Budget 2012: George Osborne will 'institutionalise poverty' Mark Serwotka, general secretary of the PCS union, says the budget will 'institutionalise poverty' in Britain's poorest areas. George Osborne will "institutionalise poverty" in Britain's poorest areas with a budget that is set to tighten the squeeze on public sector pay while reducing the tax rate for high earners, the leader of the UK's largest civil service union has warned. Mark Serwotka, one of the government's strongest critics and the general secretary of the PCS union, said that paying lower salaries to public employees in struggling parts of the country could trigger an "explosion" on pay in the wake of a two-year pay freeze. Pledging to join pensioner groups and activiss such as UK Uncut in forming an opposition to austerity measures, Serwotka said that cutting the top rate of income tax from 50p to 45p would give a "very arrogant" demonstration of the government's priorities. We will see a budget for the well-off, because when you cut the rate of tax for high earners it is hard to read that as anything other than letting off those who have so-called broader shoulders. It is a sign of where the government is at, and it is completely unacceptable. Serwotka added that the plan to peg public pay to private salaries on a region-by-region basis would introduce "postcode pay cuts," although it is not clear whether such terms will apply to newcomers only or current employees as well. The first posts to be considered for localised pay include DVLA staff in Swansea, many of whom are PCS members. If you give public sector workers in Swansea less money to spend, then you are doing completely the opposite to what needs to be done. They need a boost to the economy, and depressing people's wage levels does the opposite. It institutionalises poverty in the places that can least afford for it to happen," he said. Dismissing Ed Miliband's performance as Labour leader, Serwotka said the trade union movement was now the "de facto" opposition, but must seek alliances with other groups, including UK Uncut and Disabled People Against Cuts. You also need to embrace more direct methods of getting your case across. And I think that's the way we see things going forward. Serwotka added that the PCS was holding discussions with unions including Unite and the National Union of Teachers about industrial action over reforms to public sector pensions, which saw two mass walkouts last year: "There will be a range of tactics reviewed and there will be everything from lightning walkouts, shorter-duration strikes and rolling strikes around different parts of the public sector at different times. We will target the action where it is likely to have the most effect. PCS members include Border Agency staff at airports and ports, as well as Passport Agency staff. However, Serwotka said there were "no active plans" to disrupt the Olympics, amid criticism of Unite's general secretary, Len McCluskey, after he said employees should consider disrupting the games. While the coalition parties have been battling hard on behalf of their own pet projects in the run-up to the budget, Osborne has made it clear that he has no intention of signing off "unfunded giveaways." It means that any new spending - such as the £500m it is likely to cost him to ameliorate the impact of next year's child benefit changes - will have to be matched by tax rises elsewhere. Underspending by some Whitehall departments means this year's budget deficit is likely to come in £5bn-£10bn lower than the chancellor forecast in the autumn, and the expected slight upgrade to economic growth forecasts will mean another small boost to his finances. It is a small change in the context of the government's aggressive deficit-reduction programme, and the Treasury will bank it rather than spend it elsewhere. Any measures Osborne does announce will involve shifting money from one group of taxpayers to another, and few economists believe anything he announces will have much effect on the economy's short-term growth prospects. However, like last year's budget, when Osborne deployed the "march of the makers" catchphrase to describe the economic rebalancing he hopes to bring about, the Treasury has been working hard on a coherent narrative to explain how a battery of measures, from planning reforms to the regional pay deals and top-rate tax cut that are both anathema to Serwotka, will unleash an economic renaissance.