Autumn Statement 2012: Losers

Chancellor George Osborne has delivered his 2012 Autumn Statement, declaring there are “no miracle cures” to plug Britain’s huge £100 billion deficit. But even so, he wielded his axe, with some suffering severe blows, while others breathed a sigh of relief.

We take a look at those that will be hit hardest.

[Related link: Autumn Statement 2012 - the winners]

Wealthy pension savers

There was an expected raid on the pension pots that prompted an outcry given the government’s push to save for old age with the introduction of auto-enrollment this year.

Osbourne slashed the maximum annual contribution you can make to a pension in a year without being taxed to £40,000, from £50,000. This is estimated to save the Treasury £600 million a year.

But the impact isn’t limited to high-earners. Danny Cox from IFA Hargreaves Lansdown stresses that anyone deciding to slot a large chunk away to boost their retirement pot - say, in the last few years of work - will be affected.

Meanwhile, wealthy savers retiring with a pension pot worth more than £1.25 million will face paying tax on the excess. The lifetime tax-free allowance limit was reduced from £1.5 million.

[Related link: Autumn Statement 2012: The key points at a glance]

Most benefit claimants

Working age benefits including jobseekers, child benefit and income support will only be increased at a rate of 1% for next three years. That means a cut in real terms given the rate of inflation is far higher than this. However, disabled and carers benefits will continue to be index-linked.

Osborne said: “We have to acknowledge that over the last five years those on out of work benefits have seen their incomes rise twice as fast as those in work. With pay restraint in businesses and government, average earnings have risen by around 10% since 2007. Out of work benefits have gone up by around 20%.”

Tax evaders

The chancellor continued his crackdown on tax dodgers, with loopholes being shut. He intends to bring money to Britain from undisclosed Swiss bank accounts, for example, and make sure multinationals pay their “fair share”. He said: “It is the largest tax-evasion settlement in British history.” The move is estimated to be worth £5 billion over six years.

Windmills

Despite protests, the chancellor approved the construction of up to 30 gas power stations. As expected, he also approved tax breaks for shale gas exploration using the controversial technique of fracking. This involves cracking open rock by pumping in water and chemicals.

The unemployed

With growth forecasts that have failed to be met, the outlook remains bleak for the economy – and the unemployed, despite Mr Osbourne’s protests that the Britain has more people in employment than the eurozone and US. He said the Office for Budget Responsibility was now predicting a contraction of 0.1% in 2012, down from the growth of 0.8% it forecast alongside the chancellor’s March Budget. So despite boosts for businesses, which should encourage hiring, there is no getting round the poor predictions for growth. 

Northern line commuters

Plans to extend the northern line to include Nine Elms and Battersea may prove a boon for property owners in the area. But for those stressed commuters battling rush hour on the already packed line, it will increase journey time and cause a few more early morning scowls.

Full coverage of chancellor George Osborne's Autumn Statement 2012