Chancellor George Osborne has laid out the government’s latest austerity plans which will raise £4.5 billion and include the sell off the government’s remaining £1.5 billion share of Royal Mail. A further £3 billion will be saved through cuts to all government department budgets except the NHS, schools and aid.
Whitehall departments most affected by the cuts are the Ministry of Defence, the Department for Education and Business (non schools) and Innovation and Skills.
£500 million will be saved at the Ministry of Defence, a controversial move because the government is unlikely to be able to commit to Nato’s target – that the UK spends 2 per cent of its national income on defence.
The budget for schools has been ring fenced so cuts could hit sixth form colleges and children’s services. However, a spokeswoman for the Department for Education said that savings would be made through ‘efficiencies and under spends in demand led budgets.’
The NHS budget is also safeguarded and so will not be directly affected by the government’s austerity measures. However, the Department of Health will have £200 million less for public health grants to local authorities.
The announcement that the government is also to sell its final share in Royal Mail of 30 per cent has also drawn criticism, following the previous sale of Royal Mail shares in 2013 which were undervalued, possibly by as much as £1 billion. Shares fell by 3.3 per cent immediately after the latest announcement, causing the value of the government’s stake in Royal Mail to drop by £50 million.
This time the coming sale of Royal Mail shares is likely to be aimed at companies rather than the public. None of the shares will be reserved for Royal Mail staff, unlike in 2013, when a block of 10 per cent was set aside for employees.
People living in the Scottish Borders saw the greatest rise in disposable income during 2013, according to figures recently released by the Office for National Statistics.
Gross disposable income is defined by the ONS as money left over after taxes, mortgages, rent and pension contributions have been deducted.
Incomes have risen most in rural areas around the UK, says the ONS, particularly in Scotland. The Scottish Borders, the Western Isles and West Cumbria saw the fastest growth. Disposable household income rose in the Scottish Borders by 5.2 per cent and by 5.1 per cent in both the Western Isles and West Cumbria.
Bradford and Hull also saw an increase in gross disposable household income, rising by 4.2 per cent and 3.8 per cent, respectively.
The richest residents in the UK remain in Central London, however. People living in the London Borough of Westminster have the most disposable income, an average of £43,577 per person. In fact, residents in the four richest London boroughs of Kensington and Chelsea, Westminster, Camden and City of London have disposable incomes twice as large as the average UK resident, which is £17,559. Whilst disposable income didn’t rise as much in Fulham and Hammersmith or Kensington and Chelsea, as it did in the Scottish Borders, it still rose by 3.7 per cent.
In contrast, household disposable incomes actually fell in many urban areas of the UK. Areas in north east London, such as Redbridge and Waltham Forest, were particularly hit, seeing GDHIs fall by as much as 3.8 per cent.
Manchester, Enfield, Luton, York and South Nottinghamshire also saw disposable incomes drop by more than three per cent during 2013.
The area in Britain with the lowest level of disposable income is Leicester, with just £11,739, a quarter of the amount residents in Westminster have.
The value of property in the UK will soar over the coming months, according to leading economists.
House prices rose modestly in April but are expected to rise rapidly now that the uncertainty that led up to May’s General Election is at an end. In fact, the Conservative win has galvanized sellers and buyers of property alike.
By April of this year, average house prices had risen to just £1,200 below their highest peak reached just before the financial crisis in 2007. Figures released by the Land Registry show that house prices increased by 0.9 per cent in April, having fallen by 0.8 per cent in the previous month.
Property economist, Matthew Pointon, of City consultancy Capital Economics, said that he expects further rises in house values this year because the stock of properties for sale is at an historic low.
Annual house inflation is the lowest it has been for 14 months at 5.7 per cent but, Matthew Pointon believes that it is has reached its low point and is set to rise.
Rising incomes, as well as competition between mortgage lenders to attract customers with the best deals, are likely to increase the supply of homes on the housing market and to push up values.
In the run up to the general election, the number of properties at the top end of the housing market fell by as much as 30 per cent, as homeowners worried that a Labour win would see the introduction of a mansion tax on properties worth more than £2 million. Since the Conservative win, buyers of luxury homes have been returning to the market.
Surging house prices are likely to pose a dilemma for the Bank of England who may choose to avoid another housing boom by raising base rates earlier than otherwise predicted.
Consumer confidence has risen to its highest level since 2006, according to recently released data from market research company, Nielsen.
Job prospects are rising and inflation is at a record low, leading to increased confidence in personal finances. The Nielsen Consumer Confidence index hit 97 during the first quarter of this year, its highest since 2006 when it reached 101, and ten points higher than at the same time last year.
The proportion of households feeling that now is a good time to spend rather than save was also up, reaching 45 per cent in April, the highest figure since records began in 2006.
Nielsen’s managing director, Tony Steve Smith, said that the rise in consumer confidence was due to the fact that unemployment is falling, inflation is at zero and people are enjoying lower prices in supermarkets and at petrol stations. The UK is one of the world’s fastest growing economies and the increase in consumer confidence reflects this.
Nielsen’s survey questioned 500 people in the UK and found that the number of people feeling more positive about their job prospects has also risen to 45 per cent, its highest level since 2008.
A second survey, conducted on behalf of Asda, showed that the average UK household had an extra £17 per week to spend on luxuries during April, indicating that household finances are continuing to improve.
The Asda income tracker revealed that average household disposable income has risen by ten per cent, to £187, due to increased employment, rising wages and low inflation. Gas and electricity, food and non-alcoholic drinks are almost three per cent cheaper than they were 12 months ago.
Asda managing director, Andy Clarke, said that this is the first time he has ever seen essential item deflation during thirty years in retail.
Think carefully before securing debts against your home your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
