‘Higher wage, lower tax, lower welfare’ Britain - George Osborne’s benefit cuts

Chancellor of the Exchequer George Osborne delivers his Budget statement to the House of Commons, Lo

Chancellor of the Exchequer George Osborne delivers his Budget statement to the House of Commons, London. PRESS ASSOCIATION Photo. Picture date: Wednesday July 8, 2015. See PA story BUDGET Main. Photo credit should read: PA Wire - Credit: PA

Benefits will be slashed in a bid to push more people back into work and help save taxpayers £12bn per year as part of a 'higher wage, lower tax, lower welfare' Britain.

Clive Lewis asks his first question to the Prime Minister

Clive Lewis asks his first question to the Prime Minister - Credit: Archant

Chancellor George Osborne used the first Tory-only budget for nearly 20 years to reveal a £20,000 annual cap on household benefits outside of the capital, and declared a national 'living wage' to 'give Britain a pay rise'. Families living in London will be capped at £23,000.

It comes with the news that after April 2017, families who have a third child will receive no additional tax credit or universal credit.

The moves have been criticised by the Labour opposition for creating a two-child policy and making poorer families worse off.

In the announcement, Mr Osborne told MPs: 'Another decision that most families make is how many more children they have, conscious that each extra child costs the family more.'

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He said in the current tax system, each extra child brings an additional payment of £2,780 a year. 'The benefits system should not support lifestyles and rents that are not available to the taxpayers who pay for that system,' he said.

Working-age benefits will be frozen for four years, and those on higher incomes living in social housing will have to pay rents at the market rate.

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Mr Osborne promised to maintain child benefit, but said: 'These changes to tax credits are not easy but they are fair.'

A national 'living wage' of £7.20 an hour for everyone aged 25 and over will be introduced in April 2016, and is set to raise to £9 by 2020.

Mr Osborne said: '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 said it was a plan 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.'

But Norwich South MP Clive Lewis said the cuts to benefits, including tax credits, were 'shocking'.

'It definitely seems like we have a two-child policy now,' he said. 'These are working tax credits for people who are working and earning poverty wages because many companies are not paying a living wage.

'It is a shocking situation. It is giving with one hand and taking with three.

'What this chancellor has done is unacceptable.'

And of the increase in wages, he said: 'This is not a living wage. £9 an hour in 2020 is only £1 more than the projected increase of the minimum wage.'

He also criticised a plan to remove housing benefits from 18 to 21-year olds, and added: 'Norwich is a very young city. This is going to have a massive impact.'

Other announcements included a plan to freeze social housing rents for the next four years.

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