Budget 2015: Osborne seeks 'lower tax, lower welfare' UK
Budget 2015: Osborne targeting 'low tax, low welfare' UK
(35 minutes later)
Chancellor George Osborne is promising a "lower tax, lower welfare society", as he prepares to deliver the first Conservative Budget since 1996.
George Osborne is setting out a "Budget for working people" that will create a "lower tax, lower welfare" country.
He will unveil his tax and spending plans to Parliament at 12:30 BST.
In the first Tory Budget since 1996, the chancellor is expected to cut billions from tax credits and housing benefit - and scrap student grants.
The BBC understands he will slow the planned pace of welfare reductions, taking three years - instead of two - to cut the budget by £12bn a year.
But he is likely to spread the £12bn in welfare cuts promised in the Conservative election manifesto over three instead of two years.
Measures on tax credits, inheritance tax, Sunday trading, social housing and tax allowances are anticipated.
He is also expected to bring forward tax cuts for middle income workers.
Measures expected to be in the Budget include:
Mr Osborne told MPs his Budget would set "out a plan for Britain for the next five years to keep moving us from a low wage, high tax, high welfare economy; to the higher wage, lower tax, lower welfare country we intend to create".
It is understood there will be a rise in the amount of money people can earn before paying any tax, while the threshold for the 40p tax rate will also be raised.
The Office for Budget Responsibility forecasts growth for the UK economy in 2015 at 2.4%, and 2.3% in 2016, with it revised up to 2.4% in 2017, and for the rest of decade.
Measures restricting tax credits for families with more than two children are also anticipated.
The chancellor is unveiling "just under half" of the £37bn in cuts he says are needed to clear the deficit by 2018, with £12bn from the welfare budget and £5bn from a crackdown on tax avoidance. The remainder of the savings will come from cuts to government departments to be announced in the autumn.
The cabinet has been briefed on the Budget's contents, in a meeting that lasted an hour and a quarter
The measures expected to be in the Budget statement include:
Mr Osborne told the cabinet it would put the UK "firmly on the path... to a lower tax, lower welfare society", the prime minister's official spokesman said.
Mr Osborne said the UK economy today was "fundamentally stronger than it was five years ago", with living standards rising strongly.
He also said the package of measures would ensure a "strong solid foundation to secure a better future" in the years ahead, the spokesman added.
He said higher tax receipts meant he could implement a "smoother" path to recording a surplus in the government finances, but stressed that he would not back away from tackling the deficit.
'Merry-go-round'
"You only have to look at the crisis unfolding in Greece as I speak to realise that if a country's not in control of its borrowing, the borrowing takes control of the country," Mr Osborne said.
Before Mr Osborne gets to his feet in the Commons later, David Cameron will hold his weekly Prime Minister's Questions session with MPs, at noon.
"Britain still spends too much, borrows too much, and our weak productivity shows we don't train enough or build enough or invest enough."
Ahead of the Budget statement, acting Labour leader Harriet Harman said the economy needed to be strengthened "but not at the expense of people being made worse off".
Mr Osborne said the NHS would receive a further £8bn by 2020, on top of £2bn already committed.
Mr Osborne is set to promise "bold" policies that will "secure Britain's future", when he addresses the House of Commons later.
He is also is expected to target the £30bn-a-year tax credits system, which tops up the wages of low paid workers.
The Tories have not yet said where the bulk of the £12bn in welfare savings they have pledged to make will come from.
He will cut child tax credit payments to families with three or more children - but the move, which will save £1.4bn, will only apply to new, and not existing, claimaints. Housing benefit will also be abolished for young adults.
BBC political editor Nick Robinson said Mr Osborne would reveal the detail of the cuts, which would be phased in, with £8bn by 2017/8 and a further £4bn by 2018/9.
Tax credits are a type of welfare payment, introduced by Gordon Brown in 2003, that allow unemployed people to keep some of their benefits when they get a low paid job and are also paid to disabled workers and those responsible for children. They are due to be phased out when Universal Credit is introduced.
Analysis by Nick Robinson, BBC political editor
'Worse off'
"Big. Very big." That's how one well-placed insider responded when asked to describe the Budget.
In other Budget announcements, the chancellor is expected to increase the threshold at which workers start paying the 40p income tax rate and bring forward plans to increase the personal allowance - the amount people can earn before they start paying tax.
It ought to be. After all, this is the first Conservative budget in almost 20 years. The last was delivered by Ken Clarke in 1996. It has to deliver promises repeated for so long but yet to be delivered, like the cut to inheritance tax.
But Mr Osborne is facing calls to force firms to pay their staff the living wage - £9.15 an hour in London and £7.85 elsewhere - to make up for in-work benefit cuts.
It has to fulfil the Tories' stated goals of cutting spending, cutting welfare and cutting tax whilst still claiming to be the "workers' party" pursuing a One Nation "we're all in it together" philosophy.
Labour's acting leader Harriet Harman said the economy needed to be strengthened "but not at the expense of people being made worse off".
Read Nick's blog in full
Her party has backed plans to reduce the benefit cap, which the BBC understands will affect 89,000 households and save £1.67bn over the next five years.
Tax credits are expected to be in the firing line, with David Cameron having promised to end the "ridiculous merry-go-round" of taxing low earners then handing them money back in benefits.
But Ms Harman is likely to focus her attacks on the need to boost the productivity of British industry and help the low paid.
Tax credits are a type of welfare payment, introduced in 2003, that allow people to keep some of their benefits when they get a low paid job and are also paid to disabled workers and those responsible for children. They will be phased out and replaced by Universal Credit, which is designed to streamline existing benefits.
BBC Newsnight understands tax credit entitlements will be reduced for families with more than two children.
The measure, which would apply to new families coming into the system, would save £1.4bn.
The Conservatives have pledged to eliminate the UK's budget deficit by 2018.
Mr Osborne will also announce that the annual amount given to recipients of the highest military and civilian honours for bravery, the Victoria Cross and George Cross, is going to be increased to £10,000 a year.
Recipients have traditionally received an annuity, which was worth £2,129 last year.
The cost of the annual, tax-free award will be met using £3m in banking fines levied by the Financial Conduct Authority, the chancellor said.
Follow the Budget on the BBC
BBC assistant political editor Norman Smith said the Budget would be more than an attempt to balance the books, and would seek to "redefine" attitudes towards welfare.
"Much of the philosophy behind this Budget is meant to be 'don't stay on benefits, you are better off in work: pay will rise'," he said.
Presenting his Budget, Mr Osborne will say "the greatest mistake" the UK could make would be to "think all our problems are solved".
"You only have to look at the crisis unfolding in Greece as I speak to realise that if a country's not in control of its borrowing, the borrowing takes control of the country," he will say.
For Labour Ms Harman said: "The Conservatives should be thinking about the economy as a whole, and every corner of the country, not the Tory backbenchers and their fortunes.
"We don't want to see political tactics; we want a focus on making the economy work for everyone."
The National Union of Students warned that plans to scrap maintenance grants, and convert them in to loans, would deter poorer students from going to university.
The National Union of Students warned that plans to scrap maintenance grants, and convert them in to loans, would deter poorer students from going to university.
The grants can be worth up to £3,000 a year. The changes the government is said to be proposing could save about £1.6bn.
The grants can be worth up to £3,000 a year. The changes the government is said to be proposing could save about £1.6bn.
But NUS president Megan Dunn said: "If grants are cut, it could mean the cost of student loans will go up for everyone or repayment conditions will get tougher than they already are.
"This is yet another unreasonable barrier to accessing higher education."
Former Conservative Chancellor Ken Clarke - who delivered the last all-Conservative Budget, in 1996 - said Mr Osborne should prioritise putting "further constraints on excessive public spending" rather than cutting taxes.
He told Sky News that while he supported lowering the top rate of income tax to 40p, it would not be right to do it now for political reasons, as it would provoke "tedious rubbish about helping millionaires".
Raising the tax thresholds - as Mr Osborne is expected to do - was a more sensible move, he added.
How will you be affected by the chancellor's summer budget? Email haveyoursay@bbc.co.uk with your story.
How will you be affected by the chancellor's summer budget? Email haveyoursay@bbc.co.uk with your story.
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