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A new TUC analysis published today (Monday) of the impact of real wage losses and benefit changes on family income shows that an extra 180,000 children with at least one parent working in the public sector will end up in poverty due to government policies by 2015.

date: 24 June 2013

embargo: For immediate release

A new TUC analysis published today (Monday) of the impact of real wage losses and benefit changes on family income shows that an extra 180,000 children with at least one parent working in the public sector will end up in poverty due to government policies by 2015.

According to the analysis, families where one parent works in the public sector and another works in the private sector see the biggest losses from government policies. Their average household income will be down around £100 a week in real terms by 2015 after taking account of the current public sector pay freeze and the combined impact of tax, tax credit and benefit changes (including Universal Credit).

They are closely followed by families with parents who only work in the public sector who will lose on average £91 a week. Households with only private sector employees will lose out on average by £44 a week, says the TUC.

These figures, drawn from a model constructed for the TUC by Howard Reed of Landman Economics, combine the impact of:

government tax and benefit changes compared to the system inherited from the previous government

private sector wage changes (using Office for Budget Responsibility forecasts) combined with the government's public sector pay policy.

The research shows that 30 per cent of working families in the UK have at least one family member working in the public sector, with nearly half of all households (over 2.7 million households) where someone in the public sector is employed also having a private sector worker.

Of the 180,000 children with at least one parent working in the public sector who will be pushed into poverty by 2015, two in five live in two-earner households where one parent works in the private sector.

TUC General Secretary Frances O'Grady said: 'Ministers like to play divide and rule by trying to pit private sector workers against allegedly well-paid public sector workers.

'But these figures tell a very different story - 180,000 children with at least one parent who works in the public sector will fall below the poverty line thanks to government policies.

'And with almost one in three working families having at least one parent who works in the public sector job you would think that ministers would be more conscious of trying to win their votes, rather than punishing them with years of pay freezes and real terms pay cuts.

'The truth is that there are low and middle income workers in all parts of the economy and they are all are having a really tough time. But unless ordinary people have money in their pockets and the confidence to spend, the UK will never get the sustainable growth we need. That's why Britain - both public and private sector - needs a pay rise.'

Number of children moving into poverty by 2015 as a result of tax and social security changes, real wage losses in the private sector and public sector wage restraint

Household type

Number of children in poverty under 2010 system

Number of children in poverty by 2015 under government policies

Extra children in poverty by 2015

No-one in work

920,000

1,253,000

330,000

Public sector workers only

137,000

238,700

101,700

Private sector workers only

1,071,000

1,456,000

385,000

Public and private sector workers

148,000

227,000

79,000

Total

2,276,000

3,174,700

898,700

Weekly cash losses type of working family

Weekly income under 2010 system

Impact of government policy in cash terms per week

Per cent change

Total direct tax and social security hit

Impact of public sector wage restraint

Impact of private sector wage restraint

Public sector workers only

£703.18

-£90.97

-12.9

-£7.34

-£83.63

-

Private sector workers only

£613.87

-£44.16

-7.2

-£7.47

-

-£36.69

Public and private sector

£879.42

-£99.26

-11.6

-£11.14

-£56.43

-£34.48

NOTES TO EDITORS:

- The public sector pay policy modelled is a one per cent pay rise in 2010/11 for workers in health or education, followed by a two year pay freeze and two further years at one per cent, plus an extra £250 per year for those earning under £21,000. For workers in public administration the model assumes a three year pay freeze (from 2010/11 to 2012/13), followed by two years at one per cent and no extra £250 per year.

- The TUC's campaign plan can be downloaded from www.tuc.org.uk/campaignplan

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

- Follow the TUC on Twitter: @tucnews

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
Alex Rossiter T: 020 7467 1337 M: 07887 572130 E: arossiter@tuc.org.uk

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