Graeme Yorston

18 March 2015

Budget 2015: CEO's reaction

Our Group Chief Executive, Graeme Yorston gives his reaction to the 2015 Budget.

Graeme Yorston, Group Chief Executive at Principality Building Society, said: 
“While it remains to be seen whether today’s decisions will stand the test of time or whether the Chancellor’s moves were purely designed to woo key voters, there’s no denying that there were some progressive announcements for savers and first-time buyers which will reward those who choose to save their hard-earned money and aspire to enter the property market.

“Moves to reduce the Severn Tolls, bring forward a Cardiff City deal and on Swansea Tidal Lagoon are also to be welcomed. However, as with much of today’s Budget, the devil will be in the detail in terms of how these projects and decisions play out and whether they result in the delivery of sustainable economic growth for Wales.” 


“A change to ISA rules giving ISA holders more flexibility and a new ISA for first-time buyers, is a huge step to empowering savers and incentivising first-time buyers to make that all-important first step onto the housing ladder. Trusting people with their own savings and enabling them to withdraw from an ISA as they choose is a progressive move that will enable people the freedom to withdraw and deposit, without it affecting their tax-free limit.

“Similarly, the Help-to-Buy ISA will offer aspiring homeowners a crucial leg-up onto the property ladder by helping them to save that all-important deposit.  Raising a deposit is a huge barrier to home-ownership for many young people, so today’s announcement will offer a clear incentive to work towards home ownership.

“Of course, there will be questions around how these new products are implemented with providers, so we await further guidance on this.”

Abolition of savings tax 

“Today’s Budget has been widely heralded as a Budget for savers and it is encouraging to see the range of support measures designed to reward those who choose to save, who have been hit by low interest rates for some time now. The Chancellor’s announcement that from April 2016 a new "personal savings allowance" will reward savers by not taxing the first £1,000 of savings income for basic-rate taxpayers, and the first £500 for higher-rate taxpayers – will enable savers to get a greater return on their hard-earned savings. The very top earners will not benefit but Mr Osborne said that this reform would abolish the tax on savings for 17 million people, which will no doubt be a welcome announcement to many households.”

Pensioners’ annuities

“Moves to empower savers are a good concept in principle, particularly with the abolition of savings tax, which will allow many pensioners to make their own choices over what they want to do with their money. However, for many pensioners annuities could still be the best option. A broad brush approach might not take into account personal circumstances and there’s a danger that it’s an ill-thought, quick win plan by the Chancellor which could result in people getting into financial difficulties and ultimately more people living off the state in the long term. There’s been plenty of speculation that the annuity moves will result in an influx of alternative investments, such as buy-to-let, but savers must be mindful of being hit by blind-side taxes in these alternative investments. In an already low-interest environment, pensioners must think long and hard and seek sound financial advice to ensure that cashing in their annuities isn’t a counterproductive move.”

Increase to the personal tax allowance

“The lifting of the tax threshold to £10,600 in the next two weeks, £10,800 next year and £11,000 by the year after next is, on the surface, a positive move that will lift many people out of paying tax altogether and result in savings – albeit marginal - for many working people. But it must not be forgotten that a reliance on cheap jobs for an economy is not necessarily a good thing. It is the dwindling rise in the government’s income tax receipts has in part contributed to the greater-than-desired budget deficit and, in that sense, the increase could potentially compound this and therefore be counterproductive.”

Published: 18/03/2015