“This is a Budget that puts security first,” claimed Chancellor George Osborne as the first real Tory Budget since 1996 was revealed in the House of Commons today.
The Cameron government confirmed it will commit 2 per cent of GDP to defence spending, every year for the next 10 years. Corporation tax will be cut and the minimum wage increased significantly. Welfare cuts, however, will only continue at the same rate as the last Parliament, despite the Chancellor being free of the shackles of Nick Clegg and the Lib Dems.
In a Commons speech lasting more than an hour, Mr Osborne argued that he had taken difficult decisions to cut borrowing, make business taxes competitive and reform welfare. Here is a snapshot across the major portfolios.
“The Prime Minister and I are not prepared to see the threats we face to both our country and our values go unchallenged,” Mr Osborne said. “Britain has always been resolute in defence of liberty and the promotion of stability around the world. And with this government it will always remain so.
“So today I commit additional resources to the defence and security of the realm”Mr. Osborn continued to a surprised chamber. “I will guarantee a real increase in the defense budget every year, and on top of that, create a joint security fund of £1.5 billion a year by the end of the parliament,” he said.
He promised a new permanent memorial to victims of terrorism overseas and a “specific memorial to those murdered in Tunisia” and committed £50 million to expand the number of cadet units schools to 500.
UKIP responded with this announcement; “We… support the increase in defence spending to meet NATO requirements of 2% of GDP and have always fought hard for this commitment. However we suspect this figure may include the war pensions bill, meaning the increase will not necessarily be spent on front line resources.”
Business and Wages
Public sector wage increases will be capped at 1 per cent. However, the minimum wage will be increased to £9 per hour by 2020, and £7.20 from next April for people 25 and older. “Britain deserves a pay rise, and it is getting a pay rise”, the chancellor said.
The National Living Wage will be compulsory from next year, designed to force employers to pay their workers properly instead of leaving the taxpayer to top up incomes through the benefit system.
Iain Duncan Smith’s reaction to the rise can be seen above.
Free market think tanks and the right of the Tory party are already reacting with disgust. However, Mr Osborne will vie to keep industry happy, as the rate of corporation tax will be cut from 20 per cent to 18 per cent by 2020.
“We are giving businesses the lower taxes they need to grow with confidence. Britain is open for business,” said Osborne.
The banking levy will be cut over six years in an attempt to encourage banks, (such as HSBC, who are threatening to leave), to stay in Britain.
The excitement of the budget is all a bit too much for this MP. pic.twitter.com/qZYD92tQH2
— BuzzFeed UK Politics (@BuzzFeedUKPol) July 8, 2015
Welfare and Tax “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,” said the Chancellor, claiming to have overseen the biggest fall in British debt since the 17th century. “Britain is back in the black,” he said.
Meanwhile, a confused Frankie Boyle wrote in The Guardian; “Today’s emergency budget, we’re assured, will turn us into One Nation. Unfortunately that nation is Greece.” Osborne still claims £12 billion of welfare cuts will be found in this Parliament – part of the £32 billion of savings he aims to make. After just winning an election, he will never be in a better position to make them. However he also claims he will be making them no faster than he did last parliament, and the NHS has been promised an extra £8 billion.
“Deficit reduction is still too slow. The deficit will still be running at £70bn this year, a rate that is still far too high, and means we will not get into surplus until 2019 or 2020,” said UKIP in a statement. There were some positives. The welfare cap will fall from £26,000 to £23,000 and those aged 18-21 must “earn or learn” or lose their automatic entitlement to housing benefits.
Working parents with three and four-year olds must work if they want universal benefit – they will get more free childcare, however – and working benefits will be stripped from those who are not disabled and have no children. For working people, the Tax-free personal allowance rise to £12,500 and the inheritance tax threshold will rise to £1million, making it easier to pass property down the generations.
“This government is playing politics with this budget. This budget is less about economic strategy and more about political tactics designed by the Chancellor to help him move next door” said Harriet Harman across the Dispatch Box in response.
“…The hopes of millions of working people are more important than his hopes of being the future Tory leader. He should be ambitious not just for himself, but for the county.”
Of course, Andy Burnham was also not so pleased as his tweet below shows.
Seems like young people & public sector workers are once again the big losers from an Osborne Budget. #budget15
— Andy Burnham (@andyburnhammp) July 8, 2015