TUC submission to the Autumn 2017 Budget

Report type
Consultation response
Issue date
19 Nov 2017

The Autumn Budget 2017 is an opportunity to invest in a better future, and an economy and society that works for everyone.

At present, Britain’s economy is ill prepared for a future outside the EU:

  • Our public services and the public servants who deliver them are suffering from significant under-investment. An NHS paramedic, to take one example of public servants under pressure, is almost £4,000 worse off in real terms than in 2010.
  • Our economy is growing more slowly than most of our major competitors: GDP growth in the UK in the first half of 2017 was 31st out of 34 OECD countries, and the UK economy is expected to grow at half the rate of the Euro area in 2018. Growth in the UK still benefits some regions far more than others, with London and the South East set to account for 40 per cent of the UK’s growth by 2022 on current trends.
  • Our workplaces are not fit for the future:  UK productivity has flatlined for a decade, and we are ill-equipped to take advantage of new technological developments. Poor quality employment practices, weak enforcement of labour rights and low investment in training leave British companies lagging behind.
  • Falling real pay and the squeeze on household benefits mean that household finances are badly squeezed: TUC polling found that one in eight workers have skipped meals to make ends meet.

The first step to ensuring a prosperous future when we leave the European Union is to ensure that the deal we negotiate on our future trading relationships puts jobs, rights and investment first. The TUC has been clear that we need a transition period after we leave the EU in 2019, during which the UK remains a member of the single market and customs union during the transition period.

As we enter negotiations for a long-term settlement outside the EU, we believe in keeping all options on the table and ruling nothing out. At present we should not rule out unrestricted access to the single market through continued membership outside the EU as this meets our tests of protecting jobs, rights and investment.

Government also needs to make clear how it is preparing for the impact of new trading arrangements, with sector by sector assessments of the potential impact on jobs, rights and investment, and a clear plan to protect these.

But alongside the Brexit negotiations, is vital that this Budget takes action at a domestic level to start to address Britain’s long-standing economic challenges. The TUC is calling for:

Investment in our public services and public servants

  • Government must scrap the public sector pay cap for all public service workers and provide new money to fund pay awards, without adding pressure to existing over-stretched public service budgets.
  • Public services need a new financial settlement, with real terms increases in funding across the public sector.

An upgrade to our economic model to deliver better growth

  • The government should aim to significantly raise the level of UK public investment. A starting point would be to meet the OECD average of spending 3.5 per cent of GDP on investment, up from the current level of 2.7 per cent.
  • Housing, transport infrastructure and science, research and development are all urgently in need of investment, and the government should prioritise these in the Autumn Budget.
  • The Industrial Strategy White Paper, due to be published shortly, needs to put the workforce at its heart, and recognise the importance of working people in delivering higher productivity across the UK. The government should pilot new sectoral bodies bringing together business, workers and government, to drive up pay, working conditions and productivity across the country. And it must include a strategy to back Britain‘s manufacturing industry which is key to our export performance. There is nothing to stop the UK from trading with other countries now but Germany for example, exports three times more to China than the UK.

A plan to get our workplaces fit for the future

  • The Government should set out action to deliver great jobs for everyone. The TUC’s Great Jobs Agenda sets out actions to expand voice at work, raise levels of pay, ensure regular hours, strengthen action to promote equality at work, improve health and safety at work and ensure everyone has the ability to learn and progress.
  • This budget should prioritise spending to improve enforcement of existing rights, including the National Minimum Wage. This must cover those in the social care sector who are currently waiting for back pay owed for sleep-ins.
  • Government must also ensure that sufficient resources are in place to deliver the intention of the Supreme Court’s verdict that Employment Tribunal fees are illegal, that those who have paid them should be refunded and that employment tribunal cases should now be free of charge.
  • It should also look to expand rights for parents, to help them better combine work and family life. This should include expanded paternity pay, and the introduction of paid parental leave. 
  • Investment in skills for those already in work will be vital to take advantage of new technological developments, and ensure they benefit everyone. Government should set an ambition to increase investment in both workforce and out of work training to the EU average within the next five years, including by investing in a new life-long learning account.

Tackling the living standards squeeze

  • Government should recognise the important role that trade unions play in boosting pay and living standards, and give trade unions new rights to access workplaces in order to tell people about the benefits of joining a trade union.
  • In addition to taking action to boost pay across the economy, government should recognise the particular pressure faced by the low paid, and raise the National Living Wage to £10 an hour as quickly as possible. This rate should also be paid to those aged 21-24.
  • Government should tackle unfair pay differentials that leave working people worse off. The gender pay gap regulations should be expanded to companies with 150+ employees, and government should set out a plan to tackle the pay gap between white and BAME workers.
  • Government should reverse universal credit cuts set to leave families significantly worse off, and pause on the implementation of the Minimum Income Floor for the self-employed.
  • To ensure that those hit hardest by the living standards squeeze do not face lower incomes when they retire, government should appoint a standing pensions commission to ensure adequate retirement incomes for everyone.

The question is often asked whether we can afford this level of investment in the future. We believe that the question we should be asking is whether we can afford not to tackle these challenges now.

But there is also good evidence that a different approach to public spending could deliver more healthy growth, and help restore the public finances to balance. The OECD has called for the UK to deliver an increase in investment, to boost both demand and the productive capacity of the economy.

Even within its existing fiscal envelope the government has choices. At the spring budget, the Chancellor suggested that his plans set out £26bn of fiscal headroom, dwarfing the cost of a public sector pay increase, for example. And with no signs that Corporation Tax cuts are encouraging business investment, the (at least) £16bn annual price tag for these is hard to justify when working people are experiencing a severe squeeze on their living standards.

The report sets out these arguments in more detail.

  1. Looks at the challenge for public services and public servants, and the investment needed.
  2. Looks at the UK’s economic performance, and the investment and reform necessary to turn this around.
  3. Looks at the problems within the workplace – and how we can move to a higher productivity model of work that offers more secure jobs;
  4. Looks at how to tackle the living standards squeeze faced by too many workers; and
  5. Tackles the question of whether we can afford to make the changes we need