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Osborne pledges to 'secure future'

Published 07/07/2015

Local councils will be allowed to decide if they want to extend opening hours on Sundays
Local councils will be allowed to decide if they want to extend opening hours on Sundays

George Osborne will pledge to "secure Britain's future" tomorrow as he sets out his first Tory-only Budget, including dramatic cuts to welfare.

The Chancellor will point to the plight of Greece and warn that the "greatest mistake" would be to "think that all our problems are solved" as he sets out plans to curb tax credits and reduce the benefits cap.

But he is also expected to take advantage of better-than-forecast tax revenues to declare that his £12 billion cuts from social security spending will be implemented more slowly than previously thought.

"Our long-term economic plan is working," Mr Osborne is due to tell MPs.

"But the greatest mistake this country could make would be to think all our problems are solved.

"You only have to look at the crisis unfolding in Greece as I speak to realise that if a country's not in control of its borrowing, the borrowing takes control of the country."

Mr Osborne will promise to be "bold in transforming education, bold in reforming welfare, bold in delivering infrastructure, bold in building the Northern Powerhouse, bold in backing the aspirations of working people".

"It is a Budget that sets the way to secure Britain's future," he will say.

Mr Osborne had previously indicated that the £12 billion of welfare cuts would be implemented in full by 2017-18 - the year when he has said the Government books will return to the black.

However, he is thought to have significant "wiggle room" to move that date back because tax revenues are around £15 billion higher than projected at the March budget.

Analysts have suggested the Treasury could receive an additional £700 million this year - twice official expectations - thanks to new pension freedoms.

Millions of over-55-year-olds have since April been able to cash in their pension pots rather than being forced to buy an annuity.

Freed from the constraints of five years of coalition with the Liberal Democrats, Mr Osborne will use the Commons set-piece to slash the system of tax credits, brought in under the previous Labour government to top up the incomes of low-paid working families.

David Cameron has already signalled that he wants to end the "merry-go-round" of the Government subsiding breadline wages.

Mr Osborne is also going further than previously planned in cutting the benefits cap - currently set at £26,000-a-year - not just to £23,000 in London but to a still lower threshold in other parts of the country.

Savings of £250 million will be achieved by forcing 340,000 local authority and housing association tenants on incomes of £40,000 or more in London and £30,000 in the rest of England to pay a market, or near market, rent from 2017/18.

The £600 million-plus annual cost of providing free television licences to the over-75s is also being passed to the BBC from 2018/19 - with the broadcaster deciding whether the policy should continue after 2020.

It may in return be able to extend the licence fee to cover people watching via the online iPlayer, and the licence fee is expected to rise in line with the consumer price index (CPI) measure of inflation.

The Budget is also set to include an end to inheritance tax on family homes worth up to £1 million - at an estimated £1 billion cost to the Exchequer - a key plank of the Conservatives' general election manifesto.

There will be a move to free local authorities to extend Sunday trading hours, as well as likely efforts to roll back "green" levies on energy bills.

However, Mr Osborne appears set to disappoint Tories calling for a cut in the top rate of income tax from 45p to 40p - insisting his priority is raising the tax free allowance to £12,500 and increasing the threshold for the higher rate to £50,000.

There are reports that Mr Osborne will raise the 40p tax threshold from its current level of £42,385. He has pledged that it will hit £50,000 by 2020.

The number of people paying higher rate increased dramatically over the last parliament as it was reduced to offset boosts to the personal allowance.

But the Chancellor is said to be planning to limit child tax credits to the first two children.

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