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An extra £4,000 million cut in education, NHS, police and armed forces budgets will be imposed by the UK Tory Government ‘through the back door’ to cover a shortfall in public sector pensions, raising the prospect of even more draconian spending cuts in the next decade, said Patricia Gibson MP.

Public services will be impacted by proposals published in a Treasury technical notice, raising employer pension contributions for more than 5,000,000 workers by more than 13% a year with no guarantee of long-term compensation from the Treasury. The change in contributions would make it more expensive to hire doctors, nurses, teachers, firefighters and soldiers.

The Treasury has said that public bodies would be refunded the cash in 2019-20 when the changes first take effect, but after that there are no guarantees on further compensation stating that:

“The matter will be taken into account in the spending review.”

Schools, the NHS, police, armed forces and government departments pay employer pension contributions, which are then used to lower the cost of providing pensions for retired public servants.

Liz Truss MP, Chief Secretary to the Treasury, said that after a four-yearly review of public services there will be:

“Some increase in employer contributions.”

A similar change of half the size, resulted in a £2,000 million “squeeze on departments” in the 2016 Budget, according to the Office for Budget Responsibility, raising the level of pension contributions from public sector workers without additional UK Government support for these unfunded pensions.

Patricia Gibson commented:

“These supposedly ‘technical changes’ could have huge implications for pension schemes and public sector employers, landing them with a multibillion-pound bill and no guarantee of funding to help them meet it.

“The consequences can only be a further squeeze on public services, including Scotland’s hard-pressed budget, which suffered a cut of £221 million this year and already faces another £338 million reduction in the Scottish block from April.

“This can only impact adversely on public sector jobs and services, effectively imposing additional cuts by stealth.

“Public services must be properly funded. Changes in discount rates must be fully funded by the UK Government to avoid yet another spending squeeze, this time ‘through the back door.’”


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