age-related Income Tax allowances for most pensioners so they come into line with working-age allowances (from April);
  • Increasing working hours threshold for couples claiming Working Tax Credits;
  • Scrapping Child Trust Funds and introducing Junior ISAs;
  • Scrapping Home Information Packs, although it has retained the Energy Performance Certificate;
  • Continuing above-inflation increases in the price of alcohol, cigarettes and rail fares.

More to come soon

As I wrote following the publication of the Government's Mid-Term Review document, there are more changes coming shortly. These should include the publication of the long-delayed White Paper on pensions and potential changes to childcare support.

What's your half-term verdict on the Government? What should it be doing? Let us know your thoughts in the Comments section below.

More on Government policy

Government Mid-Term Review: childcare and pensions shake-ups coming

George Osborne proposes employee share schemes in return for rights

Benefit reform: all you need to know about the Universal Credit

Planning permission ditched for extensions and conservatories

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Comments (8)

  • Mike10613
    Love rating 626
    Mike10613 said

    Don't forget the government owns shares in Lloyds. They are worth around £15 billions and rising. I've watched them go up nearly 6% this morning (09/01-2012). With their new tax on skivers and strivers, they will have enough to pay for another Jubilee soon! :)

    Report on 09 January 2013  |  Love thisLove  1 love
  • gr8it
    Love rating 7
    gr8it said

    Governments should not be able to set unachievable goals, as these mislead the public. They should be forced to set a goal and also set out the penalty for the Government if the goal is not achieved.

    To put a goal in place to cap interest rates or curtail them on credit companies and then not follow through is unacceptable. With base rates at 0.5%, how can any company justify 29% interest rates on a credit card?

    Pensioners should receive more, they've paid in for more.

    Scrap all the tax credits and force scroungers back to work. Where people need food, clothing and accommodation supply vouchers,, remove cash from the system and put the help where it should be, too many people get their lives paid for by the state and have no incentive to work for a living, totally ridiculous and so unnecessary.

    Help those that need help, but not with money, give them what they need to live, give free energy to the pensioners, whether that be solar power, or simply free bills, fund it by taking the money from all the scroungers.

    Report on 09 January 2013  |  Love thisLove  0 loves
  • Overtone
    Love rating 38
    Overtone said

    I'm a pensioner. I and my wife saved into pension schemes (compulsory ones, fortunately). We do not need free energy. There is no reason to suggest we should have that, any more than we should have free food or clothing.

    I think the government publishing a mid-term review is a good idea. Whether they can achieve particular goals isn't entirely down to them. It's affected by many outside influences, as well as by public opinion within Britain.

    Report on 09 January 2013  |  Love thisLove  0 loves
  • mambach
    Love rating 37
    mambach said

    gr8it: Can you be trusted to spend your own wages? I rather think if you can, I should be trusted to spend mine. At the moment, Tax Credits _are_ my wages - I work a 60 hour week; so does my partner; we get nearly £200 a week total - half of which is rent.

    In what way does this make me a scrounger? Except in as much that I must adopt every miser measure there is to stay ahead of the bills.

    Vouchers - For my dinner, I could go to the local market and spend with people whom I know where the goods have come from - I can support local businesses - I can go to several different places to make the most of my shop. Or I could have a voucher which compels me to shop only in one place, only with a company big enough to run the voucher scheme, where the money will head directly overseas. Tesco do not need more profits, and will not value my business - Martin the grocer and Sanjit the butcher do value my custom.

    Likewise rent voucher - if the vouchers come in £100 lots, my rent will just go up to be the size of the voucher. This follows through - every attempt to replace real money with vouchers has cost more and gotten less.

    Plus the more moral argument of - how are we plebians supposed to learn responsibility if we are treated like idiots? Either we're citizens or we're not - we really shouldn't be serfs.

    Report on 09 January 2013  |  Love thisLove  0 loves
  • MK22
    Love rating 169
    MK22 said

    Our Government's main success has been to put into place policies which are far far to the right of anything we have seen for probably a hundred years, if not more. Everything the government has done since coming into power has had the effect of reducing the living standards of the poor whilst improving those of the rich. But as not one person in the country voted for them I guess they are entitled to do what they like. Welcome to the 17th century.

    Report on 09 January 2013  |  Love thisLove  2 loves
  • Burtonman
    Love rating 6
    Burtonman said

    The comment by MK22 is rubbish. He does not give even one example to justify his remarks. In fact, the present Government is nothing like as Right-wing as those of the Thatcher years and, for that reason, it is failing in its primary task of getting the British people less reliant on the Welfare State

    Report on 09 January 2013  |  Love thisLove  0 loves
  • Arblaster
    Love rating 43
    Arblaster said

    Scrap all the tax credits and force scroungers back to work. Where people need food, clothing and accommodation supply vouchers,, remove cash from the system and put the help where it should be, too many people get their lives paid for by the state and have no incentive to work for a living, totally ridiculous and so unnecessary.

    Well, gr8it, you are defying the laws of mathematics: how you gonna get 2.5 million scroungers into half a million jobs, most of which they are not qualified to do? Chop them all in five?

    It will take a lot more than a few vouchers to get me back to work. The workplace can be very unpleasant. I've done my wack, and I am not going to do any more. To all those paying the tax and keeping the country running while I live at home at ease, I say thank you.You are very kind. And I love you all.

    Report on 09 January 2013  |  Love thisLove  0 loves
  • gr8it
    Love rating 7
    gr8it said

    The cash benefits are clearly not working as most of the posters including the last, have aptly confirmed. Its far too easy to hoodwink the state, and its high time that was stopped. Anyone who really then needs help, not the last poster by a long chalk, would be able to receive all they help they need without draining the state.

    Sadly, the UK is a breeding ground for generational benefit cheats, and for all those who really need help, anyone who thinks we should still have a cash benefit system should be ashamed to think that its a human right to have cash benefits, we should earn any benefit, and I mean get out there and work for the state!

    Telling me there is no work is total BS. The state could create work, cleaning up the streets, training etc. If you are on benefits, report to work for the government, dont sit on you a*** and stuff yourself with macds , alcohol and fags..

    If you reply to this thinking I'm targeting you in any way, you are the type of person I'm talking about. Those of you who need help know that I'm not directing this at them, so lets hear from the bleeding hearts.

    Report on 16 July 2013  |  Love thisLove  0 loves

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