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More salary, fewer benefits

Tories to raise minimum wage by a third, but Labour says tax credit cuts mean it doesn’t help working people

More salary, fewer benefits
08.07.2015
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Chancellor George Osborne

Chancellor George Osborne

The national minimum wage will be rebranded and raised to £9 an hour under Conservative plans unveiled on Wednesday.

George Osborne, the chancellor of the exchequer, declared “Britain deserves a pay rise” in a dramatic end to the first Conservative-only Budget speech delivered since 1996.

The new “national living wage” will leave ensure those currently earning the minimum wage will be £5,000 better off by 2020, Mr Osborne claimed.

“Taken together with all the welfare savings and the tax cuts in this Budget, it means that a typical family where someone is working full-time on the minimum wage will be better off,” he told MPs.

But the chancellor also announced a range of cuts to benefits and tax credits, which Labour’s acting leader Harriet Harman said was “making working people worse off”.

And Mr Osborne’s national living wage was criticised as being significantly below the non-compulsory living wage, used by many companies in London, which currently sits at £7.85 an hour.

TAX CREDITS AXED

Under the changes families will only receive tax credits for their first two children, while housing benefit will no longer be automatically given to people under the age of 21.

Payments for social rent will be cut by 1% each year and all working age benefits will be frozen at their current levels until 2019.

He also confirmed that the benefits cap is being reduced from £26,000 to £23,000 in London and £20,000 in the rest of the country.

“Britain still spends too much, borrows too much, and our weak productivity shows we don’t train enough or build enough or invest enough,” Mr Osborne said.

“This is the new settlement. From a one-nation Government, this is a one-nation Budget that takes the necessary steps and follows a sensible path for the benefit of the whole of the United Kingdom.”

WORKING PEOPLE ‘WORSE OFF’

But Ms Harman, who had not seen an advance copy of the chancellor’s speech, said immediately after Mr Osbrone stopped speaking: “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.

“A Budget for working people? How can you make that claim when you are making working people worse off.

“You are making working people worse off by cutting tax credits and scrapping grants for the poorest students.”

TAX CUTS AND CHILDCARE

The personal allowance will rise from £10,600 to £11,000 next year, rising to £12,500 by next year.

Meanwhile, the 40p rate threshold will rise from £42,380 to £43,000 in what Mr Osborne said was a “downpayment” on his pledge to hit £50,000 respectively by 2020.

From September 2017 working parents of three- and four-year-olds will be entitled to 30 hours a week of free childcare – but in future those whose children are aged three and over will be expected to seek work if they want to claim Universal Credit.

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