UK Government Economic Statement – UNISON short response
Growth figures falling
Plan A is not working (Growth 0.9% - 2011 and 0.7% - 2012).
Unemployment will continue to rise in 2012 and the economy will get worse in 2012.
We desperately need to get the UK spending and build consumer confidence. A bad situation will only be made worse by imposing a £3.6 billion tax on public sector pensions in the form of contribution increases.
The need for further austerity measures for an extra two years between 2015 and 2017 mean that public sector job losses are now predicted by the Office of Budget Responsibility to massively increase to 710,000 by 2017. Already 240,000 jobs have gone. Private sector job growth will be insufficient, e.g. only 41,000 were added in second quarter of 2011 against 110,000 public sector losses. There is a real risk that there will be a net loss of private sector jobs, provoking a deflationary slump similar to the 1930s. The OECD is already warning that the UK faces a good chance of falling back into recession.
New infrastructure investment is welcome but it is from a very low base as the emergency Budget of 2010 cut it back to the bone, for example cancelling the Building Schools for the Future programme in England. It is too little too late and any positive impact will not come in time to prevent a recession.
The weakening of employment rights will cause insecurity and less spending. Costs to workers will rise up for credit, insurance, mortgages and loans (as Business Secretary Vince Cable MP himself suggests).
Another real pay cut
George Osborne has said public sector pay will be capped at an average of 1% increases for the two years after the current pay freezes end in 2013. This saves about £1.1bn. UNISON believes that this is unfair and will further cut living standards and weaken the economy. Though inflation is expected to fall from the current level of 5% over the next 18 months, it is not projected to fall below 1% and therefore this represents real terms cut in pay. This would mean an effective 4 year period (5 years in Local Government) of real term pay cuts amounting to an approx 16% cut in living standards for the duration of the Coalition Government.
Pension age increase from 66 to 67 (bought forward from 2030 to 2026)
UNISON remains very concerned that there has been insufficient consideration given to issues around working longer. Whilst people are living longer it is by no means clear that they can work to the same level until well into their 60s. For example, can and should a paramedic, nurse, teaching assistant, cleaner, refuse collector do at 67 what they did at 35?
A new YouGov opinion poll carried out for UNISON this month has indicated strong public support for more protections for older workers in the context of an increase in the retirement age. Such protections might include moving on to less physically and mentally demanding tasks, moving onto different shift patterns or reducing hours without detriment. The poll also showed support for stronger legal protections against discrimination of older workers. All of the issues around working longer need to be addressed before the pension age increases.
Regional and Local Pay
The Government will ask Pay Review Bodies to consider how public sector pay can be made more responsive to local labour markets by July 2012.
UNISON believes that this could be another measure to cut pay in already depressed areas. These areas already being hard hit by job losses in both private and public sectors and other cuts and this could compound the problem and widen regional disparities further. It would contradict the aim of the new Regional Growth Funds. Furthermore, evidence suggests that the top performing private companies use regional and local pay very sparingly as it there is more cost of living variation within regions than between them and it inherent so complex that it becomes costly and inefficient.
Benefits
The Government will up-rate working age benefits in line with September CPI inflation of 5.2%. This is welcome but this only honours all previous commitments it is only in line with current inflation. Inflation for low paid workers who spend more of their budget on food, energy, fuel and transport is currently much higher than official figures and is close to 10%. Some tax credits are not being increased by this figure and are effectively real term cuts.
