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Queen’s Speech 2017: Energy and motor bills to be cut but pensions ignored

Paloma Kubiak
Written By:
Paloma Kubiak

The Queen delivered her speech today, setting out the government’s priorities for the coming year, including measures to reduce energy bills and car insurance prices.

The Queen’s speech covered a number of measures including delivering on Brexit, building a stronger economy and making the UK ‘fairer and safer’. However, there was no mention of some key manifesto promises, including proposals to move the pensions triple lock to a double lock model.

Darren Philp, director of policy at The People’s Pension, said: “This was a Queen’s Speech that steered clear of pensions policy almost entirely with issues such as the state pension triple lock seemingly kicked into the long grass. However, there is still much to be done to make automatic enrolment work for everyone and we remain hopeful there will be no reversals on important pensions pledges such as to widen the scope of auto-enrolment to include the self-employed.

“We also think the government will have to look again at pensions tax relief sooner rather than later. This is in desperate need of reform to make it fairer, equitable and more sustainable.”

The speech also omitted the unpopular ‘dementia tax’ social care plans proposed by the Tories. Maike Currie, investment director at Fidelity International, said: “There was no conclusive decision on the Conservative party’s controversial social care plans – dubbed the ‘dementia tax’ by the opposition. Instead the Queen pledged that her ministers will work to improve social care and bring forward proposals for consultation.”

Below are the key policies announced which will affect your finances:

Logbook loans

The Goods Mortgage Bill will seek to increase protections to borrowers who have taken out a mortgage on goods that they own, such as their car “logbook loan”. It will also ensure borrowers are better informed about their loan and provide safeguards if borrowers get into financial difficulty.

Tenant fees

Proposals will be brought forward to tackle unfair fees on tenants to make the private rental market more affordable and competitive.

The draft bill will bring forward the following proposals:

  • Ban landlords and agents from requiring tenants to make any payments as a condition of their tenancy with the exception of the rent, a capped refundable security deposit, a capped refundable holding deposit and tenant default fees
  • Cap holding deposits at no more than one week’s rent and security deposits at no more than one month’s rent.

The proposals were first introduced by former Chancellor, Philip Hammond in the 2016 Autumn Statement. At the time, he said: “In the private rental market, letting agents are currently able to charge unregulated fees to tenants. We have seen these fees spiral, often to hundreds of pounds. This is wrong. Landlords appoint letting agents and landlords should meet their fees.”

Energy bills

The Queen outlined the need to make energy markets fairer for consumers, including bringing forward measures to tackle unfair practices and to reduce bills.

The Conservatives have previously promised to bring in an energy price cap to protect around 17 million families on standard variable tariffs from being exploited with sudden and unjustified increases in bills. The move received criticism with the industry warning that it could kill competition and leave consumers out of pocket.

The Smart Meter Bill says that smart meters will now be offered to all households by 2020, backtracking on plans to make them compulsory.

Car insurance premiums

Aiming to create a “fairer market”, legislation will be introduced to help reduce motor insurance premiums.

Insurance Premium Tax (IPT) rose from 10% to 12% earlier this month – the third rise since November 2015 and double the 6% rate at that time. Research has suggested the hike has added nearly £300 a year to typical household annual insurance bills.

Simon McCulloch, director at comparethemarket.com, said: “Over the past three years, our research indicates the average car insurance policy has increased by over £190 and, while cash-for-crash claims certainly contributed, there are many other factors at play. For example, we estimate that the change to the Ogden Discount Rate which came into effect on 20 March could add around £60 to the average annual motor policy– and around £107 for drivers under 25 – whilst successive Insurance Premium Tax hikes in recent years have also ramped up costs, so there is a lot more work to be done to ensure that running a car continues to be affordable.”

National Living Wage

The National Living Wage (NLW) was introduced in April 2016 and applies to those aged 25+. It currently guarantees these workers will be paid a minimum of £7.50 an hour. The Conservatives pledged in their manifesto to increase the NLW to 60% of median earnings by 2020 and then by the rate of median earnings.

There are currently 31.95 million people in work (employment rate at 74.8%) but reports suggest some employers are not implementing the rules properly. As a result, the Queen confirmed the NLW will be increased (as above), meaning the wages of the lowest paid will increase faster than average.

After 2020, the NLW will continue to increase so that the lowest paid workers will benefit from the same improvements in earnings as the average worker.

There was also a promise to “improve public finances, while keeping taxes low”.

Financial advice

The decision to axe the Money Advice Service was revealed in last year’s Budget. As part of the Financial Guidance and Claims Bill, three financial advice bodies will be merged into one, ensuring that people across the UK are able to seek the help and advice they need to manage their finances.

The Bill will establish a new statutory body, accountable to Parliament, with responsibility for coordinating the provision of debt advice, money guidance, and pension guidance.

The regulation of claims management services will be transferred to the Financial Conduct Authority (FCA), with complaints-handling responsibility being passed to the Financial Ombudsman Service.

The UK and Brexit

The Queen said her government’s priority is to ‘secure the best possible deal as the country leaves the European Union’.

She said: “My ministers are committed to working with Parliament, the devolved administrations, business and others to build the widest possible consensus on the country’s future outside the European Union.

“A bill will be introduced to repeal the European Communities Act and provide certainty for individuals and businesses. This will be complemented by legislation to ensure that the United Kingdom makes a success of Brexit, establishing new national policies on immigration, international sanctions, nuclear safeguards, agriculture, and fisheries.”

She added that new bills on trade and customs will help to implement an independent trade policy, and support will be given to help British businesses export to markets around the world.