Budget: good or bad news for working mums?

Chancellor George Osborne called his emergency Budget 'tough but fair'.  But several of his austerity measures have been criticised as hitting hard areas of society which are already deprived.  Workingmums.co.uk examines who are the winners and losers.
The Con-Lib coalition outlined plans to put the current deficit back in balance in 2015/16, but Labour has warned the Budget will jeopardise the economic recovery.

What has been abolished and how will it affect mothers?
* The Sure Start Maternity Grant will only be available for the first child in a family from April 2011.  
* The Health in Pregnancy Grant has been abolished - this was a universal grant of £190 available to all mothers to promote child and maternal health 
* Tax credits will no longer be available to families with an income of £40,000 or more.  
* But child tax credit is being increased by £150 above inflation for one year.
* Child benefit has been frozen for three years.
* Lone parents will be expected to return to work once their youngest child has started school - previously the age was 10.
The Trades Union Congress (TUC) has estimated that poor mothers are 'among the biggest losers' in yesterday's Budget by up to £1,293.  A spokesman said: ''Those who will be hardest hit by these policies are therefore the lowest income families with very young children, and middle income families with children who find their tax credit eligibility has been reduced as a  result of the eligibility thresholds being lowered.''
TUC General Secretary Brendan Barber said: ''Today's big claim is that this is a fair and progressive Budget.  Try telling that to those poor mothers who will lose more than £1,200 as a result of today's announcements.''
In the wake of the announcement of spending cuts, Simon Moore, managing director of Computershare Voucher Services for childcare, urged all parents to sign up for childcare voucher schemes.
''Now that belts are being tightened in households across the country, it is important that families take full advantage of those benefits that remain available,'' he said.  ''Thousands of those families who could benefit from childcare vouchers are not using them - and thousands more do not realise that they could be using them right up until their children are aged 16.  I would actively encourage parents to speak to their employers to determine how they could benefit from a scheme that does so much to help so many but could help many more.'' 

 VAT: biggest blow?
VAT is to rise from 17.5% to 20% in Jan 2011.  Stephen Menko, UK director of HR recruiter Ortus, warned the move could cost 201,000 jobs.  ''Previous studies conducted in other European states suggest we can expect over 200,000 job losses from the VAT increase,'' he said. '' The Chancellor may well feel that a price worth paying - but it certainly won't be without its costs.  The only way to reduce job losses significantly would have been to decrease other taxes, which is an option the Chancellor didn't have.  At least George Osborne stopped at 20%.  The EU allows members to increase VAT all the way up to 25%.  As VAT is the third largest source of government revenues, we're lucky the Chancellor didn't view an increase to 25% as a very attractive option.''

Public sector pay freeze - effect on staff
A pay freeze has been imposed on public sector staff for two years.  But those public sector staff who earn less than £21,000 a year will be given a flat pay rise of £250 for the next two years. The move was criticised by Charles Cotton, reward adviser for the Chartered Institute of Personnel and Development (CIPD), who said: ''In the short term, while a pay freeze will stop the public deficit getting any worse, it will do little to help the deficit get any better.  The government needs to be wary of the dangers of a prolonged squeeze on public sector pay.  Keeping the lid on pay for year after year would cut costs at the expense of severe public sector recruitment and retention difficulties.  This would harm the quality of public service provision as public sector employers would have to make do with lower quality staff, while history suggests that periods of tight pay restraint are subsequently followed by periods of significant public sector inflation when earnings are raised to competitive rates.''

Lower income earners and small businesses
The Chancellor announced the personal tax allowance rate for lower income earners would rise by £1,000 to £7,475.  The government aims to raise it to £10,000 in the current parliament.  
The Budget was broadly welcomed by the Federation of Small Businesses(FSB).  Chairman John Walker said: ''The measures announced in the emergency Budget will go a long way to reducing the deficit and will please the 93% of FSB members who called for a clear plan on tackling the country's deficit.  The increase in VAT to 20% will, however, hurt small firms who will have to pass the increase on to their customers, unlike big business which can absorb the cost.''
He backed the £1,000 increase in personal tax allowance and said it would help to reduce the pressure on businesses from wage demands and give employees more cash in their pockets. But he warned the hike in VAT would hurt small businesses in the high street - however, he said ''commonsense has prevailed'' with the VAT increase not coming into play until January 4th rather than New Year's Day.
The Enterprise Finance Guarantee Scheme is to be extended.  New businesses outside London and the south-east will be offered relief from the first £5,000 of National Insurance for their first 10 employees.  But the FSB said the Chancellor should have gone further by extending the move to existing businesses.   ''We welcome moves to give a national insurance holiday to start-up firms, but are concerned that with 70% of firms operating below capacity, those businesses already trading will not be helped,'' said Walker.  ''We need to see a full reversal of NICs increases to fully offset the 'tax on jobs' which the previous administration initiated.''