By Julian Whittle Political editor

Last updated at 14:35, Thursday, 22 March 2012

The majority of income-tax payers will be £220 a year better off from 2013, thanks to Chancellor George Osborne’s Budget yesterday.

The increase in the personal allowance – the initial slice of everyone’s income on which no tax is paid – should mean one million people will stop paying income tax altogether.

But the Chancellor is under fire for phasing out the higher personal allowance for pensioners – a moved dubbed the ‘granny tax’ – and for cutting the top rate of income tax for those earning more than £150,000 a year. This falls from 50p to 45p next year.

Workington Labour MP Tony Cunningham said: “This isn’t a Budget for the people at the bottom or the squeezed middle. They have cut the highest rate of tax for the richest people in the country.

“Weren’t we were supposed to be ‘all in this together’?”

Carlisle’s Conservative MP John Stevenson was delighted with the Chancellor’s performance, in particular the increase in the personal allowance.

He said: “I welcome the fact that many low-paid workers will be removed from paying tax completely and many others will get a substantial tax reduction.”

Higher-rate taxpayers will not get the benefit of the cut in the personal allowance because the threshold at which people start paying the higher 40 per cent rate of income tax will come down from £42,475 to £41,450 next year.

Mr Stevenson also praised moves to help small businesses and he hopes that Carlisle will benefit from an announcement to fund ultra-fast broadband in smaller cities.

The routine duty increases hitting smokers, drinkers and motorists will go ahead – cigarettes went up last night, alcohol follows on Monday and fuel duty will rise in August.

One Budget measure could see public-sector workers in Cumbria paid less than in the south.

Mr Osborne said that government departments will be allowed to set different pay rates in different parts of the country when the pay freeze in the public sector ends this year.

That opens up the possibility of nurses, teachers and police officers being paid less in Cumbria than in other parts of Britain.

Unions have accused the Government of driving down pay in Britain’s poorest areas.

Dave Berry, branch chairman of the Public and Commercial Services union at Carlisle’s Rural Payment Agency said: “The general principle is that a nurse looking after the sick, a policeman looking after the streets or a civil servant serving the country should be paid the same.

“That seems relatively straightforward to me.

“The Treasury has published a pay remit guidance for the public sector that sets out a strong push on regional pay – that’s clearly the way the Government is going.”

To counter claims that he was looking after the rich, the Chancellor pledged a clampdown on tax-avoidance measures such as using companies to buy residential property to avoid stamp duty.

There will be a new seven per cent top rate of stamp duty on homes over £2m.

He also announced changes to child benefit in response to criticism that previously-announced plans to restrict it to basic-rate taxpayers were unfair.

It will now be withdrawn progressively where one person in a household earns over £50,000 a year and only those earning over £60,000 will lose it altogether.

On pensions, the Chancellor repeated his long-term aim of merging the state pension, currently £102.15 a week, with the State Second Pension to create a flat-rate state pension of £140 a week.

He also announced automatic reviews in the pension age to ensure it keeps pace with rising life expectancy.

Sunday trading laws will be relaxed for eight weekends starting July 22 to coincide with the Olympics and Paralympics, raising speculation that the move could become permanent.

There will be £100m to improve accommodation for the families of servicemen and a doubling of council-tax relief to 100 per cent when they serve abroad.

A buoyant Mr Osborne said the forecast for UK economic growth had risen to 0.8 per cent this year.

First published at 11:29, Thursday, 22 March 2012
Published by http://www.newsandstar.co.uk