Millions to enjoy tax break but Osborne sparks fury on pensions

0
Have your say

The Chancellor confirmed a £220-a-year tax break for millions of workers across the UK as he used his 2012 Budget speech to promise an end to decades of under-investment in transport across the North.

But George Osborne launched a shock raid on millions of pensions to help fund his tax cuts for low and middle-income earners, and consigned public sector workers throughout Yorkshire to years of crippling pay freezes after confirming local pay bargaining will be introduced for the first time.

Chancellor George Osborne delivers his Budget statement to the Commons

Chancellor George Osborne delivers his Budget statement to the Commons

Labour seized upon Mr Osborne’s heavily-trailed decision to cut the 50p tax rate for those earning over £150,000-a-year, describing it as a “massive gamble” in a “Budget for millionaires”.

But the Chancellor produced figures which he said proved cutting the top rate of tax to 45p from next April will cost “next to nothing”, and that a range of anti-tax avoidance measures and a new top rate of stamp duty would offset the measure five times over.

Business leaders expressed delight at a surprise further 1p cut to corporation tax, meaning it will fall from 26p to 22p by April 2014.

And further significant investment in Yorkshire’s creaking infrastructure was confirmed, with a major upgrade for the Hope Valley rail line and for services between Bradford and Manchester, as well as millions of pounds of investment in super-fast broadband networks for Leeds and Bradford.

“For years, transport investment in the North of England was neglected,” Mr Osborne told the House. “Not under this Coalition Government.”

Smokers were hammered with a 37p hike in price of a packet of cigarettes, and there was no relief for motorists as the Chancellor refused to scrap plans for a 3p increase in the price of fuel scheduled for later this year.

But it was pensioners on middle incomes were the biggest losers of the day, in one of the few measures not leaked to the press in the build-up to the Budget.

Some 450,000 pensioners across Yorkshire who have enjoyed income tax relief on their private pensions will be hit by Mr Osborne’s decision to “simplify” the pension system by withdrawing age-related allowances for new pensioners while freezing them for existing OAPs.

The plan was instantly dubbed a “granny tax”, with Age UK warning some pensioners would be left up to £259 a year worse off. The Saga Group denounced it as an “outrageous assault”.

There was grim news too for public sector workers across Yorkshire, who face years of pay freezes as the Government moves to close the gap between public and private sector pay in the regions.

Business Secretary Vince Cable said the move towards local pay bargaining would help the private sector to grow, as firms in areas such as Yorkshire are currently being “squeezed out” by national pay deals.

But Labour said the move will entrench the North/South divide and could ultimately cost the Treasury more, even driving up wages in some areas by pitting “hospital against hospital” and “school against school.”

The Liberal Democrats were triumphant as their long-cherished policy of hiking the point at which people start paying tax formed the centrepiece of the Conservative Chancellor’s Budget.

The largest increase in the minimum tax threshold in 30 years will see the figure rise by £1,100 next year to £9,205, a tax cut worth £220-a-year to millions of low and middle-income earners.

Figures produced by the party showed 1.8m workers in Yorkshire will benefit, with 179,000 of the lowest earners moved out of taxation altogether by April next year with the promise of further hikes to come in 2014.

Party leader Nick Clegg said it was a Budget that “every liberal can be proud of.”

But Labour savaged the decision to cut the top rate of tax at a time when living standards are falling for so many.

“It is a millionaires’ Budget that squeezes the middle,” Ed Miliband said.

Mr Osborne, was defiant, however, insisting the rich would ultimately pay more and that the pro-business measures would provide the economy with the boost it so desperately needs as his deficit reduction plan continues.

“This country borrowed its way into trouble,” he said. “Now we’re going to earn our way out.”

Budget’s impact on the region

Top rate of tax reduced to 45p from April 2013

Minimum tax threshold rises to £9,200 – offering a tax break to millions

Pensioners on middle incomes lose out

New rail investment for Sheffield and Bradford

Local pay bargaining introduced for public sector

Superfast broadband for Bradford and Leeds

Cigarettes up by 37p a pack