Recovery means “food banks, zero hours and pay cuts for the many, tax cuts and pay growth for the few”

‘Whose growth?’ will be the defining political question in 2014 says TUC General SecretaryFrances O’Grady in her new year message today (Tuesday) as new polling commissioned by the TUC shows that only one in 50 voters say they are already benefiting from the recovery – and only one in five say they expect to in the new year.

Frances O’Grady said: “The statistics show that Britain’s economic recovery is real. But that is not how it feels. This is because the government has failed to deliver a growth strategy based on rebalancing the economy through exports and investment. Instead growth is coming from rising house prices and people running down their savings. And while jobs growth is welcome, too many jobs are insecure and combine the three lows: low skill, low productivity and low pay.

“But while the recovery may be based on shaky ground, it radically changes the political landscape. Voters may have accepted spending cuts, falling real wages and unemployment as a consequence of the damage done by the crash. But they will expect to share in the economic recovery.

“Our new poll is therefore bad news for the government. Voters do not expect to benefit from the recovery next year, do not expect their wages to keep up with living costs and do not trust the government to spread the benefits of recovery fairly.

“The poll also reveals a major gulf between voters and the government about the future direction of policy. Above all they do not share the Chancellor’s ambition to permanently shrink the state. By more than two to one they want to see services restored when the economy grows, not permanently cut.

“Voters accepted austerity as unpleasant medicine. But now they are realising that what they thought were the unpleasant side effects are what the Chancellor sees as a cure. Recovery seems to mean food banks, zero hours and pay cuts for the many, tax cuts and pay growth for the few at the top.

“This is why 2014 will be a crucial year. It will be dominated by a single political question – whose growth? That reflects the big divide that is opening up about what future Britain should have.

“Do we want to go back to a business as usual version of the pre-crash economy, based on housing bubbles, an overmighty finance sector and increasing inequality as a growing proportion of the workforce fail to share in prosperity?

“Or do we want to build a new, genuinely rebalanced economy that through investment, growth and active government aims for a high-skill, high-pay, high-productivity economy that shares out prosperity to all? I know which side unions are on.”

Key findings from the TUC-commissioned YouGov poll include:

·    Just two per cent of voters say they have already benefited from the economic recovery and only a further 18 per cent expect to benefit from the recovery during 2014.

·    A big majority expect the living standards crisis to continue in the new year. Only one in eight (13 per cent) of those in work expect their pay to at least keep up with the cost of living, the same proportion who report that their pay at least kept up with the cost of living during 2013.

·    Voters do not back plans for a permanently smaller state. More than half (56 per cent) agree with the statement “As the economy grows I want to see most or all of the services that have been cut restored” compared to three in ten (29 per cent) who back “As the economy grows I want to see most or all of the cuts retained.”

·    Only one in five voters (21 per cent) “expect the gains of an economic recovery to be fairly shared across the country and society”. More than twice as many (58 per cent) “expect the gains of an economic recovery to mainly go to the types of people and parts of the country who are already doing well.”

Voters say that recovery will pass them by in 2014

Just two per cent of voters say they have already benefited from the economic recovery and only a further 18 per cent expect to benefit from the recovery during 2014, according to a new TUC-commissioned YouGov poll published today (Tuesday).

A big majority expect the living standards crisis to continue in the new year. Only one in eight (12 per cent) of those in work expect their pay to at least keep up with the cost of living, the same proportion who report that their pay at least kept up with the cost of living during 2013.

Forecasts published alongside the Chancellor’s Autumn Statement earlier this month show that he is planning to keep cutting spending beyond the election, with a target of reducing public spending as a proportion of GDP to the same level it was in 1948 by 2018/19.

But voters do not back plans for a permanently smaller state. More than half (56 per cent) agree with the statement “As the economy grows I want to see most or all of the services that have been cut restored” compared to three in ten (29 per cent) who back “As the economy grows I want to see most or all of the cuts retained.”  Even 35 per cent of Conservative voters want to restore services. A slim majority of UKIP voters (47 per cent to 44 per cent) back the restoration of services against cuts.

The Institute for Fiscal Studies (IFS) says that 60 per cent of cuts in public services have yet to happen, but voters do not appreciate the scale of the cuts to come. YouGov asked people to say what proportion of cuts have already been implemented. Three in five voters (59 per cent) underestimate the scale of the cuts to come.

Only one in five voters (21 per cent) “expect the gains of an economic recovery to be fairly shared across the country and society.” More than twice as many (58 per cent) “expect the gains of an economic recovery to mainly go to the types of people and parts of the country who are already doing well.”

In her new year message today, TUC General Secretary Frances O’Grady said: “Our new poll is bad news for the government. Voters do not expect to benefit from the recovery next year, do not expect their wages to keep up with living costs and do not trust the government to spread the benefits of recovery fairly. Above all they do not share the Chancellor’s ambition to permanently shrink the state. By more than two to one they want to see services restored when the economy grows, not permanently cut.”

It will take families until next summer to pay off their Christmas debts

It will take average-income families until next June to pay off their Christmas debts, according to new analysis published by the TUC today (Friday).

The analysis shows how falling real wages and lower household savings will make it harder for borrowers to repay their credit cards and loans in 2014.

Last Christmas, one in six families borrowed money to pay for food, drinks and presents, with households borrowing an average of £654 per adult (Men £1,000, women £547). Using average weekly earnings and savings data the TUC estimated that it took average-income earners 20 weeks to pay off this debt.

This year, consumer debt has increased by 4.9 per cent. The TUC estimates this will lead to average debts of £685 per adult this Christmas. With real wages and savings lower than last year the TUC calculates it will therefore take 24 weeks for an average-income earner to pay back this money.

However, if a minimum wage worker were to borrow this sum it would take them an entire year working full-time to pay it off.

Research published by Consumer Intelligence in October showed that nearly half of all families who borrowed during last year’s festive season still haven’t finished repaying this money.

The TUC says the findings underline once again how ordinary people are not benefiting from the recovery and are instead facing a bigger struggle to pay off their debts.

British workers are currently suffering the longest real-wage squeeze since the 1870s, with inflation rising faster than wages for the last 42 months. With real wage growth forecast to be weak for the next four years, the government needs to make fairer pay rewards a priority, says the TUC.

TUC General Secretary Frances O’Grady said: “Britain’s real-wage squeeze is forcing more and more families to put Christmas on credit.

“Millions of households will be still be paying for this year’s presents, food and drink well into the summer and beyond.

“Instead of benefiting from Britain’s economic recovery ordinary people are finding it harder to pay off their debts.

“Unless the government does more to tackle the cost of living crisis this debt bubble will continue to grow. Britain needs a pay rise.”

Further information:

- The TUC has calculated that if Christmas borrowing rose in line with consumer credit, it would be £685 per adult who borrows this year. Repayment time is calculated by looking at average weekly earnings and assuming households save in line with the household savings ratio on a weekly basis.

- The TUC’s estimate of the time taken to pay off debts is likely to be conservative as it does not factor in interest repayments on loans and overdrafts taken out.

Government desperately short of solutions to curb use of zero-hours contracts

Commenting on the announcement today (Thursday) that the government is launching a consultation on changes to zero-hours contracts, TUC General Secretary Frances O’Grady said:

 “The growth of zero-hours contracts is one of the reasons why so many hard-working people are fearful for their jobs and struggling to make ends meet, in spite of the recovery.

 “But while the government has identified some of the problems faced by those with zero job security, it’s desperately short on solutions to curb the use of these contracts.

 “Through the consultation, the TUC and unions will propose tougher action in order to tackle abuse of zero-hours contracts, which can leave people not knowing how much they’ll be earning from one week to the next.”

Majority of part-time workers will now miss out on pension auto-enrolment

Commenting on the announcement today (Tuesday) by Pensions Minister Steve Webb that he is raising the salary level that triggers auto-enrolment into a workplace pension to £10,000, TUC General Secretary Frances O’Grady said:

“Every time the government raises the auto-enrolment threshold another group of workers, most of whom are women, drop out of saving for their pension.

“With the average part-time salary just under £9,000 a year, the majority of the UK’s six million part-time workers will no longer be automatically enroled into a workplace pension.

“It is time to break the link between the income tax threshold and the auto-enrolment threshold unless we want to turn auto-enrolment into a pensions system that predominantly benefits men.”