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Budget 2015: Osborne targeting 'low tax, low welfare' UK Budget 2015: Osborne commits to national living wage
(35 minutes later)
George Osborne is setting out a "Budget for working people" that will create a "lower tax, lower welfare" country. Chancellor George Osborne has vowed to introduce a "national living wage" of £9 an hour by 2020 in the first Tory budget since 1996.
In the first Tory Budget since 1996, the chancellor has scrapped student grants and is expected to cut billions from tax credits and housing benefit. The chancellor scrapped student grants, froze benefits and cut billions from tax credits and other welfare payments.
But he said he would spread the £12bn in welfare cuts promised in the Conservative election manifesto over three instead of two years.But he said he would spread the £12bn in welfare cuts promised in the Conservative election manifesto over three instead of two years.
He is also expected to bring forward tax cuts for middle income workers. He also cut housing benefit for most people aged under 21.
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". Mr Osborne told MPs his Budget 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".
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. He unveiled a downgraded growth forecast for the UK this year, of 2.4%, and pushed back the date at which public finances would move into surplus to 2019/20.
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. Measures announced in the Budget statement include:
The measures announced so far in the Budget statement include: Mr Osborne announced that the £26,000 benefit cap - the amount one household can claim in a year - would be cut to £23,000 in London and £20,000 in the rest of the country.
Further announcements are expected to include cutting the £26,000 benefit cap - the amount one household can claim in a year - to £23,000 in London and £20,000 in the rest of the country. The government will also make local authority and housing association tenants in England who earn more than £30,000 - or £40,000 in London - pay up to the market rent, but rents in the social housing sector will be reduced by 1% a year for the next four years.
The government will also make local authority and housing association tenants in England who earn more than £30,000 - or £40,000 in London - pay up to the market rent and make the BBC absorb the £650m cost of providing free television licences for over-75s. Councils in England and Wales are likely to be allowed to relax Sunday trading laws. Mr Osborne confirmed that the BBC has agreed to absorb the £650m cost of providing free television licences for over-75s. Councils in England and Wales are likely to be allowed to relax Sunday trading laws.
The chancellor unveiled "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.
Mr Osborne said the UK economy today was "fundamentally stronger than it was five years ago", with living standards rising strongly.Mr Osborne said the UK economy today was "fundamentally stronger than it was five years ago", with living standards rising strongly.
'Smoother path''Smoother path'
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.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.
"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."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.
"Britain still spends too much, borrows too much, and our weak productivity shows we don't train enough or build enough or invest enough.""Britain still spends too much, borrows too much, and our weak productivity shows we don't train enough or build enough or invest enough."
He announced reforms to the "no dom" tax status, saying "anyone resident in the UK for more than 15 of the past 20 years will now pay full British taxes on all worldwide income and gains" from April 2017. He targeted the £30bn-a-year tax credits system, which tops up the wages of low paid workers.
Mr Osborne said the NHS would receive a further £8bn by 2020, on top of £2bn already committed. Support for children through tax credits and universal credits will be limited to two children, affecting children born after April 2017 unless the third child is the result of twins, triplets or other multiple birth.
He is also is expected to target the £30bn-a-year tax credits system, which tops up the wages of low paid workers.
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.
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.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.
'Worse off''Worse off'
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. In other Budget announcements, the chancellor increased the personal allowance - the amount people can earn before they start paying 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. He announced reforms to the "no dom" tax status, saying "anyone resident in the UK for more than 15 of the past 20 years will now pay full British taxes on all worldwide income and gains" from April 2017.
Mr Osborne said the NHS would receive a further £8bn by 2020, on top of £2bn already committed.
Labour's acting leader Harriet Harman said the economy needed to be strengthened "but not at the expense of people being made worse off".Labour's acting leader Harriet Harman said the economy needed to be strengthened "but not at the expense of people being made worse off".
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.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.
But Ms Harman is likely to focus her attacks on the need to boost the productivity of British industry and help the low paid.But Ms Harman is likely to focus her attacks on the need to boost the productivity of British industry and help the low paid.
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.
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.
Please include a contact number if you are willing to speak to a BBC journalist.Please include a contact number if you are willing to speak to a BBC journalist.