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Budget 2015: Osborne commits to national living wage Budget 2015: Osborne unveils 'national living wage'
(35 minutes later)
Chancellor George Osborne has vowed to introduce a "national living wage" of £9 an hour by 2020 in the first Tory budget since 1996. George Osborne has set out plans to cut welfare spending and increase some taxes - but also boost the minimum wage - in the first Tory Budget since 1996.
The chancellor scrapped student grants, froze benefits and cut billions from tax credits and other welfare payments. The Living Wage, which starts at £7.20 next April and rises to £9 an hour by 2020, will be compulsory and replaces the minimum wage which is now £6.50.
But he said he would spread the £12bn in welfare cuts promised in the Conservative election manifesto over three instead of two years. The chancellor scrapped student grants, cut housing benefit for under-21s and froze working age benefits.
He also cut housing benefit for most people aged under 21. Labour leader Harriet Harman said the Budget made "working people worse off".
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".
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.
Measures announced in the Budget statement include:Measures announced in the Budget statement include:
Mr Osborne unveiled a downgraded growth forecast for the UK this year, of 2.4%, and pushed back the date at which the UK's public finances would move into surplus to 2019/20.
The Office for Budget Responsibility said the government would spend £83bn more over the next five years than Mr Osborne said in his March Budget.
In his speech the chancellor said the UK economy today was "fundamentally stronger than it was five years ago", with living standards rising strongly.
And his Budget was "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".
In a surprise announcement at the end of his speech, he said workers aged over 25 would be entitled to a "national living wage" from next April.
The current minimum wage, which applies to those aged over 21, is £6.50. Those entitled to the "living wage" will get £7.20 and that will rise to £9 an hour by 2020. Labour had vowed to increase the minimum wage to £8 by 2020 during the general election campaign.
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.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.
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, but rents in the social housing sector will be reduced by 1% a year for the next four years.
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. Mr Osborne confirmed that the BBC has agreed to absorb the £650m cost of providing free television licences for over-75s.
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. The chancellor unveiled "just under half" of the £37bn in cuts he says are needed to clear the deficit, 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.
'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. Mr Osborne 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 targeted the £30bn-a-year tax credits system, which tops up the wages of low paid workers. The Office for Budget Responsibility said the government would spend £83bn over the next five years than Mr Osborne said in his March Budget.
The chancellor targeted the £30bn-a-year tax credits system, which tops up the wages of low paid workers.
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.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.
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 increased 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.
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 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.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". In her Budget response, Labour's acting leader Harriet Harman said:"The Chancellor is said to be liberated without the ties of coalition holding him back but what we have heard today suggests his rhetoric is liberated from reality.
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. "A Budget for working people? How can you make that claim when you are making working people worse off.
But Ms Harman is likely to focus her attacks on the need to boost the productivity of British industry and help the low paid. "You are making working people worse off by cutting tax credits and scrapping grants for the poorest students."
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.
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.