Pre-budget report: Reaction

by | Dec 9, 2009 | Articles, Section: Article | 1 comment

The measures in Alistair Darling’s pre-budget report today, while welcome, do not go far enough to meet the government’s target of halving child poverty by 2010. As things stand the government looks set to miss this target by an unacceptable 550,000. With child poverty costing the economy an estimated £25bn a year serious investment in helping eradicate child poverty would do a good deal to reduce the deficit moving into the future.

There are elements we welcome including extension of free school meals, helping to make work pay, training and support for unemployed young people and a move toward a fairer more redistributive tax system. However none of these measures have gone far enough to help the government meet their child poverty target.

Alistair Darling has responded to the recommendations of Child Poverty Action Group and other members of the End Child Poverty Coalition to put money into free school meals, an effective way of reducing poverty and increasing educational attainment for young people in families on low incomes. The estimate 50,000 who will be lifted out of poverty is to be welcomed but had the measure been rolled out universally as was recommended it would have made a more meaningful inroad on child poverty.

We welcome the statement that extra money will be made available to ensure people will not be made worse off by going into work and measures to increase training for unemployed young people. However, with 60% of children in poverty having at least one parent in work we clearly need to go further to make work a sustainable route out of poverty.

The current Labour government more than any other in history have made ending child poverty a priority and we have seen great progress since 1999. However the government must take bold action in the budget next March in order to make sure this progress doesn’t stall and to take us as close as possible to halving child poverty by 2010.

1 Comment

  1. Ray McHale on December 11, 2009 at 3:45 am

    Glad to see you got a good job, Josh. But don’t be writing for thsi right wing website. These Blairites won’t care about Child Poverty.

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Pre-budget report: Reaction

by | Dec 9, 2009 | Articles, Section: Article | 0 comments

I did not get to watch the pre-budget report today as I was in UNISON, my union’s, National Executive hearing about cuts in services in local councils, police and health services, and how UNISON is making the case for quality public services, as well as how our members’ pay and conditions have come under attack and how we are defending our members, especially the successful Leeds bin strike.

But reading the pre-budget report statement what should public service workers make of it? We didn’t hear details of cuts to come, but the expectation that they would come. An average growth of 0.8% while better than the slashing that Tories and Liberals would inflict, still represents real and significant cuts.

We did hear that public service workers would feel it in our pockets now and our old age. The chancellor indicates a pay policy capping increases at 1% across the public sector in 2011 and 2012. Even the best financial analysts cannot know what inflation and the pressures on the cost of living is by then, especially for the lowest paid who we know suffer much higher real inflation than other workers. For me my pay is based on an Independent Pay Review Body, and ministers will remember the anger of health workers when they rejected the NHS PRB award in the last months of Gordon Brown being chancellor.

And on our pensions, this seems to be coming from the myth, pushed by the Tories and Lib Dems of ‘gold-plated’ pensions for ‘feather bedded’ public servants. Well the truth is far from gold-plated, with the average annual pension in local government being £4000 and only £2000 for women. The bankers who caused the crisis would be appalled if their pensions were capped at that level. But UNISON, along with other public sector unions, negotiated with employers and the government reforms to our pensions to make them sustainable, and Labour should be the party to go into the next election promising public sector workers that their pensions are safe.

UNISON’s Million Voices campaign is about us as public service staff speaking out for the importance of our services to the communities we serve, and to the economy. Association for Public Service Excellence (2008) demonstrated that for every pound spent on local public services, 64 pence is re-spent in local economies, spending that local businesses and the jobs that rely on them cannot do without.

As part of our Million Voices campaign UNISON has published our alternative budget which raises £74bn a year through fair taxation and cutting real waste. Real waste, like the £2.8bn by ending the use of private consultants by central government.

So when it comes to the budget, the chancellor should listen to our Million Voices, protect public services and protect the economy.

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Pre-budget report: Reaction

by | Dec 9, 2009 | Articles, Section: Article | 0 comments

Deficit reduction

The UK is the only G20 economy still in recession, yet it will also be one of the first to start tightening fiscal policy when VAT returns to 17.5% in January. The chancellor was right to avoid larger tax increases or spending cuts in the short-term that would have risked the economy remaining in recession throughout 2010.

Taxes

The chancellor is absolutely right to tax bankers’ bonuses. Banks are only making money thanks to the support of the taxpayer. If wealthy bankers cannot recognize that fact and exercise self-restraint, then the government has no choice but to act. Threats to leave the country need to be faced down.

But the chancellor should have also seized this opportunity to set out a vision for the shape of the tax system, including more green taxes and making the system more progressive, rather than just announcing ad hoc changes to a number of taxes.

Spending

There is no justification for ring-fencing certain areas of spending when the public finances are so strained. Spending on health and schools has increased rapidly in recent years and savings should be possible without affecting the quality of provision. And rather than increased funding for the police, fundamental reform of the way the police service is governed, organised and held to account is long overdue.

Cutting capital spending should have been avoided as it will only build up problems for the future. Spending on infrastructure and skills will boost the economy’s competitiveness and growth rate in the medium-term.

Measures to help the unemployed and ease child poverty

A long time spent out of work at a young age can scar an individual for life. The government is right to guarantee work or training for anyone under the age of 24 who has been out of work for six months.

The announcement of more free school meals to lift 50,000 children out of relative poverty is welcome, but not enough. The recession will lead to more child poverty and, as a result, more children are likely to underperform at school and face a higher risk of unemployment and low wages in adulthood.

Overall

Good in parts but opportunities were missed for more fundamental reform.

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Pre-budget report: Reaction

by | Dec 9, 2009 | Articles, Section: Article | 0 comments

The PBR needed to focus on growth and getting the deficit down. Today Darling did that. Here are my highlights:

Support for small businesses: With a freeze in corporation tax, increasing the threshold for empty property relief and extending the loans guarantee schemes small businesses have received a welcome fillip of support. Small businesses are the backbone of our economy and this will ensure that they are at the forefront of the recovery too.

Youth unemployment: With more support for jobs and training Labour today has made it clear that we will not condemn a generation of young people to the scrapheap as the Tories did in the 1980s and ‘90s. Youth unemployment has risen fast in this recession and Darling is right to ensure that we do everything we can to get young people into high quality jobs.

Low carbon economy: In the week that the Copenhagen summit gets underway Darling showed that he recognises that greening our economy will help create the jobs of the future. Support for green technologies and the boiler scrappage scheme that will make our homes more environmentally friendly are both economically and environmentally the right thing to do.

Deficit reduction: We all know that we need to bring down the deficit. Spending now is getting the economy back on track and will avoid the double dip that Osborne’s reckless cuts mantra would be sure to bring. But going forward the books do need to balance. The Tories say we’re all in this together but it’s Labour today who put that soundbite into practice. Tough action on non doms, a freeze in inheritance tax and a 50|% tax on bonuses of more that 25k mean that it is those with the broadest shoulders who are contributing a bit more to reducing the deficit. The Tories continue with their position to give a tax break of £200,000 to 3,000 millionaires by raising the inheritance tax threshold to £2m, at a time when everyone else is struggling to make ends meet. I expect the Tories will oppose the tax raising measures in today’s PBR – the Tory funders in Belize and Richmond won’t want to see their fortunes being used to reduce the deficit. But to avoid the poorest paying the highest price for a recession that they did not cause we must ensure that spending cuts are balanced with tax increases.

Today’s statement by the chancellor was not a painless PBR, but it was a responsible one. The dividing lines are getting clearer and voters are being offered an increasingly stark choice at the next election.

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