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Budget 2015, Osborne announces minimum wage

21By A Shahid

Chancellor of the Exchequer, George Osborn unveiled the Summer Budget 2015 setting out his plans for the UK economy.  It is a first all – Conservative budget for nearly two decades.
Mr Osborn said his party was fulfilling key pre election pledges to reduce welfare bill by a further £12bn. The standout policy was him embracing a key Labour Party policy of a minimum wage renaming it a national living wage announcing to a cheering front bench that Britain “needed a pay rise”. It will start next April at £7.20 and rise to £9 an hour by 2020. It will apply to over 25s. He said it was a “budget for working people” and would bring economic security as he predicted a 2.4% growth for the UK economy.
Budget observers and commentators however said that hundreds and thousands of families will be affected by deep cuts to welfare benefit bill and highlighted the reductions in child tax credit, universal credits and local housing allowance as areas where working people will be hard hit.  Limiting Tax Credits for two children will affect over 850,000 families alone they said.
Young people will also be affected by limits of housing benefit for under 21s and the introduction of loans to replace student maintenance grants has been widely criticised not least by the National Union Students  who said in a blog post “it was a “typical Tory transaction of cutting tax for the rich and grant cuts for students.”
Any family that has a third or subsequent child born after April 2017 will not qualify for Child Tax Credit, which amounts to up to £2,780 a year per child. This will also apply to families claiming Universal Credit for the first time after April 2017.
However, those who have been in receipt of tax credits or Universal Credit with an interruption of less than six months will be protected.
This change will not apply to Child Benefit.
The income level at which you can claim tax credits will also go down.
From April 2016 the income threshold will go down from £6,420 to £3,850, meaning that far fewer people will be eligible to claim. Previously claimants’ income could also rise – the income rise disregard – by £5,000 a year.
That disregard will now be cut to £2,500.
As many as 300,000 fewer people are expected to be eligible for Universal Credit as a result of the changes. From April 2017, parents claiming Universal Credit will be expected to “prepare” for work when their youngest child is two years old. When the child is three, they will be expected to look for work.
The current benefit cap limits most payments to £26,000 a year, across the UK. From April 2017 that will be cut to £23,000 in London, and £20,000 elsewhere. Up to now 45% of households affected by the cap have been in London. Those who exceed the cap receive a cut to Housing Benefit. The benefits excluded from the cap include: Working Tax Credit, Disability Living Allowance, Personal Independence Payments and the WRAG element of ESA.
Personal allowance, at which people start paying tax, to rise to £11,000 next year. The government says the personal allowance will rise to £12,500 by 2020, so that people working 30 hours a week on the minimum wage do not pay income tax.
The cost of funding free TV licences for the over-75s transferred from the government to the BBC between 2018 and 2021.
Harriet Harman, acting Labour leader said the conservatives were “playing politics with working people’s lives and that said that his “actions did not match his rhetoric on helping working families.” She said her party would give “serious consideration” to some measures and be a “different kind of opposition”.
Iain Watson a political correspondent at the BBC said the chancellor had “stolen Labour’s clothes” and said: Although the speech lasted little more than an hour, it was substantial in its scope.
Channelling former Conservative Prime Minister Margaret Thatcher, George Osborne said “there will be no turning back”.
But in some key respects, it was Labour’s clothes he stole.
Picking up the mantle of ‘One Nation’ – appropriated but then arguably discarded by former Labour leader Ed Miliband – the centre point of Mr Osborne’s speech was to take a key opposition policy, then enhance it.
So there would not just be incentives for employers to pay a Living Wage, it would become compulsory for them to do so. “Britain deserves a pay rise”, said the chancellor.
Work and Pensions Secretary Iain Duncan Smith almost burst a blood vessel as he cheered enthusiastically, delighted that Mr Osborne had now apparently symbolised his message that it pays to work.
And Mr Osborne expropriated even more policies from his opponents, such as abolishing “non-dom” status for wealthy residents who had lived here for 15 of the past 20 years.
Shadow chancellor Chris Leslie questioned whether the measures prioritised by the chancellor would boost productivity.
He said “manifesto promise after manifesto promise” was being “thrown out” by the Conservatives.
“They won an election in some respects on a false prospectus,” he added.