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Osborne freeze on benefits 'another attack on the poor'

By Colin Francis

Chancellor George Osborne has spelled out plans to slash £3.2bn off the welfare bill by freezing a raft of working-age benefits for two years if the Conservatives win the general election in May.

The freeze will hit an estimated 10 million households to the tune of an average £320 a year, as inflation erodes the value of welfare payments including jobseeker's allowance, child benefit, income support and tax credits. Half of those affected are in work.

The announcement came in a speech to the Conservative conference in Birmingham at which Mr Osborne also promised to raise hundreds of millions of pounds with a clampdown on a tax avoidance ruse known as the "double Irish" arrangement.

The move was instantly nicknamed the "Google tax" because the arrangement – involving payments between different entities within a company to shift profits from higher-tax countries to those with lower taxes – is widely used by technology firms.

Urging voters to "choose the future not the past" at next year's election, Mr Osborne said that the benefits freeze would make a "serious contribution" to eliminating Britain's national deficit over the next Parliament, as part of a package of cuts totalling £25bn.

Some £13bn of these cuts are to be found by Whitehall spending departments, leaving a further £9bn from so-far unspecified welfare reductions.

Charities said the freeze – which comes hot on the heels of the announcement of plans to remove housing benefit from under-21s and cap benefits at £23,000 a year – would force families into poverty.

Mr Osborne said it was unfair and unsustainable that increases in state support had outstripped pay rises since the start of the recession.

The two-year 0% uprating would bring welfare increases in line with pay rises over the decade 2007-17, said aides.

Pensioner and disability benefits will be excluded from the freeze, as will maternity and paternity pay.

"This is the choice that Britain needs to take to protect our economic stability and to secure a better future," the Chancellor said.

"The fairest way to reduce welfare bills is to make sure that benefits are not rising faster than the wages of the taxpayers who are paying for them."

The Treasury said a one-earner couple with two children and a household income of £25,000 would lose £25 a year in child benefit and £420 in tax credits because benefits will not be upgraded in line with inflation, while a two-earner couple with one child and both adults earning £13,000 would lose £44 in child benefit and £310 in tax credits.

The chief executive of one-parent charity Gingerbread, Fiona Weir, said the changes meant "some of the poorest in society bear the brunt of cuts", while Alison Garnham, chief executive of Child Poverty Action Group, said it was "bad news for working parents struggling on low wages, already coping with rising living costs and previous benefit cuts".

Labour and unions also slammed the plans as making the poor pay.

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