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‘Middle-class tax credits and baby bonds are luxury we can’t afford’
6 Oct 2009Where George Osborne's cuts will hit the hardest. The Shadow Chancellor delivered his assessment of the economic situation with brutal reality.
Public sector: Union fury over pay freeze
Unions reacted with anger at the one-year public sector pay freeze planned by Mr Osborne. The only exemptions are those in three-year deals or earning less than £18,000.
Most teachers, nurses and council officials are in the line of fire. Tories said they would not be allowed “catch-up” rises in subsequent years.
Labour is only pressing for a pay freeze for top-earning public servants, such as GPs, mandarins and judges.
A spokesman for the Police Federation, which represents rank and file officers, said it was pleased the existing three-year pay deal would be honoured, but warned it would resist any attempt to impose a salary freeze in 2011.
The Prison Officers Association, which last year staged wildcat strike action in defiance of a legal ban in a dispute over pay and conditions, is also certain to resist any attempt to freeze its members' salaries in 2011.
Chris Keates, General Secretary of the NASUWT teachers' union, said: “Public service workers and the community will pay the price for reckless bankers.”
Mark Serwotka, leader of the Public and Commercial Services Union, said Labour and the Tories were conducting a “Dutch auction” about who could be toughest on public sector workers.
Dave Prentis, leader of Unison, said: “Millions of public sector workers will be left out in the cold by this pay freeze. Other staff will have to pay with job and service cuts, while bankers and tax cheats escape with a slapped wrist.”
Jon Skewes, of the Royal College of Midwives, said: “The birthrate has increased by over 20 per cent and we have too few midwives. A pay freeze may well cause many to leave.”
Whitehall: Civil servants hit hard
London's army of civil servants will bear the brunt of Mr Osborne's plan to slash a third from Whitehall running costs.
Jonathan Baume, leader of the First Division Association, which represents senior mandarins, doubted that cuts on such a scale were possible.
He also said Mr Osborne's plans to cap pensions would breach contractual rights.
“Bureaucracy and quangos” will bear the brunt of cutbacks. The plan claims £3 billion a year could be saved. It says the Government should “find ways to cap the biggest government pensions, aiming to impose a £50,000 ceiling”, but does not specify how this would be done. It would undoubtedly involve legal disputes with the unions.
Forces: Troops given pay boost
Doubling the “operational allowance” for troops in Afghanistan to £4,800 will be warmly welcomed by military families.
The current allowance gives them a tax-free payment of £2,380 at the end of a six-month tour, but many complain this is too little. American soldiers enjoy tax-free salaries and French, German, Italian, Spanish and Dutch troops get generous allowances.
British squaddies earn from £20,178 to £28,378 a year. One soldier, Dean Byfield, put Gordon Brown on the spot in Helmand last August, when he asked why he was paying any tax at all.
Middle classes: Fewer benefits
Tigher means testing of state handouts would remove benefits from the middle classes.
Tax credits would no longer be paid to households where the joint income is over £50,000. Two earners on a total of £48,175 would be hardest hit — losing £545, or £10 a week.
At present tax credits are paid in full up to £50,000, then taper down to zero at £58,000. Lowering the threshold would save £2 billion over a Parliament, according to the IFS.
Child trust funds would be axed for all but the poorest, to save £1.5 billion over a Parliament. The scheme was launched in 2005 to pay a £250 voucher to create nest-eggs for newborns. Existing accounts would not be affected.
