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date: 22 March 2006

embargo: immediate

TUC detailed budget reaction

Commenting on today's Budget, TUC General Secretary Brendan Barber said:

'This was a confident Chancellor, taking justifiable pride in sustained growth and record investment in public services.

'While today was a Budget for stability not a giveaway, the Chancellor has targeted his resources well. We particularly welcome the boost to childcare and the child tax credit; investment in schools, class sizes, skills and further education; and extra incentives for research and development.

'But we are concerned at the scale of the efficiency targets. We do not believe these can be met without making real cuts in public services.'

in detail

On public service pay and public spending

'The TUC is deeply sceptical that five per cent falls, in real terms, for three years in the Departmental Expenditure Limits of the Department for Work and Pensions, HM Revenue and Customs, HM Treasury and the Cabinet Office, can be achieved without affecting the quality of the service given by those departments. We believe it is simply not possible to take £1.8 billion in total out of the budgets of these departments without affecting the quality of the service provided. Nor do we accept the distinction between front-line services and back office staff. In most cases, the two work together and these cuts will be felt by users, such as benefit claimants.

'The tight target for public sector pay will ring alarm bells across the public sector and is storing up trouble for the future. The responsibility for controlling inflation cannot be carried by public servants alone. Ministers will not achieve the public service improvements they seek unless they can recruit and retain quality staff. This will not be possible if public sector pay falls behind the private sector. Recruitment difficulties in the public services remain, and unfilled vacancies in the public services are increasing relative to the rest of the economy. And the government faces the challenge of ending discrimination against women in public sector pay.'

On skills and FE

'The TUC welcomes the increased funding for skills and further education. We look forward to more detail on the proposals in the upcoming FE white paper. The TUC particularly welcomes the support for learners in the commitment to enable all young people up to the age of 25 to receive free funding to study up to level 3, with support available from the Adult Learning Grant.

'Measures to help low-skilled women into work in response to the Women and Work Commission are also particularly welcome. A new pilot aimed at achieving level 3 qualifications for women with low skills, additional skills coaching pilots focusing on women and funding for Sector Skills Councils to develop new ways of recruiting and training low skilled women into industries with skills shortages are helpful strategies to increase the opportunity for higher skills, higher pay and sustainable employment for women.'

On childcare

'The continuing focus on childcare and childcare support is particularly welcome. From this April the childcare element of the Working Tax Credit will be increased to cover up to 80% of childcare costs (up to a maximum of £240 per week), which will be of particular benefit to low to middle income families. Furthermore, the Chancellor has recognised that employers have a role to play in supporting the childcare needs of their workforce and the TUC welcomes the introduction of capital grants for SMEs to provide workplace nurseries. The recent focus on childcare vouchers has seen some workplaces shut their on-site childcare support and replace them with vouchers. This initiative may help to reverse that trend.'

On energy and the environment

'This is one of the Chancellor's greenest Budgets, yet a central issue for the Treasury is that the UK's carbon emissions are once again increasing, as yesterday's report from the Environmental Audit Committee pointed out.

'The TUC warmly welcomes the key green initiatives, particularly the new Energy & Environment Research Institute announced today, supported by a £1 billion fund from Government and private bussinessinvestment , £50 million to support microgeneration in 25,000 schools and housing trust homes, and inflation-proofing industry's Climate Change Levy from 2007.

'Introduced in 2001, the Climate Change Levy has contributed to a cumulative cut of 16 million tonnes of carbon emissions from industry. The levy rates have been frozen since their inception, and the Chancellor's decision to inflation proof the CCL rates from 2007 is timely.

'While industry is playing its part in tackling energy efficiency and fossil fuel consumption, transport is not and this urgently needs to recognised in Government policy.

'Overall greenhouse gas emissions from road and air transport continue to rise rapidly.

'The efficiency of new cars bought last year was worse than in previous years, as the Energy Savings Trust has shown, especially as more private car buyers opt for 4x4 "gas guzzlers". Raising Vehicle Excise Duty by £40 to £210 (the price of half a tank of diesel) is unlikely to change hearts and minds. Rather than using the revenue to reduce other car owners' rates of VED, the income generated should be used to fund road transport energy saving initiatives.

'Similarly, annual greenhouse gas emissions from aviation rose by 10 per cent last year. The Chancellor has to be mindful of the important contribution air transport makes to the economy, but freezing the Air Passenger Duty for a further year may send the wrong environmental signals to the industry. A freeze in the duty is, in effect, a tax cut in real terms. Moreover, as a result overall APD revenues have fallen.

'The TUC would have preferred a more comprehensive Treasury assessment of the economic instruments needed to address our challenging Kyoto targets. We trust that the final report from the Stern Review will help embed a more comprehensively green, Kyoto-oriented Budget in future years from 2007.'

NOTES TO EDITORS:

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Contacts:

Media enquiries: Ben Hurley T: 020 7467 1248; M: 07881 622416 ; E: bhurley@tuc.org.uk
Liz Chinchen T: 020 7467 1248; M: 07778 158175; E: media@tuc.org.uk

Press release (1,100 words) issued 22 Mar 2006