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Budget round-up: Osborne heralds tax cuts and local pay rates


Chancellor George Osborne has hinted that local pay rates will be introduced for some public sector workers.

His annual Budget statement today also announced a string of tax changes affecting those working in the NHS.

Mr Osborne pledged to make “public services more responsive, and help our private sector to grow and create jobs in all parts of the country”. He said government evidence to independent pay review bodies – potentially giving more details of any move to local pay - would be published today.

The chancellor added: “Some departments will have the option of moving to more local pay for those civil servants whose pay freezes end this year.”

In the immediate aftermath of his speech it was unclear how this will affect those working in the health service.

Mr Osborne also pledged to increase the personal tax allowance on pay bills by £1,100 to £9,205 in April 2013, providing some relief particularly to those at the lower end of the health service income scale.

For high earners, he reduced the top rate of income tax from 50% to 45%, starting in April 2013.

There was also help for the private sector with reductions in corporation tax by 1% next year. A series of further falls will leave the rate of corporation tax at 22% in April 2014.

Staying on workforce issues, Mr Osborne pledged to conduct an internal review of the role of employee ownership in supporting growth. This would conclude in advance of the 2012 autumn statement. It was immediately unclear if this will impact on health service workers.

The Budget would be fiscally neutral, the chancellor said. However, there will be intensifying resource constraints across government departments.

The full Budget paper restated forecasts of average real reductions in government department expenditure limits. The size of the falls would increase from an average of 2.3% a year in the Spending Review 2010 period to 3.8% a year in 2015-16 and 2016-17, unless action was taken to curb the potential for welfare spending to rise.

There will be £10bn further reductions in welfare spending by 2016.

Mr Osborne confirmed a white paper on social care would be published, but he gave no date for this. Although this had been billed for late spring, there has been speculation it will be delayed until the autumn.

There would be an “automatic review of the state pension age to ensure it keeps pace with increases in longevity”, he said. Further details will be given alongside the Office of Budget Responsibility’s fiscal sustainability report this summer.

On public health, Mr Osborne said the government would soon publish its alcohol strategy “to address the growing problem of alcohol abuse, and the many billions of pounds it costs our NHS and criminal justice system”. But there would be no immediate changes on duty today, with there being no mention of minimum alcohol prices.

Tobacco duty will rise by 5% above inflation, an increase of 37p per packet of cigarettes, from 6pm.

Royal College of Nursing chief executive and general secretary Peter Carter said: “Nurses were looking for a silver lining in this Budget but they are unlikely to find it.

“The rising cost of petrol, a two year pay freeze, and an attack on their pensions are all making nurses feel the pinch every day. We do welcome the rise in personal allowances but we will fiercely resist any move away from national pay rates for nursing staff,” he said.

“Introducing regional pay would only serve to drive down pay in certain areas and lead to damaging competition between Trusts. Ultimately it is patients who would suffer.”

Unison general secretary Dave Prentis said: “Far from encouraging economic growth, the Chancellors’ policies are sucking demand out of the economy.  Public sector workers are being hit with a pay freeze again this year and now the government are proposing local pay which mean £1.7bn would be lost from the economy. 

“Taking money out of the pockets of hard working people will starve local shops, cafes and businesses out of much needed revenue sending the economy further downwards.”


Readers' comments (6)

  • tinkerbell

    Royal College of Nursing chief executive and general secretary Peter Carter said: “Nurses were looking for a silver lining in this Budget but they are unlikely to find it.

    So we'd best start looking for the money tree at the end of the garden. Just when you thought it couldn't get any worse.

    This government seem hellbent on hounding nurses out of the profession so they can bring in cheap labour to work in run down hospitals, in their new 2 tier health system. The SALE of OUR NHS, everything must go! Can't even be bothered to swear about it all anymore.

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  • "Budget 2012: Boost for Wallace and Gromit
    Television companies like the animators behind Wallace and Gromit will be given tax credits under a new scheme designed to stop British creative talent from moving abroad."

    How about a similar boost for nurses to stop their caring skills and talent from moving abroad or giving up altogether?

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  • tinkerbell

    'cracking cheese Gromit', which is what most of us will be living on, cheese on toast. What about the price of Brie though lately? Well beans on toast then. Well just beans, well mostly just toast then with a sliver of butter, well marg then, oh just lick the marg tub instead.

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  • tinkerbell

    'what do you expect from millionaires?' as one pensioner said. Wise old gal.

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  • What was the point of Camsey and Lameron going round hospitals with sleeves rolled up for very brief visits and giving orders to the nurses on how to do their job when there aren't enough of them to to do it, let alone take on any more?

    They obviously noted from the press that care is suffering through lack of staff and not enough adequately trained personnel. If the system can't cope with the present demands and capacity what is it going to happen as more and more go into retirement and for the many who will need care?

    If they cut pensions for those already retired and now caught between this tax net and the elderly are left with less pension in the future yet they want them to pay more for their care, the government will end up having to finance more, put them out in the street or in a home with cheap and substandard care, leave those on their own to their own fate in their own homes or just hope they drop off sooner.

    What a shame previous governments were so hasty in converting or demolished all the old workhouses an army Nissan Huts!

    ""George Osborne has tried to bury his £3 billion 'Granny Tax' raid on pensioners

    "And he added insult to injury by dressing up a tax grab as a 'simplification' and claiming that he was taking this money away from pensioners because they could not understand the allowances they were entitled to.""

    does this arrogant young man thinks once past 65 you don't understand anything any more?

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  • The reason welfare spending is so high is because unemployment is high and rising and millions in work are poorly paid and are dependent on tax credits and benefits - all of which can be linked to government policies. Regional pay will exacerbate this. The process is another race to the bottom to add to the pension changes.

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