Queen’s Speech 2015 & Your Personal Finances

Queen's Speech 2015 & Your Personal FinancesThe first Conservative Queen’s Speech in nearly 20 years featured proposals for various personal finance measures.

Perhaps the most important personal finance measure in the Queen’s Speech 2015 was the promise of an EU referendum by the end of 2017.

This is likely to result in a period of uncertainty for investors and markets, as the consequences of Britain leaving the EU could be dramatic for our currency, direct investment in Britain and our sovereign credit rating.

Leaving the EU could also mean interest rates staying lower for longer, as the Bank of England compensates for lower economic output.

Another big personal finance announcement in the Queen’s Speech today was the intention to freeze income tax, VAT and National Insurance for the next five years.

This five year ‘tax lock’ would be written in law, preventing the government from increasing these key taxes during the life of this fixed term parliament.

There are also plans to implement the Conservative manifesto promises of a £12,500 personal allowance for income tax by 2020.

The government says the purpose of the National Insurance Contributions and Finance Bill is to “reward those who work hard and do the right thing”.

There was good news for parents in the Queen’s Speech 2015, with the promise of 30 hours of free childcare each week for three and four year olds by 2017.

Working parents already experience some of the highest childcare costs in the world, so any measures to increase free childcare provision will be a welcome relief for family Financial Plans.

Under current law, parents of three and four year old children qualify for the equivalent of 15 hours of free early years education or childcare each week during a 38 week year.

A possibly overlooked inclusion in the Queen’s Speech was the Bank of England Bill, designed to align monetary policy, macro prudential policy and micro prudential regulation by further strengthening the governance and accountability at the Bank.

Business owners will welcome the Enterprise Bill, which will include measures to reduce regulation on small businesses in a bid to boost job creation. It aims to cut red tape for British businesses by at least £10bn and require independent regulators to contribute towards that target.

Also in the area of enterprise, the proposed Full Employment and Welfare Benefits Bill would aim to achieve full employment “and provide more people with the security of a job”. This would happen through the creation of two million new jobs and three million new apprenticeships.

This bill will also introduce a planned reduction in the welfare cap, cutting it from £26,000 to £23,000 per annum per household. It will also freeze working-age benefits, tax credit and child benefit for a period two years.

There was little mention of pensions in the Queen’s Speech, with the exception of the government’s intention to “secure the real value of the Basic State pension so that more people can live in dignity and security in retirement.”

This means continuing the ‘triple lock’ – increasing the State pension by the higher of inflation, earnings or 2.5% a year – up until the end of this parliament in 2020.

We await clarification however as to whether this promise will be extended to new single tier pension being introduced from April 2016.



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About Martin Bamford

Martin Bamford is a Chartered Financial Planner, Certified Financial Planner (CFP) professional and published personal finance author. He works with elderly clients to provide advice on funding residential care fees, hosts the Informed Choice Podcast and is a keen ultra runner.
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