date: September 7 2008

embargo: noon Sunday Sep 7 2008

Put growth first says TUC

'This year's Congress meets in very different circumstances from recent years. The economy is facing a toxic combination of credit crunch and rising inflation. The result of which is a squeeze on living standards, paralysis in the housing market, and millions of people increasingly fearful for their jobs.

'So it's not surprising that this morning I want to particularly put the focus on the TUC statement on the economy which the GC will be presenting to Congress on Tuesday and in that General Council statement we release today we say the country needs new policies for economic growth to counter the world-wide economic downturn.

'This slowdown is not made in Britain. But the government must respond. It must ensure that the downturn is no deeper than it need be. And ministers should show that they are on the side of ordinary people with fairness as their watchword.

'Trade unions are not soft on inflation. Our members are its victims. But the big threat now is recession.

'It is economic masochism to try and choke off external inflation by depressing the domestic economy - especially when the credit crunch is already biting hard.

'This is why the statement says the Bank of England must now start aggressively to cut interest rates.

'And that is why we are calling on the government to put money into the pockets of ordinary people.

'That is why we want to see tax cuts.

'First there should be an immediate cut in the VAT liable on property renovation to boost those parts of the construction sector hit by the housing downturn.

'But the government should go further to cut the tax bills of ordinary families.

'This could come either from further income tax cuts for low and average earners or further VAT cuts, perhaps on energy bills. And of course every VAT cut reduces inflation.

'The government should increase the winter fuel allowance to bring it once again to one third of the average fuel bill.

'And the government should end the arbitrary pay ceiling for public servants.

'To help fund these bold measures the government should ask those who have done well out of the boom years to pay their fair share.

'That is why we are calling for a new minimum tax rate for those earning above £100,000 a year.

'This is not an increase in any tax rate, simply a call to limit the allowances and reliefs that those with clever accountants are so good at claiming.

'Only 650,000 earn more than £100,000 a year. Many of these - particularly those earning not much more than £100,000 and on PAYE - would pay no extra tax. But such has been the growth of the super-rich and their skill in using allowances and loopholes that our proposals could still raise £5 billion a year.

'We are also calling for a windfall tax on the huge profits of energy companies. After all, they are receiving an effective £9 billion windfall hand out as a result of the European Union Emissions Trading Scheme. And in the longer term it is clear we need better regulation in the energy sector.

'And if necessary the government should be prepared to borrow more and I hope that the Chancellor will soon make clear that an arbitrary limit of 40 per cent on public debt is just not appropriate to an economy at risk of plunging into recession.

'We welcome the government's housing announcements of last week but more is needed to help those threatened by repossession and to increase the supply of affordable housing.

'These are hard-headed policy proposals based on our core values of fairness.

'I urge Ministers to give them the attention they deserve and I hope to see urgent action to show that they are on the side of ordinary people.'

NOTES TO EDITORS:

- All TUC press releases can be found at www.tuc.org.uk

- Register for the TUC's press extranet: a service exclusive to journalists wanting to access pre-embargo releases and reports from the TUC. Visit www.tuc.org.uk/pressextranet

- Congress 2008 will be held at the Brighton Centre, Brighton from Monday 8 September to Thursday 11 September. All applications for media passes must be received no later than noon Tuesday 2 September. Any applications received after this date will be processed in Brighton and subject to a £50 administration fee. The form for media credentials, plus information on how to book wireless internet access and a phone line at the Brighton Centre can be accessed at www.tuc.org.uk/mediacredentials

Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Brenchley T: 020 7467 1337 M: 07900 910624 E: ebrenchley@tuc.org.uk

Press release (900 words) issued 7 Sep 2008