George Osborne unveils Summer Budget

The Chancellor of the Exchequer allowed himself a further year to reduce spending, but vowed to be bold in his reforms. Osborne announced plans, including Tax Credits and Local Housing Allowance, to freeze working age benefits for four years to ensure ‘earnings growth will catch up and overtake the growth in benefits’.

The benefits cap, a major talking point in the build up to the Budget, will be reduced from £26,000 to £23,000 in London and £20,000 across the rest of the country. The government will also look to abolish the automatic entitlement to Housing Benefit for 18-21 year olds under a ‘learn or earn’ programme, with exceptions for the vulnerable. Disability benefits will not be taxed or means tested.

Unexpected news was the introduction of the National Living Wage, which starts at £7.20 next April and rises to £9 an hour by 2020. The Living Wage will be compulsory for workers aged over 25 and will replace the minimum wage which currently stands at £6.50. In the build up to May’s General election, Labour had vowed to increase the minimum wage to £8 an hour.

Plans on housing changes will mean that high earners living in social housing will no longer be entitled to reduced rents. Those earning £40,000 or more in London and £30,000 in the rest of England will now be charged full market rates for local authority or housing association properties.

The move is expected to affect around 340,000 households, raising £250m a year for the Exchequer. Osborne also confirmed the government’s plans to push ahead an extention the Right to Buy scheme to housing associations tenants. Further housing plans are expected to be unveiled on Friday.

From September 2017 all working age parents of three and four year olds would receive free childcare of up to 30 hours per week, with the expectation that they will ‘look for work if they want to claim Universal Credit’.

Elsewhere, small and medium sized enterprises (SMEs) received a boost as Osborne revealed that the Annual Investment Allowance (AIA) will be set at £2000,000 indefinitely.

Read the speech