Military spending will increase every year until the next election to meet the Nato defence target, George Osborne announced to cheers today.
The Chancellor committed the Government to spending 2 per cent of national income on the military every year until 2020, raising the Ministry of Defence’s budget by 0.5 per cent a year in real terms.
The announcement ended months of speculation over the pledge. Until now, ministers had not committed the UK to spending at that level beyond the current financial year – prompting pressure from backbench MPs and military chiefs.
The Chancellor committed the Government to spending 2 per cent of national income on the military every year until 2020, raising the Ministry of Defence’s budget by 0.5 per cent a year in real terms
But Mr Osborne today told MPs: ‘The Prime Minister and I are not prepared to see the threats we face to both our country and our values go unchallenged.
‘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.’
Announcing the 2 per cent commitment, he added: ‘We will ensure that this commitment is properly measured, because we know that while those commitments don’t come cheap, the alternatives are far more costly.’
The Ministry of Defence’s budget will rise by 0.5 per cent above inflation every year until 2020/21.
In its budget policy document, the Government says it remains committed to maintaining the size of the Army at 82,000.
US President Barack Obama urged Britain to meet its Nato requirement to spend 2 per cent of GDP on defence to counter the growing threat posed by Russian leader Vladimir Putin
Military spending will increase every year to help Britain’s military keep up to date with the growing threat posed by Russia (pictured two RAF Tornados)
In addition, a joint security fund of £1.5 billion a year will be created by the end of the Parliament to pay for increased spending on the military and intelligence agencies.
The Chancellor also disclosed that the budget for the overall counter-terrorism effort – a total of more than £2 billion spent by a range of departments, agencies and the police, will be protected.
He added: ‘I said that this was a Budget that delivered security to the people of Britain. And I said that we had to choose our priorities. Well, today, this government makes this choice.
‘Committing to our armed forces who fight to keep us free. Committing to the intelligence agencies who keep us safe. Committing to the values we hold dear – and defend around the world.’
Defence Secretary Michael Fallon was briefed on the budget commitment this morning
The budget also included funding for the Defence Medical Welfare Service and the Royal Commonwealth Ex-Services League.
Mr Osborne added: ‘We’re supporting the incredibly courageous members of our special forces who are injured and, in the 75th Anniversary of the Victoria Cross and George Cross Association, quadrupling the annual annuity we pay to those who demonstrated the highest valour and who I had the honour of meeting yesterday.’
Former Navy chief Admiral Lord West said he was ‘absolutely delighted’ that the Nato target will be met.
He said: ‘That’s got to be seen very much as a minimum. My only concern is what exactly is now included in that methodology compared to two years ago? I would like a very clear explanation.’
Lord West said it is crucial that the UK’s military capability is enhanced, saying: ‘It is a much more dangerous and unstable world.’
At Prime Minister’s Questions ahead of the budget Mr Cameron faced pressure from the new Tory chairman of the Commons Defence Committee to guarantee military spending.
Tory Julian Lewis asked Mr Cameron whether Britain, should ‘not be aiming at a 3 per cent target rather than the bare Nato minimum figure’.
Mr Cameron told MPs: ‘We assess our defence spending constantly as to whether it meets our obligations and keeps our country safe. As figures published last month show we are meeting the 2 per cent Nato target this year.’
He added the only way to have strong defence ‘is to have a strong economy’. The MP for New Forest East raised the issue of quantity in the armed forces.
Mr Lewis said: ‘As the Prime Minister and indeed the Chancellor know, quality is not the issue with our armed forces, but quantity is.
‘Given that we used to spend regularly between 4 and 5 per cent of GDP on defence when we last faced a threat on the Continent and a major terrorist campaign, should we not be aiming at a 3 per cent target rather than the bare Nato minimum figure?’
Mr Cameron replied: ‘The point I would make to him – he is right we do face very severe threats in our world – is the only way to have strong defence is to have a strong economy, that is absolutely key.
‘We made some very clear commitments about the size of our armed forces, about the successor to the Trident submarine and also the vital equipment programme, where we have the aircraft carriers and the other equipment vital to our armed services that are coming through.
‘Those things are only possible because we closed the deficit in our MoD, and the mess that we found when we became the Government and we have a strong economy.’
Osborne stuns rivals with new National Living Wage
George Osborne outmanoeuvred his political opponents today with the shock creation of a new National Living Wage.
The Chancellor had been stung by criticism in recent weeks that his plan to cut tax credits paid to top up low wages would hit poor working families.
Instead, he announced that from April next year employers will have to pay everyone over 25 at least £7.20 an hour – rising £9 by 2020.
George Osborne was congratulated by David Cameron after unveiling his Budget designed to make work pay
Some six million people will see their pay increase as a result – and those currently earning the minimum wage of £6.50 an hour will be £5,000 better off by 2020, he claimed.
Mr Osborne said he was following the Conservative tradition as the party that brought in protections for mill workers during the industrial revolution.
‘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,’ Mr Osborne told MPs.
Mr Osborne also ruled out reducing the top rate of tax for those earning more than £150,000 from 45p to 40p.
London Mayor Boris Johnson this week warned Britain’s richest bosses should not get a tax cut until they pay their workers properly.
He said the idea of cutting the top rate of tax cannot be supported until business leaders pay their staff a living wage which means they do not have to rely on welfare to top up their income.
A study by Citizens UK this year showed that there were 5.2million low paid workers in supermarkets and shops the UK, receiving £11billion in state support through tax credits.
It is argued that if their firms paid them the Living Wage instead of the minimum wage it would save the taxpayer £6.7billion in benefits.
CitizensUK suggested that workers at five of the country’s biggest retailers – Tesco, Asda, Sainsbury’s, Morrison’s and Next – receive £1billion-a-year in taxpayer-funded subsidies topping up their low wages.
Some businesses have already adopted the voluntary Living Wage of £7.85 an hour (£9.15 in London), rather than the adult national minimum wage of £6.50.
Income tax cuts for 29million a ‘for a country on the up’
Almost 30million people were promised an income tax cut as George Osborne brought forward help for low earners and the middle classes.
From next April workers will be able to earn £11,000 before paying tax, a year earlier than planned.
And the threshold for paying the 40p tax rate will rise from £42,385 to £43,000, taking 130,000 people out of the higher rate of income tax altogether.
From April next year the amount workers can earn without paying income tax will rise to £11,000, a year earlier than planned
In their election manifesto, the Conservatives promised to increase the amount workers can earn before paying income tax to £12,500 by 2020.
David Cameron also set out a new law to ensure that someone working for 30 hours on the minimum wage paid no income tax at all.
When the coalition was formed in 2010, the personal tax allowance was £6,475 but was increased gradually to hit £10,600 this year.
It was due to rise to £11,000 by April 2017 but will now happen from April 2016.
Mr Osborne said: ‘That’s £11,000 you can earn before paying any income tax at all – boosting wages by over £900 in total – and a down payment on our goal of reaching £12,500.
‘We will now legislate so that after that the personal allowance always rises in line with the minimum wage, and we never ask the lowest paid in our society to pay income tax.’
The Chancellor has also been under intense pressure from Conservative MPs to act on the growing number of people dragged into paying the 40p tax rate.
David Cameron has said it was wrong that millions of people doing normal jobs like teaching are now paying a tax rate that was ‘only ever meant for the better off’.
Since 2010-11 the number of people paying the 40p rate has risen from 3million to 4.65million this year.
Mr Osborne said increasing the threshold to £43,000 from next year ‘marks a strong start to our commitment to raise the threshold to £50,000’.
He said: ‘It will lift 130,000 people out of the higher rate of income tax altogether.’
He added: ‘A personal allowance of £11,000. A higher rate threshold of £43,000. 29 million people paying less tax. A downpayment for a country on the up.’
Inheritance tax threshold to rise to £1million for family homes
Honouring a pledge announced eight years ago, George Osborne confirmed today that all but the richest will now be able to pass on their homes to their children without a huge tax bill
Families will not have to pay inheritance tax on homes worth up to £1million, under long-promised Conservative reforms.
Honouring a pledge announced eight years ago, George Osborne confirmed today that all but the richest will now be able to pass on their homes to their children without a huge tax bill.
The Chancellor also unveiled provisions that mean people who downsize will not lose out.
The change will come into effect in 2017 and ensures that 94 per cent of families will pay no inheritance tax at all.
Mr Osborne said: ‘The wish to pass something on to your children is about the most basic, human and natural aspiration there is.’
He told MPs inheritance tax had been designed to be paid by the very rich, but was now hitting ordinary families.
He said: ‘Today there are more families pulled into the inheritance tax net than ever before – and the number is set to double over the next five years. It’s not fair and we will act.’
Mr Osborne said his reforms meant ‘no more inheritance tax on family homes’, adding: ‘Aspiration supported, the tax paid only by the rich, the security of home ownership restored – promise made – promise delivered.’
Inheritance tax is currently levied at 40 per cent on assets above £325,000 for a single person or £650,000 for a married couple.
Mr Osborne has increased that threshold to £500,000 for singletons and £1million for married couples.
The increased amount however will apply only to the value of the main home, and not to other sources of wealth.
Polls have found that death duties are the most unpopular of all taxes – even among Labour voters.
Because the threshold has stood still as property prices have risen it is affecting record numbers of families.
In March’s budget, Mr Osborne unveiled forecasts showing the number of estates hit was on course to almost double from 35,000 in 2014/15 to 64,000 to 2019/20.
Welfare cuts: Tax credits slashed and FOUR year benefit freeze
Tax credits slashed and benefits frozen for FOUR years: Osborne cuts £12bn from welfare but admits it will take TWICE as long as planned to make the savings
George Osborne froze benefits for four years and took an axe to tax credits today, but admitted it would take twice as long as originally planned to find £12billion in welfare savings.
The Chancellor, delivering the first Tory budget in almost 20 years, said he wanted to turn Britain into a ‘high wage, low welfare’ economy.
The amount workless families can claim in benefits will be cut to £23,000 in London and the South East, and £20,000 for the rest of the country, well below the average annual salary of workers in every part of the UK
He announced that tax credits would be cut by £9billion and limited to a family’s first two children, while in-work benefits will kept at today’s levels until 2019/20.
The amount households can receive in benefits will also be limited to a maximum of £20,000 a year outside London and £23,000 in the capital.
The Chancellor also stripped under 21s from receiving housing benefit and slashed Employment and Support Allowance for those too sick to work by £30 a week.
Taken together, the benefit cuts will save £12billion by 2019/20 – two years later than Mr Osborne promised in the Conservative manifesto.
The Chancellor insisted the benefit cuts were needed to secure Britain’s ‘economic security’. He told MPs: ‘If we are to build a more productive economy, and our country is to live within its means, then we have to make this fundamental change.
‘Welfare spending is not sustainable and it crowds out spending on things like education and infrastructure that are vital to securing the real welfare of the people.’
Mr Osborne warned the scale of tax credits was not sustainable and major reforms and cuts were needed
To make £12 billion in welfare savings Mr Osborne unveiled a series of benefit cuts, including plans to:
- Force those aged between 18 and 21 to either ‘earn or learn’
- Strip housing benefit from under 21s
- Cut Employment and Support Allowance – paid to people too ill to work – by over £30 a week.
- Freeze working age benefits for four years
- Cap the total amount of benefits a family can take home in benefits to £20,000 outside London and £23,000 in the capital
Mr Osborne said the cuts we designed to put the welfare budget ‘on a sustainable footing’.
He said: ‘In 1980, working age welfare accounted for 8 per cent of all public spending. Today it is 13 per cent.
‘The original Tax Credit system cost £1.1 billion in its first year. This year, that cost has reached £30 billion. We spend more on family benefits in Britain than Germany, France or Sweden.’
Mr Osborne said this was simply ‘not sustainable’.
The Chancellor also reduced the benefit cap from £26,000 to £23,000 in London, and £20,000 in the rest of the country.
He said confirmed a crack down on middle class families living in council houses with cheap rent.
The Chancellor told MPs: ‘We are also going to require those on higher incomes living in social housing to pay rents at the market rate.
‘It’s not fair that families earning over £40,000 in London, or £30,000 elsewhere, should have their rents subsidised by other working people.
Tory delight as Osborne vows to spend 2% of GDP on defence
Britain will meet the Nato spending target for defence, George Osborne has announced.
The Chancellor committed the Government to spending 2 per cent of national income on the military every year of the decade and raising the Ministry of Defence’s budget by 0.5 per cent a year in real terms. The announcement ended months of speculation over the pledge.
Until now, ministers had not committed the UK to spending at that level beyond the current financial year – prompting pressure from backbench MPs and military chiefs.
ritain will meet the Nato spending target for defence, George Osborne has announced to the delight of Tory MPs
Mr Osborne said: ‘The Prime Minister and I are not prepared to see the threats we face to both our country and our values go unchallenged.
‘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.’
Announcing the 2 per cent commitment, he added: ‘We will ensure that this commitment is properly measured, because we know that while those commitments don’t come cheap, the alternatives are far more costly.’
The Ministry of Defence’s budget will rise by 0.5 per cent above inflation every year until 2020-21.
In its budget policy document, the Government says it remains committed to maintaining the size of the Army at 82,000.
In addition, a joint security fund of £1.5 billion a year will be created by the end of the Parliament to pay for increased spending on the military and intelligence agencies.
The Chancellor also disclosed that the budget for the overall counter-terrorism effort – a total of more than £2 billion spent by a range of departments, agencies and the police, will be protected.
The move was cheered by Tory MPs in the House of Commons who have called for the pledge to be made.
£10,000 thank-you for heroes given George and Victoria Crosses
Britain’s most remarkable heroes are to be handed a £10,000-a-year ‘thank you’ from the nation, George Osborne announced.
Thirty holders of the Victoria Cross and George Cross already qualify for a £2,129-a-year annual stipend from the state in recognition of their bravery.
The Chancellor has now ruled that this should be increased to £10,000.
Mr Osborne yesterday met Victoria Cross and George Cross winners during a reception at 11 Downing Street
The £3 million cost of the tax-free payment will be funded by fines levied on the banks for misconduct.
Mr Osborne, who met holders of the two medals in Downing Street yesterday, said: ‘These inspirational people have gone above and beyond for this country and it is only right that we do all we can to support them.
‘That’s why I am so pleased to commit an extra £3 million to the holders of the Victoria Cross and the George Cross in the Budget. It is quite right that we use the bank fines from those who demonstrated the worst of values to support those who have shown the best of British values.’
The Victoria Cross is the highest military award for bravery. It is often awarded posthumously, and there are only 10 living holders.
The George Cross is the civilian equivalent for gallantry. Awards are rare and there are only 20 living recipients.
Yesterday’s guests at Downing Street included Johnson Beharry, who was awarded the VC for ‘supreme courage’ in Iraq, when he twice rescued fellow soldiers under intense fire, and Bill Speakman, who was awarded the VC after leading repeated grenade charges against the enemy despite being wounded.
Shops to open for longer on Sundays to boost trade
Sunday trading restrictions could be axed under plans to announced in the Budget.
The Chancellor wants to hand power to councils and elected mayors to scrap some or all of the rules governing the opening hours of larger stores on Sundays.
The move has been welcomed by many supermarkets, garden centres and other large retailers, who have warned for years that the restrictions from 1994 are out of date and unfair.
The government will hand power to councils and elected mayors to scrap some or all of the rules governing the opening hours of larger supermarkets on Sundays
But it has put the Chancellor on a collision course with church groups and trade unions who want Sunday to be treated as a special day.
At the moment, large stores can only open for six hours between 10am and 6pm on Sundays, while shops with a floor area of less than 3,000 square feet can open all day.
Mr Osborne said that changes in shopping patterns meant it was time to look at the restrictions again.
The Chancellor said this would let towns and cities ‘determine their own futures’. The Treasury is expected to consult on whether to devolve power over Sunday trading laws to elected mayors, or whether all local authorities should be included.
Asda boss Andy Clarke said in February that the existing laws were ‘fundamentally wrong’ because those who wanted to shop at other times had to pay more for their food.
TUC general secretary Frances O’Grady said lifting the restrictions on Sunday opening would ‘take precious family time away from shop workers’.
She said: ‘There is no pressure for this from shoppers and it may push some smaller retailers out of business.
‘It’s a sign of desperation that the Chancellor is trying to strengthen growth through shopping instead of manufacturing. We need a better economic plan than asking people to spend another day of the week putting debt on their credit cards.’
£30million to speed up adoption of children in council care
Funding will be provided to help thousands of children in local authority care to be adopted by new parents.
Ministers argue it is a ‘tragedy’ that so many children ready for adoption were forced to wait months or years to join a loving home.
The Budget provides £30million to councils to ‘tear down the barriers’ and accelerate the process for some 3,000 children waiting to be adopted.
George Osborne argues it is a ‘tragedy’ that so many children ready for adoption were forced to wait months or years to join a loving home
More than half of these children have been in care for at least 18 months while a new family is found, despite a national surplus of potential adoptive parents.
The money will used to waive the fees which local authorities must pay to adoption agencies for finding, assessing and matching an adoptive parent and child outside their catchment area.
A £27,000 fee is paid for an adoptive parent found from outside a local authority’s border, either by another local authority or by one of 30 voluntary sector adoption agencies.
Ministers believe these steep costs prevent councils from looking far and wide for potential parents for children in their care, particularly those that are least likely to find a new home.
Since 2010, the number of children adopted has increased from 3,200 to 5,050 by last year. The average time it took to place a child with adoptive parents fell from an average of 656 days in 2012/13 to 533 days in 2013/14.
Ever-rising green taxes to be scrapped to curb energy bills
Environmental taxes subsidise wind farms and other green energy sources by increasing household bills
A review of green taxes and subsidies will be launched in a bid to clamp down on runaway energy bills.
Environmental taxes subsidise wind farms and other green energy sources by increasing household bills.
Under the Coalition the government had a target to increase the proportion of tax raised from environmental levies — a commitment that also featured in the Conservative manifesto five years ago.
But ministers are concerned that the bill to subsidise low-carbon energy, which is added to business and household electricity bills, has spiralled out of control.
The Department for Energy and Climate Change budgeted for £7.6billion to subsidise wind farms, nuclear plants and solar power by 2020.
But on current trends it could reach £9billion – or £170 on an annual household bill.
But the Chancellor has signalled a major change in direction – setting out plans to reduce in the longer term the amount families and businesses are expected to funnel into renewable energy schemes through their energy bills.
The review of green taxes and subsidies underlines David Cameron’s shift away from longer-term environmental goals during his time in office.
In 2010 the PM promised ‘vote blue, go green’ but has since watered down his green commitments
Student grants for the poor to be axed and replaced with loans
Student grants will be axed and replaced with loans, under plans being announced in today’s Budget.
Sajid Javid, the Business Secretary, has been working on plans for the grants – worth up to £3,387 per year this September – to be paid back after a student graduates.
Maintenance grants, which are means-tested, cover a students’ rent and living costs at university and are intended to help those from poorer backgrounds.
Student grants will be axed and replaced with loans, which students will pay back once they have graduated
But they already cost £1.6billion a year of the Business department’s £13billion budget. Officials are concerned that the grant budget could double over the course of the Parliament.
The proposal will go down badly with student groups, who say that with fees having tripled to £9,000 a year, the prospect of getting into further debt will put off students from low-income families.
Grants are available for students with a family income of up to £42,620 a year. One option is keep them only for students with a family income of under £25,000 who are eligible for the maximum grant.
Whitehall officials proposed converting grants to loans two years ago, but the plans were abandoned due to opposition from the Liberal Democrats, who were concerned about further damage to their reputation with students after Nick Clegg’s u-turn on tuition fees.
But as unprotected departments are faced with making budget cuts of around 15 per cent over the next three years to meet the Conservatives’ targets to cut the deficit, the move will help Mr Javid reach his goal of cutting £2.2billion.
BBC to pay £650million for free TV licences for the over-75s
The BBC has agreed to cover the cost of providing free TV licences for 4.5million over-75s – saving the government £650million a year from 2020.
In return legislation will be brought forward in the next year to ‘modernise the licence fee’ – allowing BBC bosses to begin charging for the iPlayer.
The annual charge – currently set at £145.50 a year – will also rise by around £10 by 2020 helping the BBC recoup around £250million.
Legislation will be brought forward in the next year to ‘modernise the licence fee’ – allowing BBC bosses to begin charging for the iPlayer
A deal has also been struck to let the BBC decide whether or not to continue funding the free licence perk after the next election.
Culture Secretary John Whittingdale said the Government was pleased the broadcaster had agreed to ‘play its part in contributing to reductions in spending like much of the rest of the public sector’ while further reducing its ‘reliance on taxpayers’.
George Osborne said the BBC needed to make savings like every other publicly-funded body.
He said: ‘The deal we have agreed with the Corporation means that it will take on the significant cost of TV licences for the over-75s, easing some of the pressure on taxpayers who have to meet the country’s welfare bill, while also ensuring that our promise to maintain pensioner benefits is met in full over the next five years.’
BBC Director-General Tony Hall, said it was the ‘right deal for the BBC in difficult economic circumstances for the country’.
The BBC could recoup a lot of the money from the rising number of households each paying the licence fee.
The £650million bill is more than 10 times the cost of Radio 1 (£52million) and Radio 2 (£60million), while hit shows like The Voice cost £55million over five years.
Big name stars are also expensive. Chris Evans has reportedly been handed a £3million deal to host Top Gear for three years alongside presenting the Radio 2 breakfast show, while Graham Norton and Gary Lineker are both said to earn more than £2million.
Can George Osborne can write like an injket printer?
As Chancellor of the Exchequer, writing the Budget speech is one of the biggest parts of George Osborne’s job.
But he was mocked online this morning after posting a picture online which appeared to show him writing in a perfect Times New Roman font.
Mr Osborne tweeted the picture of his Budget speech, but social media users were quick to point out that the sheet of paper in front of him had been typed and not handwritten.
George Osborne was mocked online this morning after posting a picture online which appeared to show him writing in a perfect Times New Roman font
In a tweet posted online this morning, Mr Osborne said: ‘Today I will present a Conservative Budget – a Budget that puts economic security first.’
The picture was taken at his desk in Number 11 Downing Street, with his official red leather folder to his left and the red Budget book to his right.
While Mr Osborne hoped to communicated the message behind his Budget measures, some on Twitter were more interested in what he was doing with his pen.
Andrew Wilson asked: ‘Why is Osborne holding a pen in this photo? Is that supposed to be his handwriting? Or is he colouring in the O’s?’
Benjamin Partridge wrote: ‘George Osborne can write Times New Roman with a pen!’
Dave W added: ‘That awkward moment when you’re George Osborne and your pen is an inkjet printer.’
‘GIRLS? GIRLS!’: NICKY MORGAN HITS OUT AT NO.10 PHOTOGRAPHER
As the government’s minister for women, Nicky Morgan has attacked misogynistic attitudes holding back female equality.
But the top Tory cabinet minister, who is also the Education Secretary, appeared to take the fight against ‘everyday sexism’ into her own hands today after slapping down a photographer who shouted at her as she left Downing Street.
As Mrs Morgan walked out of Number 10 with the Energy Secretary Amber Rudd this morning, a photographer attempted to get her attention by shouting ‘morning girls’.
The Education Secretary snapped back ‘Girls?! Girls!’ before appearing to win an apology from the photographer.
REVEALED: GEORGE’S SECRET TWITTER WAR WITH THE LIB DEMS
Just four months ago, George Osborne and his Lib Dem number two Danny Alexander stood together in Downing Street ahead of their last Coalition budget.
But the relationship between the Chancellor and his former allies appears to have dramatically soured after it emerged he had officially ‘blocked’ the Lib Dems on his official Twitter account.
Mr Osborne’s decision, which means the Lib Dems cannot view any of his Twitter messages, was ridiculed this morning.
One party source said: ‘You would’ve thought he had much greater things to worry about on Budget day than the Lib Dem press office.
‘He must have seen something from us he didn’t like and decided to block us. It’s rather daft. It gives you a bit of an insight into his state of mind.’