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Budget: 'The low paid will bear the brunt'

By Channel 4 News

Updated on 22 June 2010

"The battles lines have been drawn in the government’s first budget, and public sector workers, the vital services they provide, and the poor, sick and vulnerable people who depend on them, are in the firing line," writes UNISON general secretary, Dave Prentis, for Channel 4 News.

Piggy banked smashed (Getty)

Freezing public sector pay, when inflation is running at 5.1 per cent and VAT is going up will mean a real cut in living standards for millions of ordinary workers and their families.

Economic recovery will be another casualty, as the government’s attack on pay for nurses, social workers, paramedics, and PCSOs will hit spending power, and the 25 per cent department cuts will have a devastating impact on jobs, driving down much-needed demand in our economy. 
The chancellor’s approach is not just damaging, it’s based on a fraud. Cutting back the public sector will not inevitably lead to a rise in private sector activity. And while we wait for the Chancellor’s dreams to come true – private sector recovery - the economy will 'bottom out’', meaning misery for millions, raising the spectre of breadline Britain.

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It is not just UNISON sounding the warning bells. Nobel prize winning economists, and American President Barack Obama, agree that the government's zeal for deficit slashing is potentially dangerous and wrong.

They are calling on European economies to stop the hard and fast cuts, and carry on spending to boost economic recovery. A slide into a decade-long depression, not just a double-dip recession, is now on the cards. 
Cutting back the state will have damaging, lasting impacts on public services, the very fabric of our society. Far from fair, as the Chancellor argues, the withdrawal of vital services and spending will only widen the gap between the rich and the poor.  Inequalities are caused not just by the pay gap, many people, especially women and the low paid, depend on public services. Studies show that there is a hugely positive redistributive effect of spending on public services – two thirds of the impact of taxes and benefits.
Meanwhile, the bankers and city financiers who got us into this mess must be breathing one long sigh of relief – they have got off very lightly indeed. Where is the compassion in this coalition?
The errors in the Chancellor’s approach do not end there. Cutting council tax is a useless gesture, saving people pennies but cutting tens of millions from council budgets, threatening jobs, services and undermining the local economy. 

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Some Tory councils have already taken the step of freezing council tax. Low-income families, or fixed income groups like pensioners have been left struggling to pay the price, with additional charges added to meals on wheels, day care centres, or homecare services. Low-income families will again be hit hard by the planned rise in VAT. Low paid people spend a higher proportion of their meagre incomes on basic goods and services.
The Chancellor has not even bothered to consider the alternatives to his slash and burn approach. A clear alternative, that does not involve throwing tens of thousands of public sector workers onto the dole – a move that would cost more than ten billion in lost tax revenue and increased state benefit payments. 
UNISON’s Save our Services budget set out an alternative plan to raise nearly 78bn next year. The government should have taken the banking levy further by introducing the Robin Hood Tax, which would have raised ten times the government’s bank tax. 
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The government pays lip service to fairness, with talk of being 'all in this together', but the low paid will bear the burden of this budget.  Instead of tinkering at the edges the Government should have grabbed the opportunity to raise £4.7bn by raising income tax for those earning over £100,000 to 50 per cent.

Dave Prentis (pictured right) is general secretary of UNISON which represents public sector workers.

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