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Posted on 7 July 2010 at 2:20 GMT

How will George Osborne's budget affect families?

"It's class war, isn't it?" This was the view of a woman asked by the BBC what she thought of George Osborne's emergency budget, the day after it was announced.

Eleanor Donne and Vicky Perin

In his emergency budget speech George Osborne described the cuts he was delivering as "ensuring everyone, across the income scale makes a contribution to helping our country reduce its debts".

It would seem that the Royal Family is not exempt from 'sharing the pain'. Taxpayers' funding of the queen will be frozen at just 39.9 million for this financial year. Let's hope she and her children don't suffer too much as a result. Meanwhile, back in the real world, Britain's poorest families face freezes with quite different implications.

Child benefit, a vital component of low income and unemployed families' subsistence budgets, has been frozen for three years.

This means it has effectively been cut in relation to inflation, VAT rises and the soaring cost of living.

It will therefore hit, as with the entire austerity package, the poorest hardest.

Pre-election talk of ending this universal benefit and making it means-tested, leading to complex application forms and income assessment processes, often meaning that those most in need fail to claim, was not implemented.

But, instead of raising income from high income families through taxation, it is we who pay the price.

This budget has cut 5 billion from benefit support for struggling families. It will guarantee that New Labour's yawning chasm between rich and poor widens and that the figures for children growing up in poverty in Britain continue to rise.

From April 2011 pregnant women will no longer get the Health in Pregnancy payment of 190 and the Sure Start maternity grant of 500 will only be for your first child, not any subsequent children.

The 'baby element' of child tax credits, which was an additional payment worth about 10 a week for a whole year has also been abolished.

Plans to extend free school meals to working families on low incomes have been dropped.

'Neutral' measures at best

The Lib Dems, desperate to show that there is something 'progressive' about the budget, point to an increase in the child element of tax credits of 150 from April 2011 as a measure to protect poorer families.

However, Gingerbread, the lone parent organisation, called this at best a 'neutral' measure. It will simply offset rises in VAT and the effect of increasing the 'taper' which means that tax credits will reduce more sharply as income increases.

The government has reduced the maximum income at which a household can get some tax credits from 50,000 a year before tax to 40,000 from April 2011 and down to 30,000 by 2012.

In reality this cap will affect many ordinary couples, working full time and earning average wages, who often have to pay huge nursery costs.

Gingerbread also points out that increasing the tax threshold by 1,000 will not necessarily benefit lower earners if they are claiming housing benefit or council tax benefit as any increase they see in their net wage will mean a reduction in benefit.

Tax credits for Britain's ever-swelling ranks of 'working poor' will now, under new rules, respond quickly with payments dropping when income rises, but take much longer to increase as and when a family's income falls.

Benefits and tax credits will no longer be up-rated to the retail price index but instead to the consumer price index, shaving about 1% a year from payments and netting the government coffers almost 6 billion a year.

Parents will be forced off benefits once their children are five years old in the assumption that they can and must find work.

New Labour MPs are raising their hands in horror at the cuts. But in reality it was their government that forced lone parents off income support once their youngest child is seven, and rushed through their latest Welfare Reform Act just before the election.

More cuts?

This Act allows for further benefit sanctions and 'work for your benefit' schemes and makes it harder to qualify for contribution based Jobseeker's Allowance, as well as effectively abolishing Income Support for new claimants and extending privatisation of Jobcentre services.

This budget is a thoroughgoing attack on every aspect of working class families' battle to survive. But it is only the first shot in the class war, with massive public sector cuts to be outlined in the autumn.

Cuts in social care, classroom support, Sure Start programmes and other 'soft targets' will make the Tories' talk of 'equality of opportunity' for all children into even more of a sick joke.

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