Public sector workers in Bradford face years of pay freezes under plans to set local rates.

The district’s MPs were divided over a Budget that also brought news of funding for rail improvements in the region. But the Government faced criticism over a “granny tax” that will cut tax relief for pensioners.

Other measures unveiled by George Osborne included a cut in tax for the highest earners, a crackdown on tax avoidance and a hike in stamp duty on the most valuable homes. Extra cash was given to the region’s Local Enterprise Partnerships, a total of £23.7 million across Yorkshire, which will work to drive regeneration.

There was no action to change the planned August increase on fuel duty while the price of a packet of cigarettes will immediately go up by 37p.

The Chancellor also announced extra funding for armed forces accommodation and increased the council tax relief given to servicemen and women.

Coalition MPs hailed the decision to increase the threshold for income tax to £9,205 – a key demand of the Liberal Democrats.

Lib Dem officials claimed this would lift almost 17,000 people in Bradford out of income tax altogether by April 2013. They claimed the move would mean an overall tax cut for middle earners, benefiting more than 159,400 people across the two sections of the population.

Bradford East Lib Dem MP David Ward said: “I am delighted that through this Budget we have been able to deliver on our key promise to give ordinary workers in Bradford another £220 cut in their income tax bills and take hundreds more low-paid workers out of paying income tax altogether.”

But the move towards locally-set public-sector pay could spell more misery for Bradford’s public sector workers, who are already suffering a pay freeze. Vince Cable, the Lib Dem Business Secretary, has previously expressed reservations about the change.

Yesterday he insisted this would not be a “broad brush” approach, and admitted there would be “obvious constraints” to how it could operate.

Treasury Minister David Gauke told the Telegraph & Argus: “I don’t think there has been any suggestion of cash cuts in pay.”

But once inflation has been taken into account, this means a real-terms pay cut for nurses, teachers, council workers and prison officers.

Other key points included plans to improve Bradford’s rail links with Manchester as part of the Northern Hub scheme.

In his speech, Mr Osborne said the “Manchester to Bradford” line would be improved as part of the scheme.

Budget documents said Network Rail was investing £130 million on links between a number of Northern cities but did not provide any further detail.

Labour jeered as Mr Osborne announced an income tax cut for people earning £150,000 and over.

But Keighley Tory MP Kris Hopkins insisted: “This is a budget not for the rich minority but for the overwhelming, hard-working majority on middle and lower incomes.”

He hailed the moves on income tax and concessions on the controversial cuts to child benefit.

Shipley Conservative MP Philip Davies said: “I believe it was good for Bradford, with investment in our infrastructure on the railways and with broadband. It is very obviously a budget in which Bradford is being given some support for the local economy and people of the district should be happy with what George Osborne is saying.”

But Labour MP for Bradford South Gerry Sutcliffe was not convinced.

He said: “This is a budget for the rich with no options for any growth. My constituents will not be better off. The unemployed will still be unemployed and at a time when we need to support communities, the help is not there.”