The Mayor of Hackney has criticised the government’s spending review after the Chancellor revealed it would ”pause” pay for the majority of public sector workers.
Chancellor Rishi Sunak promised to protect the wages of NHS staff and low earners but said a pay freeze for other public sector workers was part of the “extraordinary” and necessary measures to protect people’s lives and livelihoods.
Mayor Phil Glanville said the review, broadcast from the House of Commons on November 25, made “clear” that pay cuts for key workers and “potential” tax increases for local rate payers will see them “bear the brunt of the financial cost” of the coronavirus pandemic response.
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He told the Gazette: “Teachers and their assistants, care workers, local contact tracers, park keepers and waste collectors are among those who kept Hackney safe and moving over the last year, often putting themselves at personal risk to serve others – just like our NHS heroes. Does the Chancellor think their commitment to public service matters less?
“Freezing the vast majority of key workers’ pay – and offering a pitiful £20 a month before tax to those on the very lowest incomes – will do little to thank them for their tireless efforts.
Figures from the Office for Budget Responsibility (OBR), a non-departmental public body funded by the treasure to provide independent economic forecasts, paint a bleak picture for coming financial years with the nation’s economy contracting by 11.3 per cent this year, and the country witnessing its largest fall in output for more than 300 years.
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However, in his review Chancellor Sunak also spoke of economic recovery, despite the “long-time scarring” which he said is likely to be “lasting”.
He announced £3 billion for the government’s Work and Pensions department to help over a million unemployed people find work, but added: “I have always said we cannot protect every job, despite the extraordinary support we have provided. The OBR expects unemployment to rise to a peak in the second quarter of next year, of 7.5 per cent - 2.6 million people.”
Still, the Chancellor praised the government’s response so far saying it is clear its measures “are making a difference”.
The OBR, Bank of England and International Monetary Fund have all stated, he said, that the UK government’s response “has protected jobs, supported incomes and helped business stay afloat”.
“They have said that business insolvencies have fallen compared to last year and the latest data shows the UK’s unemployment rate is lower than Italy, France, Spain, Canada and the United States.”
Local councils are to receive £2.5 billion in government funding next year and they will be compensated for up to 75pc of council tax and business rates income.
But despite welcoming “hard fought for” increases in local government funding, Hackney’s Mayor says: “The devil will be in the detail, and yet again, [the chancellor’s] announcement fails to tackle our funding shortfall head-on - instead hiding behind clever language and passing difficult decisions onto local leaders.”
Currently, the council is forecasting a £20.5 million shortfall from council tax and business rates income, which will affect its 2021/22 budget but it says the government’s commitment to cover 75pc of this lost income will leave the council with “great uncertainty”.
The local authority’s finances have been cut over a decade of government-led austerity with Hackney losing £140m in government funding since 2010, £1,459 a year per household and the most of any London borough. The effects of its stretched budget will likely have a significant impact on council services.
“What we needed today was a commitment to meet the black hole in local finances left by the pandemic, giving councils across the country long-term certainty.” Mayor Glanville said.
“Without this, they will be forced to make very difficult decisions about essential frontline services – at the time when people most in need are relying on them most.”
He proposed the government take a “more action” by committing to extend the Universal Credit uplift to reduce the number of people at risk f being plunged into an “underfunded social insecurity system that leads to a pernicious cycle of poverty, debt and homelessness”.
The Treasury has been contacted for comment.
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