Public and Commercial Services Union
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Government makes the poor pay for economic crisis
Measures in the government’s first budget, including slashing £11 billion from welfare benefits and increasing VAT to 20% from next year will punish the poorest in society for an economic crisis caused by financial speculators.
While some measures are to be welcomed, such as the increase in the personal allowance for income tax and restoring the earnings link for pensions, they are cancelled out by other announcements.
Far from protecting the most vulnerable, among the welfare cuts are a commitment to force more people off disability living allowance, a three-year freeze to child benefit and cuts to tax credits.
With inflation running at over 5%, and thousands of civil servants already suffering pay freezes and below inflation increases, a two-year pay freeze for public sector workers earning £21,000 or more is deeply unfair and will drive down living standards.
Cuts of 25% in most government departments will also inevitably lead to massive job cuts at a time when unemployment is continuing to rise.
The costs of public sector pensions are far from “spiralling” as the chancellor George Osborne claimed, they are modest and sustainable - as the National Audit Office recently confirmed.
Any gap between average public and private sector pensions is the fault of private sector employers retreating from making decent provision for their workforces. It is not the fault of low-paid public servants, who will retire on a low pension.
The union is deeply concerned that the government’s insistence that cuts in public spending should account for 77% of the deficit reduction poses a serious risk of further damage to our economy.
The union believes there is an alternative to budget cuts. The government should be investing in the public sector to help the economy to grow, and it should take action to tackle the widening tax gap which means an estimated £120 billion in revenue is lost every year.
Tax evasion by some very wealthy and powerful individuals and organisations accounts for £70 billion of this, tax avoidance is £25 billion, and currently £28 billion is uncollected because HM Revenue and Customs does not have enough resources - of this £11 billion has been written off as unlikely to ever be collected.
PCS general secretary Mark Serwotka said: “During the election, the Liberal Democrats campaigned hard against the Tories’ ‘VAT bombshell’. But increasing VAT to 20% will now go down as one of their first acts in the coalition that shamefully calls itself ‘progressive’.
“This is one of the most regressive budgets we have seen for many years, with attacks on the low-paid, the unemployed, pensioners, the welfare state and the public sector as a whole.
“This is not a progressive budget to help the country recover from the worst economic crisis in living memory, it is a programme of despair for millions of people who did not cause the recession and should not be made to pay for it.
“We do not believe that these cuts are necessary, we do not accept the flawed analysis on which they are based, and we are committed to helping to organise joint union action and campaigning in communities to resist them.”