Spending cuts, indirect tax changes, the VAT increase, benefit and tax changes, as well as frozen pay at a time of high inflation is leaving many families thousands of pounds out of pocket

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Public servants face a household budget meltdown because of the government’s planned pensions hike, UNISON has warned.

Research by the union reveals the household squeeze – coming from spending cuts, indirect tax changes, the VAT increase, benefit and tax changes, as well as frozen pay at a time of high inflation – is leaving many families thousands of pounds out of pocket this year.

One in two households with more than one person working includes a public service worker, and the proposed pension contributions hike – that could cost hundreds of pounds a month – will send family budgets into meltdown.

The union is warning that the pensions hike will leave workers with even less money to spend – a disaster for our economy – or may force them to opt out of the schemes. This could cost taxpayers £2.5 billion a year in means tested benefits in the long term.

General secretary Dave Prentis said: “No wonder our economic growth has shuddered to a halt. Families are facing an unprecedented squeeze, and sadly things are about to get worse. Many families include a public sector worker, and government ministers are telling them they must pay a lot more into their pension.

“Taking money out of family budgets now is economic suicide – the country needs people to be spending, and fuelling our recovery, not too frightened to go to the shops.

“And it’s just not necessary to tighten the noose further by hitting public service workers’ pensions. The schemes are affordable and sustainable. But in eight months of talks the government has failed to listen to all our arguments. That’s why I am urging members to Vote Yes in our ballot for industrial action over these unnecessary, unfair and detrimental changes to their pensions.”

Research shows that:

  • a single parent paramedic on £27,625 with children will by 2012 be losing £2,378 a year as a consequence of cuts to services, and the combined effect of changes to tax, tax credits and benefits.  With RPI at 5.6 per cent and a wage freeze, the same paramedic is facing a real terms cut in pay. The increased contributions for the paramedic will total approx £597 a year by 2014/15.
  • a nurse on £24,355 with children and a partner in the private sector, on the average private sector wage, will by 2012 be losing £2,136 a year as a consequence of cuts to services, and the combined effect of changes to tax, tax credits and benefits.  With RPI at 5.6 per cent and a wage freeze, the same nurse is facing a real terms cut in pay. The increased contributions for the nurse will total approx £283 a year by 2014/15.
  • a single parent nurse on £24,355 with two school age children will by 2012 be losing £2,336 a year as a consequence of cuts to services, and the combined impact of changes to tax, tax credits and benefits.  With RPI at 5.6 per cent and a wage freeze the same nurse is facing a real terms cut in pay. The increased contributions will total approx £283 a year by 2014/15.
  • a teaching assistant on £21,601 with children and a partner in the private sector, on the average wage for construction, will by 2012 be losing £2,224 a year as a consequence of cuts to services, and the combined effect of changes to tax, tax credits and benefits.  With RPI at 5.6 per cent and a wage freeze the same teaching assistant is facing a real terms cut in pay. The increased contributions alone could total £388 by 2014/15 under one of the options currently on the table.
  • a single social worker on £29,366 will by 2012 be losing £732 a year as a consequence of cuts to services, and the combined effect of changes to tax, tax credits and benefits.  With RPI at 5.6 per cent and a wage freeze the same social worker is facing a real terms cut in pay. The increased contributions could total approx £528 a year by 2014/15 under one of the options currently being consulted on.

UNISON research has shown that nearly one in two households with more than one worker will include someone who works in the public sector, demonstrating a far greater interdependence between public and private sectors on household incomes.


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