Pre-Budget Report: Reactions

Pressure groups, unions and the bookies react to Alistair Darling’s Pre-Budget Report (PBR).

By Ian Dunt

The best place to look for how confident Alistair Darling’s speech had made the British public was the betting shops. They react instantly, and with economies comprised primarily of millions of people’s nervous tics, they are the most reliable place to check. The signs weren’t good.

Paddy Power instantly cut the odds on Britain maintaining its coveted AAA credit rating following the speech from 3/1 to just 6/4. “Darling’s Pre-Budget speech, arguably Labour’s most important financial speech since coming to power in 1997, has done little to convince punters that Labour have a handle on Britain’s debt-ridden economy,” said Darren Haines, spokesman for the company.

The unions weren’t happy either. After all, Darling had announced a one per cent, two year pay cap and pensions cap on public sector workers.

Here’s what Dave Prentis, general secretary of Unison, had to say: “I am not going to sign up to this. I know how our members feel – they feel angry and betrayed. It is just not on to make nurses, social workers, dinner ladies, cleaners and hospital porters pay the price for the folly of the bankers.

“The people who earn most should pay the most. Instead we have the disgraceful spectacle of rich bankers threatening to leave the country if they don’t get their massive bonuses. Where is their loyalty? In tough times the rich should show leadership, not run off to the nearest tax haven.

“Capping pension contributions will reduce the already small public sector pensions even further.

“We know that for every £1 a public sector work earns they spend 70p in their local community. Any squeeze on their pay will put a stranglehold on local businesses and services, cutting off much needed income.”
Brendan Barber, TUC general secretary, was more moderate in his tone, but he had similar concerns. “On the biggest decision he is right. The chancellor has ruled out big cuts in the near future. To have cut spending so soon after a serious recession would be gross economic irresponsibility. Instead he has concentrated on helping the unemployed and given a welcome boost to investment in the green technologies of the future. This is not just good for jobs, but helps rebalance the economy away from our over-reliance on finance.

“But a centralised pay cap on public sector staff is unfair, inefficient and will damage long-established independent review systems – which already take affordability into account. Public sector workers – many of whom are low paid – should not have to pay the price for a crash they did nothing to cause. And we will need to study the small print to look at where the cuts the chancellor has announced will hit.”

Barber also came out in support of Darling’s ‘super-tax’ on bankers’ bonuses. “The tax on bonuses not only raises a useful amount that will help the young unemployed, but it – and other measures – begins to ask those who did so well out of the boom years and whose recklessness caused the crash to make a proper contribution, particularly through getting tough on avoidance.

“But today the chancellor could have been much bolder in moving to a fundamental reform of tax where the super-rich were asked to pay their fair share. The National Insurance increase will hit ordinary workers and business, though of course we welcome the exemption for those earning £20,000 or below, which is nearly half the workforce.”

His views on the National Insurance reform were shared in a curious quarter – the British Retail Consortium (BRC). “This is madness,” said director general Stephen Robertson. “The new threshold will help some but the chancellor should have said he’s scrapping the increase already announced not adding to it. This makes it more expensive for all businesses to maintain and create jobs but is particularly bad for retail because it is such a big employer.”

If the unions felt strange agreeing with the BRC, the will have felt even odder winding up on the same page as infamous right-wing outfit the Taxpayers’ Alliance. Chief executive Matthew Elliott said: “It is unbelievable and completely counterproductive that the chancellor has decided to increase National Insurance whilst talking about the need for job creation and economic recovery. This is a huge tax hike on jobs, that will put many more people out of work and condemn the unemployed to continued joblessness. People needed a bold speech that pledged serious, radical cuts in wasteful public spending, but all we got was political posturing about the rich and harmful tax rises for the middle and working classes. We are in a dire state economically and fiscally, but this Pre-Budget Report dodges all of the difficult questions that must be answered. I fear that Alistair Darling has just lengthened the recession and deepened the suffering of British taxpayers.”

There was support, however, from many of those groups who saw the report take up their campaigns. Kirsty Hughes, Oxfam’s head of policy, welcomed the bank bonuses policy. “Asking those who caused the economic crisis to help pay the costs of recovery is a no-brainer,” she said.

The National Union of Students (NUS) celebrated Darling’s plan to offer financial support for 10,000 low-income undergraduates so they could take up internships. “We are delighted that the government has adopted our proposals to provide financial support for poorer students so that they can carry out internships and improve their job prospects after graduation,” said president Wes Streeting.

The Child Poverty Action Group was happy about an announcement on free school meals. “The announcement of the extension of free school meals to a further half a million primary children with parents in work lifting another 50,000 children out of poverty is fantastic news and will help hard pressed family budgets stretch further,” said John Dickie. “We are pleased the chancellor has listened to campaigners’ calls on this issue.”

You can’t win them all, but can always win over a few people.