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IFS: 13 million families will be worse off because of Budget

Thirteen million families will on average lose £260 each year because of the freeze on working-age benefits, according to the Institute for Fiscal Studies.

Describing George Osborne's Budget as "regressive", IFS director Paul Johnson said it took "much more" from the poor than the rich, adding that after 2017 most benefit rates will have fallen to pre-2008 levels.

"The biggest single cut to welfare spending is set to come from extending the freeze in working age benefits, tax credits and local housing allowance out to 2020," he said.

"That will affect 13 million families who will lose an average of £260 a year."

The IFS also cast doubts on the Chancellor's claim to be delivering a "lower-tax" society, pointing out that the Treasury's own documents show tax increases totalling £6.5 billion a year by 2020.

"Given the array of benefits, it is not surprising that the changes overall are regressive, taking much more from poorer households than richer ones", Mr Johnson added.

Millions wiped off retail shares after Budget

Millions of pounds have been wiped off the value of Britain's listed retailers amid fears over soaring staff costs from the new national living wage.

Shares in Marks & Spencer dropped 3% Credit: PA Wire

Fashion chain Next, Sainsbury's and Debenhams were among the stock market casualties in the second day of share losses for the sector as experts warned they faced significantly higher costs from the plans revealed in yesterday's summer Budget.

Marks & Spencer and Argos owner Home Retail Group were among listed retailers sent as much as 3% lower yesterday after George Osborne unveiled plans for a compulsory "living wage" of £7.20 an hour for over-25s from next year, rising to £9 by 2020.

Next was more than 2% lower in the FTSE 100 Index today, while Sainsbury's fell more than 1% and Debenhams dropped 3% in the FTSE 250.

John Harding, employment tax partner at PricewaterhouseCoopers, said businesses needed to prepare for a "significant increase" in staff costs.

He added: "Although this increase will only affect the over 25s they do make up a significant proportion of employees who are either on or just above the current national minimum wage.


Budget will 'hit working families hard' says Labour

George Osborne has been accused of pulling the rug from underneath working people who will be hit hard by his latest Budget.

The Shadow Chancellor accused George Osborne of stealing Labour policies Credit: PA Wire

Shadow chancellor Chris Leslie said Labour was "delighted" the Chancellor wanted to "steal" some of their manifesto policies but accused the Treasury of hiding the true impact on families.

"The difficulty with the Chancellor's position though is that he is not bringing in those increases in wages in time for the pulling of the rug from underneath hundreds of thousands of working people with the introduction of what is effectively a work penalty into the tax system," he said.

"Do not under-estimate how important those tax credits have been for many, many people.

"It will really hit working families hard."

CBI says Osborne's minimum wage increase a 'gamble'

The CBI has called the Chancellor's minimum wage increase a "gamble" that risked politicising the process and causing problems for some small businesses.

John Cridland said businesses will be under pressure Credit: PA Wire

Director general John Cridland said overall he was pleased with George Osborne's Budget but added that businesses were being put under pressure.

"Overall, sorting the public finances, giving people incentives to work, reducing business costs in taxes: full marks to the Chancellor," he said.

"But this issue of the minimum wage will have caught businesses by surprise. It is a gamble.

"The businesses that will be under the most pressure, paying a significantly higher minimum wage - 6% higher on average every year in this parliament - aren't the same businesses as a whole who will get the benefit from the tax reductions."

Osborne: 6 million people will be better off

The Chancellor has insisted that millions of Britons will be better off because of his changes to tax credits.

Speaking to Good Morning Britain, George Osborne said that six million people will be on higher pay because of a "ripple effect" through the economy.

"If you are a typical family and working full-time on the current national minimum wage - because of the national minimum wage and because of the welfare savings we've made - you will be better off," he said.

"And for those working on salaries a bit higher than the current minimum wage, you'll also be better off because there will be a ripple effect as wages rise... that will mean six million people with higher pay."

The Chancellor said his Budget - the first Tory Budget in 19 years - was offering "a new contract" with the country as the Government made "difficult decisions" with welfare but added: "The country has to live within its means."

Asked whether his Budget was part of his strategy to get his hands on the key for Number 10, Osborne wouldn't be drawn on the issue.

"I fancy being Chancellor of the Exchequer.. that's what I'm focused on."

Describing the changes as a 'new contract' for Britain, the Chancellor later reiterated the benefits of the Budget via Twitter:

Osborne's Living Wage plans to come under scrutiny

George Osborne delivering his Budget statement. Credit: PA

George Osborne's Budget will come under scrutiny from independent experts and MPs today, amid a row over his plans for a national "living wage" for over-25s.

The Institute for Fiscal Studies will present its analysis of all the Chancellor's measures today, as its director Robert Johnson claimed Osborne was "taking a bet" on the economic impact of the living wage pledge.

Parliamentary debates will also continue today over the Budget measures, as Labour leadership contenders attacked the plans.

Liz Kendall described it as a "con trick", claiming that a wage to live on would need to be "much higher" than the £9 proposed by 2020.

Fellow candidate Andy Burnham said the decision not to start the wage until age 25 would create a "two-tier workforce".


Welfare cuts: People fear the fall in child tax credit

The welfare cuts announced by George Osborne in today's Budget announcement may not have been as severe as feared, but people are still worried, especially once child tax credit becomes limited to two children.

ITV News Correspondent Romilly Weeks reports from Portsmouth:

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