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Public sector unions condemn new Budget pressures on pensions

Yesterday’s Budget has angered public sector trade unions, who have warned the ‘smoke and mirrors’ financial measures will increase pressures on the sector through spending cuts and increased pensions contributions.

After warning of cuts because of concerns about the stability of the global economy, chancellor George Osborne announced £3.5bn public sector cuts by the end of this Parliament.

He also raised public sector employer pension contributions by over £2bn by 2021, following an evaluation of the pension discount rate.

Dave Penman, general secretary of public senior managers’ union the FDA, said: “Once again, when the chancellor's numbers don’t add up he comes to the well of public services to drink again by announcing further budget cuts.

“It's only three months since departmental budgets were set and yet departments are now expected to deliver an additional £3.5bn of savings in 2019-20 through another efficiency review.

“But that's not all. By announcing a change to the discount rate on public sector pensions - without any consultation - they are effectively removing a further £2bn from public services and transferring it to the Treasury to give the illusion of a surplus: a political con trick that can only further damage public services.

“This government have consistently failed to explain to taxpayers and public servants how the resources it allocates to match the commitments it makes, despite the promise to do so. Unfortunately for the chancellor, his smoke and mirrors on the pension contributions can't hide the fact that the cuts are significantly worse than his headline announcement."

Mike Clancy, general secretary of Prospect, added that most of this money will not go towards paying for pensions; it will be paid to the Treasury instead.

“If the chancellor holds on to this windfall and does not disburse the funds back to the public sector, it will have to find this amount in savings on top of the cuts it is expected to deliver under the last spending review,” he said. “George Osborne is hiding the true extent of the cuts he is imposing behind stealth measures such as this.”

Clancy also warned that measures in the Budget to levy employer National Insurance Contributions on redundancy payments in excess of £30,000 would also create problems for public sector employers because of forthcoming jobs cuts in the sector, estimated to be over 100,000 this parliament.

(Image c. Hannah McKay from PA Wire)


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