Daily Mirror (Northern Ireland)
RISHI & POORER
Public sector pay frozen for next year Unemployment is set to hit 2.6 million Sunak: UK now in economic emergency
RISHI Sunak has dealt a double blow to low-paid workers as the nation’s finances reel from the devastation caused by the Covid-19 pandemic.
Millions of public sector workers will have their pay frozen next year in a return to austerity-style wage restraint.
Doctors, nurses and other NHS staff will be exempt, a reward for their service in the darkest days of the pandemic.
Public sector workers earning less than £24,000 will get a rise of at least £250, which could amount to a realterms pay cut after inflation.
EMERGENCY
A 19p-an-hour minimum wage rise was also less than was expected, while two million people on benefits will get an increase of just 37p a week in April.
Mr Sunak said: “Our health emergency is not over and our economic emergency has only just begun.”
Labour and union leaders condemned the measures in th e Chancellor’s Spending Review.
Shadow Chancellor Anneliese Dodds said: “Earlier this year the Chancellor stood on his doorstep and clapped for key workers. Today his Government institutes a pay freeze for many of them. This takes a sledgehammer to consumer confidence.”
TUC General Secretary Frances O’grady said: “For all the Government’s talk of levelling up, this spending re v i e w wi l l level down Britain, hitting key
workers’ pay and breaking the Government’s promises to the lowest paid.” Mr Sunak said he could not justify a wider public sector pay rise when the private sector had been so badly hit.
But official statistics show that real wages growth over the past decade has been minus 2% in the public sector compared with plus 2.5% in the private.
The Chancellor’s promise of a £4billion “levelling up” fund for local projects across the country also raised eyebrows. He suggested that support for
schemes, such as bypasses, libraries and high street improvements, would be conditional on support from local MPS.
Labour accused the Government of “pork barrel” politics – spending to benefit Tory MPS in return for their political support – even though Treasury sources insisted there would be “rigorous scrutiny” of spending.
Boris Johnson also came under fire for cutting around £5bn in aid for the world’s poorest people. The Government believes the decision will be popular with red wall voters, while critics say it will damage Britain’s global standing.
Millions of people in England could also face eye-watering above-inflation
council tax rises in April, with councils allowed to raise bills by up to 5% – a chunk of the money going on social care.
The small print of the Spending Review revealed a £650m cut to housing benefits. The amount low-income renters can get to help with rent will be reduced, months after it was raised due to the pandemic.
Th e de vastation caused by th e pandemic will trigger the worst recession for 300 years. Government borrowing will balloon to a peacetime high of £394bn.
It will leave public sector debt at 105% of GDP – the highest level since 1959-60.
The Office for Budget Responsibility issued a barrage of bleak forecasts.
Mr Sunak was warned there would be
For all the Government’s talk of levelling up, this will level down Britain FRANCES O’GRADY TUC GENERAL SECRETARY
lasting damage, with the economy shrinking by 11.3% this year and not expected to recover to pre-crisis levels until the end of 2022. Unemployment is forecast to hit 2.6 million by the middle of next year.
The Chancellor has already unveiled a new £4.6bn package to help people back to work.
GDP is predicted to plummet by 11.3% in 2020 – the largest annual fall since 1709, the year of the Great Frost, the coldest European winter during the previous 500 years.
The “long-term scarring” from the Covid crisis means that in 2025 the economy will still be around 3% smaller than expected. Mr Sunak warned tax rises would be needed to plug the funding black holes created by the pandemic.
Defending the record £280bn of spending to tackle the coronavirus, he told the Commons: “High as these costs are, the costs of inaction would have been far higher.
“But this situation is clearly unsustainable over the medium term. We have a responsibility, once the economy recovers, to return to a sustainable fiscal position.”
The Government claims it has ruled out a return to austerity.
But Institute for Fiscal Studies director Paul Johnson warned: “It seems more likely than not that spending will end up significantly higher than set out today.
“And so borrowing in 2024-25 will be considerably more than the £100bn forecast by the OBR.
“Either that or we are in for a pretty austere few years once again, or for some significant tax rises.”