Two Pennies Worth

Will 2011 really be "a horrible year"?

2010 was yet another tough year, with Britain pulling slowly out of recession and witnessing the start of tough new government money-saving measures. But trade unions are now warning that we should expect even worse in 2011. Are they right? Confused.com's Stephen Jones considers it all.

Most Brits could be forgiven for breathing a huge sigh of relief as 2010 draws to a close. It's been a tricky old year, and few, if any, have escaped the pain altogether - whether they've suffered from low interest rates, continued job losses, stuttering property prices, falling annuity returns or indeed anything else that's come with this economic downturn.

However, if the Trades Union Congress is to be believed, we could be in for worse in the coming 12 months. In a cheery New Year message, general secretary Brendan Barber warned that "2011 is going to be a horrible year", before arguing that cuts to benefits and public services, along with increases to taxes such as VAT will lead to growing public hardship in the coming months.

Is this fair? Well, certainly things will get tougher for some. Charities such as Shelter have warned of a rise in home repossessions as a result of government cuts to housing benefit and mortgage support schemes, while this would undoubtedly be exacerbated if interest rates were to rise from their current record lows. And of course, an estimated 500,000 public sector job losses aren't likely to help.

On top of that, the Bank of England predicts that the Consumer Prices Index (CPI) is likely to stay above its 2 per cent target throughout 2011 – meaning earnings and savings rates are likely to stay below inflation for the next 12 months at least.

But there are some reasons to be cheerful, even if they might be hidden underneath all the bad news. The British Chambers of Commerce recently pointed out that growth in the private sector would mean that the country shouldn't slip back into recession next year, and a recent study by the Forum for Private Business predicted that more than half of small businesses would create jobs in the coming 12 months.

It may seem that economists are just damning our economy with faint praise, but you only have to look at Greece or even across the Irish Sea to see how much worse things could get. So let's be grateful for small mercies, and keep our hopes up for a prosperous 2011.

And on that note –thanks to everyone who has followed this blog during 2010, I hope you all have a very happy new year. Here's hoping it's not so horrible after all!

What are you expecting for 2011? Have your say by commenting below.

Should snowfall bring the UK to a standstill?

Severe weather has yet again brought planes, trains and automobiles to a halt, but could some of the chaos have been avoided?

It’s amazing to think that, in the age of the internet, a whole country can be brought to a near standstill as a result of snow. Yet the past week has seen almost all forms of transport ground to a halt as providers and local councils struggled to cope with the effects of the inclement weather.

While it wouldn’t have prevented the chaos, the government could well have improved things by holding up its end of the bargain. The Winter Resilience Review - a report delivered in January and led by David Quarmby, head of the RAC - urged the government to buy in 250,000 tonnes of emergency salt supplies by the beginning of winter, to cover local authorities that run out.

Though the Department for Transport apparently accepted this recommendation, yet less than half of this had been delivered by the start of this month, according to Transport Minister Phil Hammond.

And it’s not just transport – footpaths in many parts of the country are perilous – anyone traversing my road at about 2.30pm yesterday would have been treated to the sight of me flying through the air before landing flat on my rucksack. Worry not, my ego was more bruised than anything else, but I do wonder what would happen if it were someone elderly or pregnant that needed to get somewhere.

Apparently, footways are not a priority for most local authorities; yet I imagine I’m not alone in expecting that my taxes should go towards making it safe to walk on major walkways at least.

Been affected by the heavy snowfall? We want to hear your stories, and how much responsibility you think the government should take for making our roads and pathways safe.

Forget tuition fees, it's younger students I fear for

As students rampage through the streets of London, all the talk is about soaring tuition fees. But one cut is arguably a far bigger barrier to poorer children entering university, argues Confused.com’s Stephen Jones.

A lot of hot air has been blown about the big hikes to tuition fees coming into effect in 2012. Whether or not you think it’s fair that students should be forced to bear a bigger portion of the cost of learning, the argument that increasing fees will prevent people from going to university doesn’t, to me, stand up to scrutiny.

That’s not to say the changes won’t be painful, but I fail to see that a student choosing university will be put off by the cost – for a start, it’s not something I really thought about when I was 17. That was for my parents to worry about.

Plus, due to the low-cost nature of student loans, it’s less the size of the borrowing, but more how it’s paid back that should be taken into account. With these new measures, students won’t actually start paying back their loans until they reach £21,000 – the current level is £15,000. That leaves students nearer the bottom end of the pay scale better off at the start of their careers, the time when they most need it.

Of course, it does mean paying for longer, leaving less disposable income for people as they have kids, take on a mortgage – in reality many may never pay off their loans in full by the time they retire. But, seeing as a university education is thought to increase your lifetime earnings by £100,000 on average, I don’t see that this will come into the thinking of many people deciding whether to go into further study.

A much bigger problem, in my view, is the announced cut to the Education Maintenance Allowance (EMA). For those not familiar, the EMA offers up to £30-a-week for teenagers going through further education such as A-levels, on a means-tested basis.

Students will no longer be able to claim EMA from January 2011, meaning many poorer students will have to find another way of funding their tertiary education. £120 a month, whichever way you look at it, is a big amount of money to lose for anyone at a young age, and, aside from the increased hardship, it could well put people off continuing their studies altogether.

I have a few friends that claimed EMA when I was going through school, and any of them would tell you that it made a massive difference – allowing them to work reasonable part-time hours that didn’t impede on their studies. Without it, there would definitely have been some questions raised as to whether college or 6^th form was either worthwhile or affordable.

And, unlike tuition fees, this is money that students will be losing out on right away. Like many others, my worry is that young people will be put off continuing their education. Unlike most, I fear that it will happen long before university even comes into the equation.

Got a view on the fees? Let me know by commenting below or email me: stephen.jones@confused.com.