STUC initial reaction to Budget 2014

March 19th 2014

Speaking after the Chancellor gave his Budget Statement, Grahame Smith, Scottish Trades Union Congress (STUC) General Secretary said:

“With the majority of spending cuts yet to be implemented and the unprecedented decline in real wages ongoing, there was nothing in this Budget to help the low paid or those out of work. This Government is clearly intensely relaxed about falling living standards.

“The Coalition continues to pretend that raising the personal tax allowance is a progressive measure which helps the lowest paid who are suffering most from falling wages and benefit cuts. However all the evidence shows that the benefits of this policy flow largely to households in the upper half of the income distribution.

'The additional help with Childcare costs really misses the point. There is no control on Childcare fees in the private sector and the new measures will mostly see public money going to meet fee increases. Low pay and poor working conditions for Childcare workers remain unaddressed. Working parents need a serious investment programme for publicly funded Childcare services, appropriate to the needs of local communities and workers in every industry - with no judgements about eligibility. '

“Additional assistance for exporters and energy intensive industries is welcome but hardly signals the manufacturing renaissance promoted by the Chancellor. The STUC is sceptical that increasing allowances will lead to an investment boom. It should be noted that many businesses are currently cash rich but unwilling to invest.

“The STUC would give a cautious welcome on arrangements for increased flexibility for pensioners converting pension pots in retirement including the scrapping of compulsory annuities and provision of impartial advice. However, more detail is needed and annuities, despite their flaws, did provide regular retirement income.

“Our concern is that the increase in capped drawdown limits to 150% of an equivalent annuity may encourage those with smaller pension pots to take more out of their scheme in the early years of retirement and leave less for later. The STUC would want to see how the Government plans to help those with smaller pension pots get the best out of the new arrangements and get a better return from their pension savings throughout their retirement.

“We are also concerned that the Government has not addressed the inequalities on pension savings for those who have incomplete work histories and cannot afford to save, particularly young people and women. Auto enrolment may be a start but a contribution of 8% may not deliver sufficient income in retirement.

“'We know from talking with our younger members that many worry about money with some having to access pay day lenders in order to survive. Furthermore the vast majority of unemployed young people remain seriously concerned about their future career and earnings prospects. This budget does nothing to allay the fears of young people in or out of work.”

ENDS

For further information contact Stephen Boyd 0141 337 8100

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