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Chancellor delivers Living Wage in Budget

by Desmond Busteed

The announcement will please Church of England bishops who called for it in a letter to parishioners before the general election, which they said would ensure people earned enough to "live decently".

But critics say it's also a pivotal day in the dismantling of the welfare state.

The independent Institute for Fiscal Studies has concluded 3 million families will lose £1000 a year from changes to the universal credit threshold.

While the freeze in tax credits will mean 13 million families will lose £260 on average.

The cuts in the first all Conservative Budget since 1996 include tax and universal credits being limited to families with no more than two children, affecting those born after April 2017.

"What you need to do is find a way to raise the levels of pay, and the Government did something on that today, but not withdraw the tax credits before those increases take effect," said Shadow Minister for Employment Stephen Timms.

So the increases announced by the Chancellor will take effect over the next five years, the tax credits cuts will all take effect next year, so working families are going to be badly hit in the meantime," added Mr Timms.

Most working age benefits are to be frozen for four years. While housing benefits for 18 to 21 year olds are being scrapped for those deemed not vulnerable.

The total yearly amount any one family can claim for is being reduced to £20,000 pounds outside London (£23,000 in the city).

Maintenance grants are to be replaced with loans for new students from next year.

"Many of the same people that will see their wages going up will also see their tax credits going down, and it's quite hard to tell at this stage whether they'll be better or worse off," said Niall Cooper, director, Church Action on Poverty.

However, George Osborne's Living Wage announcement was greeted with a great roar from Conservative benches in the House of Commons.

"I was pleased that before the Chancellor went into other cuts and issues, he said firstly that we need to have the principal of protecting the elderly, the vulnerable and disabled," said Conservative MP and backbencher David Burrowes, a Christian, giving reaction to the Budget on Premier.

"And so, he didn't go down the route of taxing or means testing of disabled benefits and protected pensioner benefits as well.

"The safety net needs to continue to be properly generous and fair to those who need help but aren't working and that's still happening, that still is the case," added Mr Burrowes.

Some of the other big announcements include: increasing the amount you can earn before you start paying tax, the non-dom tax status being abolished, big reforms for Vehicle Excise Duty in England and inheritance tax being scrapped for houses under 1 million pounds.


A new, compulsory National Living Wage of £9 per hour for over-25s by 2020. Starts next April at £7.20 per hour - up from current minimum wage of £6.50.


Government must save £37bn over five years, Mr Osborne says - £12bn to come from savings through welfare changes, £5bn from crackdown on tax evasion and avoidance and the rest from departmental cuts.

Real increase in defence budget to meet NATO commitment to keep it at 2% of GDP. Boost for forces and intelligence agencies.

NHS to receive extra £8bn by 2020.

Public sector pay awards restricted to 1% per year for the next four years.


Tax-free personal allowance to be raised to £11,000 next year - boosting wages by £900. Higher rate of income tax threshold raised to £43,000.

Corporation tax rate will fall to 19% in 2017 and 18% in 2020 to show that "Britain is open for business."

Non-dom tax status abolished from April 2017, raising £1.5bn.

Climate Change Levy exemption for renewable electricity to be scrapped.

Pensions tax annual allowance to be gradually reduced to a minimum of £10,000 from next year.

Inheritance tax scrapped for estates under £1m.

Reduced tax relief for buy-to-let landlords. Mortgage interest relief on residential property to be restricted to the basic rate of income tax - phased in over four years - from April 2017.

From 2017, three new Vehicle Excise Duty bands will come into force for new cars in England only, starting at £140 annually. "Every single penny" from VED will go to a Roads Fund to fund improvements from 2020.

No changes to fuel duty this year.

Bank levy rate to be gradually reduced over six years with new 8% surcharge on bank profits introduced from January.


Benefits cap reduced to £23,000 in London and £20,000 outside of the capital.

Rents in social housing sector reduced by 1% annually for next four years.

Tax Credit and Universal Credit to be limited to families with up to two children from 2017.

Working age benefits frozen for four years.

30 hours of free childcare for working parents of three and four-year-olds.

Housing benefits for 18-21-year-olds scrapped for those deemed not vulnerable.

Northern Powerhouse:

Leaders of 10 councils of Greater Manchester agree greater devolution of powers from Westminster. £30m funding for transport for the North, including Oyster-style ticketing. Pushing for more powers for the Midlands.


Maintenance grants to be replaced with loans for new students from 2016/17.


Office for Budget Responsibility (OBR) forecasts UK 2015 GDP growth at 2.4% "faster than America."

A Fiscal Charter will commit UK to running an overall budget surplus in normal economic times.

Borrowing forecast for 2015/16 revised down to £69.5bn, then revised up for following two years to reach £6.4bn in 2018/19.

Budget surplus will be achieved a year later than planned in 2019/20, but the national debt will be lower and the surplus larger than expected.

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