Social partners react to planned public spending cuts
In December 2009, the Trades Union Congress (TUC) and the Confederation of British Industry (CBI) outlined their positions on the public spending cuts proposed by all three main UK political parties in the run-up to the general election due in 2010. The TUC fears that spending cuts will lead to job losses, deteriorating employee terms and conditions as well as poorer service provision in the public sector. The CBI believes that cuts are necessary to restore the economic health of the UK.
Plans for public sector cuts
In recent months, the three main political parties in the United Kingdom have proposed cuts in public spending that they consider necessary to restore the public finances to health. However, the parties’ proposals differ in the extent of the cuts and the ways in which they would be achieved.
- In his December 2009 pre-budget report, the UK Chancellor of the Exchequer, Alistair Darling, outlined the governing Labour Party’s plans for public spending. Although public sector spending was to rise in 2010–2011, Mr Darling stated that it was expected to fall by 0.8% between 2011–2012 and 2014–2015. Furthermore, Mr Darling announced that contributions to public sector pensions were to be cut by GBP 1 billion (about €1.1 billion as at 15 December 2009) a year and that all public sector pay settlements were to be capped at 1% for two years from 2011.
- In October 2009, the Conservative Party’s ‘shadow’ Chancellor of the Exchequer, George Osborne, also set out a series of proposals for public sector cuts should the Conservative Party form the next UK government. These measures included a one-year freeze on public sector pay from 2011 for all those earning more than GBP 18,000 (€20,000), except for members of the armed forces, and a GBP 50,000 (€55,500) limit on the maximum pension payments for senior civil servants.
- The leader of the Liberal Democrats, Nick Clegg, has also stated that his party would implement cuts in public sector expenditure, including freezes and cuts in public sector wages and pensions.
Social partner reaction
The reaction of the UK social partners to the proposals has been polarised. The TUC has strongly criticised the plans and has argued that the spending cuts will lead to job losses, diminishing employee terms and conditions, as well as resulting in poorer service provision within the sector.
The General Secretary of the Trades Union Congress (TUC), Brendan Barber, said of the government’s public sector pay plans:
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.
Unite, the UK’s largest trade union, stated that it opposed the cap on public sector pay but commented that ‘the [Conservatives’] plans for our public services are far worse than Labour’s. The [Conservatives] will slash our public sector and we could see up to a million job cuts’.
In contrast, the Confederation of British Industry (CBI) restated its longstanding support for public sector spending cuts, while stressing the need to avoid cuts in frontline staff. The CBI argues that cuts in public spending are crucial given the current UK budget deficit and existing inefficiencies within the public sector.
CBI Director General Richard Lambert, responding to the government’s pre-budget report, argued:
The Chancellor missed the opportunity to increase the UK’s credibility by reducing the public deficit earlier. The government still needs to set out fuller plans on how it will reduce public expenditure ... We applaud the government’s courage in beginning to tackle the thorny issues of public sector pensions and pay, but it is only a start.
Commentary
Although UK trade unions and commentators on the political left are seeking to make a case for avoiding extensive public spending cuts, the poor state of the UK public finances and the fact that all three main political parties are advocating such measures means that cuts would appear to be imminent. A key question relates to how public spending cuts will be achieved – and the extent to which pay freezes and cuts would be part of a programme of public sector retrenchment. It is also possible that substantial job losses within the sector would be implemented as a result of any cuts. The potential reaction of UK public sector trade unions to such cuts remains to be seen. Large-scale industrial action took place in 2008 in response to the UK government’s policy of pay restraint within the public sector (UK0807039I, UK0804029I), and it is possible that extensive strike action could occur again.
Thomas Prosser, IRRU, University of Warwick