Budget 2025: Protecting public investment is right for workers and for Britain

Given the difficult economic problems that this government has inherited, some tough choices needed to be made and many of us will be asked to pay more, but the Chancellor has got it fundamentally right, writes Prospect General Secretary Mike Clancy.

Prospect General Secretary Mike Clancy

There were few surprises in yesterday’s Budget, but perhaps that was to be expected given the fiscal situation. While inflation is heading towards normal levels, and interest rates are on a downward path, the reality of sluggish economic growth is a serious constraint on the government.

Given this context, this was always going to be a difficult Budget, but the Chancellor’s choice to avoid a return to austerity and protect public investment is fundamentally the right choice for workers and for Britain.

It’s hard to overstate the scale of the economic problems the government inherited, following a period of austerity that has harmed members’ cost of living and the public finances, the impact of Brexit which is continuing to hamper the UK’s growth, global instability and conflict, and the threat of further tariffs from Donald Trump.
Previous governments responded to these challenges by cutting spending and holding down pay – doing this again would have been a disaster and it is important that a different choice has been made.

However, this choice has consequences and it is inescapable that all of us are being asked to pay more tax, though it is welcome that the heaviest burdens will broadly fall on those who can pay the most through measures like the new ‘Mansion tax’ and more taxation of the gambling industry.

Salary Sacrifice Pension schemes

There are still measures in this Budget that will cause concern for our members. These include changes to salary sacrifice pension schemes, which many Prospect members benefit from. I know members will be worried about the impact this may have on them, with a potential for reduced pension contributions in the future. The government established the expert Pension Commission to look at pension savings, and it is expected to warn that too many people are not saving enough into their pensions. Given this, it is a strange decision to announce a policy that could reduce some pension contributions, and do so without waiting for the Pension Commission to report. The good news is that this change will not kick in until 2029, meaning there is time to gather evidence and adjust. The government must seek the Pension Commission’s view on this issue and give themselves time to change course if needed. We will be working with members and their employers to understand the impact these changes will have, and will be fighting hard to protect their pensions.

Freelancers

In addition, self-employed and freelance workers such as those in our Bectu sector will be caught by many of the tax and benefit changes proposed like taxing dividends and savings incomes and cash ISA restrictions. The same people, while paying more tax, continue to be denied basic rights like sick pay, parental leave and pensions and will miss out on the Government’s flagship worker protections. We will continue to campaign for key rights at work to be expanded to cover freelancers, so that all our members benefit from this agenda.

Pensions win

There are other measures that we welcome, including the announcement in the Budget that members of the Pension Protection Fund and Financial Assistance Scheme pension schemes who made contributions before 1997 will finally have their pensions uprated with inflation. This comes after years of campaigning by Prospect and our affected members.

Next steps

Prospect’s priority now is to continue to campaign on other issues that were not tackled in this Budget. This includes funding and resourcing for regulators, especially in the context of the recent Nuclear Regulatory Review. We will also continue to push for action on funding to stop job cuts in nuclear decommissioning, and will push for the newly announced ‘Tourist tax’ to be spent on supporting our vital heritage and creative industries sectors.

It is now up to the government to redouble efforts to back the key sectors of our economy through the industrial strategy, invest in defence and energy security, and implement the Employment Rights Bill as soon as possible to deliver improved rights for working people.

Our members in both the public and private sectors will be critical to delivering the growth our economy needs. The government must demonstrate that it backs them to succeed if we are to turn the economy around and create the conditions for more positive Budgets in the years to come.