The Budget: Living Wage ‘Could Cost 60000 Jobs’

It will be surprising to many, with Osborne’s “lower tax society”, that the Budget increased tax, with the increases roughly twice the size of the cuts in aggregate.

But the move has been described as a “fraud” by Blackpool South MP Gordon Marsden who pointed out it was less than the current £7.85 recommended by the Living Wage Foundation.

Osborne said the British economy was “fundamentally stronger than it was five years ago”, with living standards rising strongly, Xinhua news agency reported.

“A cut in inheritance tax is irrelevant to most people in Blackpool -there are not that many wishing to leave more than £1m to their children, it is just playing to the Tory party gallery”.

It was already known he’d lower the household benefits cap from £26,000 to £20,000 and scrap grants for the poorest university students.

The Employment Allowance will rise from £2,000 to £3,000 next year, meaning that employer National Insurance bills will be cut by another £1,000.

Harriet Harman, acting labour leader, 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”.

However, the introduction of a National Living Wage is likely to oppose these positive changes.

“These changes will not help the 586,000 people for whom even the 2020 rate announced would not be enough to live on now”, said Moore.

Osborne’s plans to legislate to run a budget surplus “in normal times”, require huge cuts to public services and in-work benefits. Shadow Chancellor Chris Leslie accused Mr Osborne of trying to “pull the wool over people’s eyes” by offering a “rebadged” minimum wage that would not offset the cuts in tax credits.

Alongside the Budget, the Government published an entirely new remit for the LPC.

“We continue to believe that the real key to raising more people out of low pay will rest in increasing productivity”.

For individuals, the tax-free personal allowance will increase from £10,600 to £11,000 in April 2016.

David Birrell, chief executive at Edinburgh Chamber of Commerce, welcomed the further reductions in corporation tax but said the new National Living Wage had come as a surprise to businesses.

The money raised from this new Vehicle Excise Duty will go towards a “new roads fund” to provide sustained investment into the nation’s roads.

The Chancellor announced a whole host of measures that affect workers, at all ends of the scale.

She also argued it is right that the new wage rate should not be applied to workers under 25, saying: “We want to ensure we don’t price younger workers out of the labour market, it’s very important to ensure when you are 18 to 25 you are able to get a job initially and gain skills in that job”. Rates of income tax remain unchanged. Blair never resolved that contradiction, complaining bitterly about Gordon Brown’s expensive tax credits without accepting that they were the only way to meet the targets he had set. “As usual, bakers will have to manage their business within an acceptable level of overall costs, otherwise there will be no business and this could create additional job losses”.

VED for commercial vehicles remains unchanged, for now.

The IFS expects cuts to unprotected departments between 2015/16 and 2019/20 of around £19 billion to be announced in the Spending Review in the Autumn.