In the first Tory Budget for 19 years, Chancellor George Osborne announced brutal cuts to tax credits and housing benefits.
There was official confirmation from the Chancellor that he seeks to cut the UK’s deificit with £12 billion worth of welfare cuts over the next four years. The special emergency Budget saw Osborne announce a freeze on working-age benefits for four years. He also confirmed plans to cap benefits at £20k outside London.
There was genuine surprise when he announced a new mandatory living wage to be introduced next year. It will replace the minimum wage of £6.70 with a living wage of £7.20 next April, rising to £9 by 2020. Osborne also announced inheritance tax relief which will see the rich able to leave an estate of up to £1 million tax free for their family.
Public sector workers will see a pay increase of just 1% over the next four years. And there will be an end to automatic housing benefit for 18-year-olds. The young will have to “learn or earn”, said Osborne.
“Those who can work will be expected to look for work and take it when it’s offered,” said Osborne. “It’s not acceptable that in an economy moving towards full employment some people leave school and go on to life on benefits."
Tax credits will now only be eligible for the first two children. After April 2017, people who have an additional child will not get extra help, and people who make a new claim will only get money for two children. There will, however, be exceptions for twins and triplets. There will be similar changes to housing benefits.
Addressing the Chamber, the Chancellor said his Budget would see the end of the "longest continual rise of our national debt since the 17th century".
Students in England saw grants scrapped to be replaced with loans. The Chancellor also announced new Vehicle Excise Duty bands, with the money raised to go into a new “road fund” to pay for a new round of road building. An apprenticeships levy will be applied to all large companies. Those that don’t take apprentices will have to pay into the levy.
During the speech Patrick Harvie tweeted: “I've lost count of the number of measures in #budget2015 which will inevitably see even more wealth concentrated in even fewer hands.”
Dr Paul Monaghan MP ?tweeted: “George Osborne says his Budget is for a 'country' on the up! Presumably achieved by trampling on the dignity of those he just impoverished."
Responding for Labour, Harriet Harman accused Osborne of making a political Budget speech, less to do with economic policy and more to do with getting the Chancellor into No 10 when David Cameron stands down.
A statement from the Office of Budget Responsibility released after the Budget said: "The new Government has used its first budget to loosen significantly the impending squeeze on public services, financed by welfare cuts, net tax increases and three years of higher borrowing. The Government has also delayed the expected return to a budget surplus by a year to 2019-20, but is then aiming for a slightly bigger surplus in the medium term."
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