By the rich for the rich

Public spending

Chancellor George Osborne was given hard evidence that his pro-austerity economic policies are failing Britain this week as the Office for Budget Responsibility (OBR) halved its growth forecasts for 2013 from 1.2 to 0.6 per cent.

But when the going gets tough, Osborne gets tough on public-sector spending as he revealed 1 per cent departmental budget cuts worth billions of pounds in each of the next two years, an extension of the 1 per cent pay cap for public-sector workers to 2015/16 and limits to "progression" pay rises.

He also announced a further £1.5 billion cuts in the 2015/16 spending review.

No wonder unions called the Budget a "war on public-sector workers," also pointing out that education and the NHS are not "protected" from cuts, as Osborne touted, but are too suffering massive real-term cuts.

Pay freezes, job losses, increased pension contributions and downgrading services are all part of these indirect cuts.

Civil servants' union PCS, which organised a national Budget day strike, said that because Osborne is unable to think of a plan B it's hard-pressed public sector workers who end up being penalised.

TUC general secretary Frances O'Grady said Osborne has "significantly" added to the strained family budgets of millions of nurses, teachers, fire-fighters, council workers and civil servants.

Taxes

The flip side to Osborne's ideological attack on the public sector was that this gave him a green light to award tax sweeteners to private business. As he praised the increase in private-sector employment revealed by the Office for National Statistics he pledged a new employment allowance that will cut National Insurance bills by £2,000 for companies, tax breaks on shares traded on growth markets and for investors in social enterprises, 450,000 small companies exempt from national insurance and a reduction in corporation tax from 21 to 20 per cent by 2015.

However, economists weren't so convinced. Socialist Economic Bulletin's Michael Burke pointed out that there's no point "offering carrots" to businesses by cutting taxes on non-existent profits.

Environmental campaigners were equally unimpressed by tax allowances given to companies that invest in shale gas, promoting the highly controversial drilling process known as fracking, which releases natural gases by splitting rocks, in some cases causing earthquakes.

And measures to recoup £3bn in tax avoidance and evasion are a drop in the ocean when almost £100bn is being lost in this way. It appears that Osborne's strategy was to appear to do the right thing without doing very much at all.

Another case in point was his attempt to give lip-service to the decision to bring forward to 2014 the £10,000 threshold at which people start paying income tax, a year earlier than planned.

But he fell silent when Labour leader Ed Miliband asked the Cabinet whether any of them benefited from the 50p top-rate tax cut for earnings over £150,000, which will be introduce in two weeks.

Unison said the government's decision to cut the 50p rate of tax would hand the 13,000 millionaires in Britain an average of £97,884.62 next year, at a cost to the Treasury of £1,272.5 million.

Meanwhile the Family Action charity's David Holmes pointed out that parents won't even benefit from the changes to the personal tax allowance.

He said they "will be left battling to heat their homes and put meals on the table as racing food and energy prices outstrip benefit uprating."

And what will it do for the lowest-paid workers in the country, many of who don't pay tax while others will lose out when in-work benefits like housing benefit get factored in?

Housing and childcare

Two of Osborne's plans that seem at first glance positive steps in helping the less well off but actually risk being hijacked by multi-millionaires when looked at more closely.

The 20 per cent bonuses for Help To Buy schemes appears to be aimed at first-time buyers looking to get onto the property ladder, with the government backing 5 per cent deposits by giving 20 per cent repayable loans on homes worth up to £600,000.

But the scheme says nothing about multimillionaires muscling in on the market to get subsidised mortgages for their second homes, pushing out first time buyers altogether.

Shadow chancellor Ed Balls put it best when he said: "From what I can see so far, the government is basically saying that if you have got a spare room in a social home you will pay the bedroom tax but if you want a spare home and you can afford it, we will help you buy one."

Another seemingly positive step was to offer a 20 per cent tax cut on childcare worth up to £6,000 per child.

But the measure, to be introduced in 2015, is likely to again benefit the wealthy while pushing up childcare costs, STUC general secretary Grahame Smith warned.

"A much better approach would have been to learn from the best childcare systems around the world and start directly subsidising provision," he said.

Child Poverty Action Group's chief executive Alison Garnham said: "It's a great disappointment for struggling families that the majority of extra funds for childcare will be going to the wealthiest families.

"The real challenge is to make childcare affordable for those at the bottom end, so that there are strong incentives for second earners and single parents. That would do much more to help reduce child poverty, and it would help economic recovery too."

Head of women's equality group the Fawcett Society Ceri Goddard said it is "vital the government ensures as many parents as possible benefit" and stressed that a close eye will need to be kept on the new benefit to see which groups may miss out.

Pensions

Meanwhile pensioners are expected to "enjoy" a single flat-rate pension of £144 a week to be brought forward a year to 2016.

But the National Pensioners Convention's general secretary Dot Gibson pointed out there's nothing in the proposals that will help today's pensioners, warning the move will create a single-tier state pension in a two-tier pension system.

She highlighted that setting the state pension at £144 is at least £30 less than the official poverty level and will do very little to stop future generations of older people falling into poverty.

"What the government is trying to sell is a plan for people to pay in for 35 years, get £144 a week and have to wait at least until 68 before they can collect it. No-one should be taken in by what is little more than a con trick."

The Scottish Pensioners Forum's Eddie MacDonald called it "a clever way of disguising what will actually be in place for pensioners, a two-tier pensions system by another name."

Osborne also capped social care costs at £72,000 in 2016 - the total amount paid by elderly people in England for their own care before the government steps in.

But it remains to be seen how the further 1 per cent cut to local council's budgets for 2014/15 will effect social care services.

The NPC warned that it will no doubt mean yet more social care cuts, piling more pressure on older people and their families as they struggle to cope.

And once again the cap ignores those on low incomes and elderly people in the country who don't have any savings.