One of Gordon Brown’s last acts as chancellor was to introduce a new “tax simplification” scheme. The scheme, coming into effect this week, abolishes the 10p income tax rate for childless workers under the age of 65 who earn less than £18,500. What is dressed up as a tax “simplification” is in fact a direct attack on five million low waged workers.
These moves come in the wake of a Treasury Select Committee report that slammed Alistair Darling’s optimism on the general financial outlook. The chancellor has already slashed growth forecasts from 2.5%-3% to 1.75%-2.25% and projected a £7bn increase in borrowing projections from £36bn to £43bn. The report also raised concerns about child poverty reduction targets.
The government had originally committed itself to halving child poverty by 2010-11 but the Select Committee report stated that the mechanisms by which this will be achieved remain “ambiguous”.
The Select Committee’s concerns have been echoed by around 70 Labour MPs who signed up to a series of Commons Motions expressing opposition to the 10p rate abolition. But how many of these same MPs eagerly approved of the swingeing three-year below inflation pay deals for the public sector?
On 7 April the government announced a three-year deal for nurses and other NHS workers. Salaries will “increase” by 2.75% this year, by 2.4% in 2009/10 and 2.25% in 2010/11. A newly qualified nurse working for the NHS has a current annual salary of £15,445. Under the deal this will go up to £15,792, but with inflation at 4.1% nurses will lose around £300 in real terms. Add to this the abolishment of the 10p tax rate, and low paid workers like nurses really begin to lose out.
Darling and Brown have committed themselves to a course of action that will benefit certain sections of the workforce at the expense of already embattled low paid workers. All the more reason to push for determined industrial action in defence of public sector pay.