Last Wednesday saw the Chancellor provide the nation with an update on the country’s finances in the usual Autumn Statement. This year’s was particularly notable because the Chancellor announced the abolition of the Autumn Statement and the movement of the budget to the Autumn.
As is to be expected, the majority of announcements concerned national growth and budget projections as well as tax announcements. However, there were some items that will affect the average person’s daily life. This article seeks to give you a summary of these proposals.
Increase in Living Wage
An announcement welcomed by many will be that the minimum wage is to rise from £7.20 to £7.50 per hour. Whilst seemingly small on the surface, the increase will add up over time. The Low Pay Commission expects that it will effectively increase the average worker’s annual earnings by a few hundred pounds.
It will be important for workers to ensure that their employers increase their wage by the correct amount. It is a criminal offence for an employer not to pay at least the mandatory minimum wage. Enforcement action can be brought against any employer who does not. Further, an employee who has not received the full wage to which he/she is entitled under law may bring proceedings in the Employment Tribunal to recover this unlawfully withheld wage.
The consumer energy market has been a source of concern for some time. There have been concerns that the big energy companies had not been passing on savings to their customers and, in some extreme scenarios, may not have been fair on their pricing structures. Although no solid plans have been confirmed, the Chancellor announced that the government will look closely at what it can do in respect of the energy market.
What this will entail in practice is not yet known, but it could involve the strengthening of the powers of the industry regulator, OFGEM. It may also lead to a widening of powers for the Energy Ombudsman. Both of these could be a welcome development for consumers. If the Ombudsman has increased powers, consumers could raise their grievances there, rather than enter into costs-disproportionate litigation in the small claims court.
Ban on Letting Agent Fees
An announcement that will be greeted by tenants is the plan to ban letting agents from passing on their fees to tenants. In the future, agents will only be able to recover their fees from the landlord, which could introduce an element of competition as landlords may look to move around and change agents.
Agency fees have long been a sore point for those who rent private properties. This is particularly so in the South-East of England and London, where agents’ fees may amount to many thousands of pounds on top of the expense of renting a property. That tenants will no longer have to put these bills will surely be welcomed.
It is as yet unclear how the ban will affect landlords, tenants and letting agents, and we have looked at this in some detail in a previous blog post.
The Chancellor confirmed in the Autumn Statement plans previously announced, to reduce the recovery of damages in low value road traffic accident and personal injury claims. This will also include the increase of the small claims limit for personal injury claims. It is hoped that these measures will reduce the number of claims being brought. It has been suggested that this will reduce car insurance premiums by £40 per year.
However, there is a sting in the tail. The Chancellor also announced that Insurance Premium Tax (“IPT”) (tax paid by insurance companies on the premium you pay when you take out an insurance policy) will increase from 10% to 12%. Just like VAT, insurance companies are allowed to recover IPT from their customers. Therefore, with the increase in IPT, it seems that the promised £40 saving on your premiums will never actually materialise. It is difficult not to consider whether these two announcements are in fact linked.