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Local government workers get half of total public sector Working Tax Credit

The local government workforce accounts for half of public sector Working Tax Credit (WTC) expenditure, despite it making up only a quarter of the public sector workforce, research from the New Policy Institute has revealed.

The number of local government workers receiving WTCs is equivalent to the retail sector and second only to the hospitality industry.

According to the think-tank 11.2% of local government workers receive WTC, around two and a half times higher than the rest of the public sector. Between 2011-12 and 2012-13 local government workers received around £380m in WTC.

Local government union Unison argues that the research highlights just how poorly paid the local government workforce is, and suggests that some of the cost of low pay in the sector is merely being displaced to WTC expenditure, a benefit paid directly by HMRC to workers with a low family income.

The union’s head of local government, Heather Wakefield said: "This is a damning report that reveals just how far pay in local government has regressed. Successive years of pay freezes and paltry rises well below the level of inflation are creating an increasingly impoverished and demotivated workforce, with taxpayers forced to fund tax credits.

"Working Tax Credits is just one of the ways in which social security picks up the tab for low pay in the local government workforce. Paying tax credits and other in-work benefits to local government workers on the lowest rates of pay is a completely false economy. A substantial increase to local government pay would recoup millions for the Treasury in lower spending on benefits, and see more money pumped back into local economies.

"On one hand we have sectors with widespread low pay such as retail and hospitality that are under pressure to reform, but on the other hand is local government which is subject to direct political control and should set an example. However rather than turning local government into a good example, the Chancellor spelled out more misery last week in his Autumn Statement which promised further pay freezes for council employees under a future Tory government."

PSE asked the Local Government Association for comment but did not receive a response by the time of publication.

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