Has Britain been given a pay rise?

In the first all-Conservative budget since 1996, George Osborne pledged the minimum wage for 25-year-olds and over will rise to £9 an hour by 2020 – a living wage on which it is intended someone can get by without needing benefits, writes Daniel Wainwright.

Businesses have mixed opinions. The Tories themselves once feared the minimum wage would cost jobs.

"Britain is getting a pay rise," beamed the Chancellor, while work and pensions secretary Iain Duncan Smith cheered as though he had just scored the winning goal in the World Cup.

But the rate has to go up because the Chancellor has taken the axe to the benefits people can claim both in and out of work. And public sector workers must brace themselves for another four years of austerity, their pay rises capped at a below inflation one per cent. Here is what was in the rest of the Budget:

Welfare

The benefits cap, the £26,000 maximum someone can receive on welfare, will fall to £20,000 in the West Midlands.

There will be a youth obligation for 18-21year-olds to earn or learn. Housing benefit for that group will be abolished. John Tew, chairman of governors at Sandwell College, said: "Earn or learn trips off the tongue. But it worries me that despite good intentions it might backfire."

There will be free childcare of 30 hours a week for working parents of three-year-olds. But they must be looking for work to get universal credit. Working age benefits will be frozen for four years.

"Average earnings have risen by 11 per cent but benefits have risen by 21 per cent," Mr Osborne explained.

Tax credits

Statistics obtained by Dudley North MP Ian Austin show at least 121,000 families with children are claiming them in the Black Country, south Staffordshire and Wyre Forest.

Devolution

"Those who oppose any savings to tax credits will have to explain how they propose to eliminate the deficit, Mr Osborne said.

"While he throws all of his weight behind the Northern Powerhouse, those of us in the Midlands will find it difficult to believe that the government is serious about rebalancing the economy and his lack of detail encourages the view that much of the talk is hot air."

There was also a promise of £1.5 million for some junction work on the Birmingham New Road in Coseley to help bring forward housing on six sites.

Tax

The Chancellor has already committed to raising the threshold for the 40p tax rate to £50,000 by 2020. Currently it is paid by anyone earning more than £42,385 and next year it will be £43,000, something the Chancellor hailed as a 'down-payment for a country on the up'. The coalition government already raised the personal tax allowance to £10,600, taking the lowest paid workers out of income tax altogether. The Tories want it to go to £12,500 by 2020. It will go to £11,000 next year. But non doms will have to pay the same inheritance tax as everyone else. Permanent status is to be abolished and anyone in Britain more than 15 years will pay the full tax, raising £1.5bn.

Corporation tax will be cut to 18 per cent, 'sending out a message around the world that Britain is open for business', the Chancellor said.

Mr Rogers said that for an insurance business like his the rise was 'a real whammy'. "It will add £250,000 costs a year to my business," he said. "The question is whether to absorb it or pass it on to policy holders. That is a real challenge to us by the end of this year."

Fuel and car tax

New vehicles will get new car tax rules from 2017, divided into just three bands. The Chancellor said 95 per cent will pay £140 a year, which is less than the average £160 paid at the moment.

Tax will be put into a new roads fund, meaning road tax actually goes on fixing and improving the roads. Motorists are pleased that fuel duty will remain frozen this year – but some fear it 'sounds alarm bells' for next year.

RAC chief engineer David Bizley said: "While oil prices are expected to stay low, the oil market is notoriously hard to predict so there is always the chance that fuel prices will be considerably higher by the time of the Budget in March 2016 and any increase in duty would therefore have a negative effect on the economy."

Apprenticeships/University

The government will introduce a levy on large UK employers to increase the number of apprenticeships.

John Cridland, of the Confederation of British Industry, said: "Firms want to play their part in training up more apprentices but an apprentice levy is a blunt tool. A volunteer army is always better than conscription but the CBI will work with the Government to make the best effect of this measure."

Maintenance grants for university students will be scrapped and replaced with new loans from 2016-17, to be paid back only when their earnings exceed £21,000 a year.

Social housing

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.

Sunday trading laws

The Chancellor said handing the power to councils will 'let people decide'. But John Spellar, MP for Warley, said: "The compromise on Sunday trading hours meant that those who want or need to shop on Sundays can do so, but that staff have an option.

"Sunday is a special day, especially for families.

"This wouldn't just be bad for individual workers and their families, but would erode the special position of Sunday. It's no good David Cameron claiming his support for religion in the newspapers and then undermining Sunday. I will certainly be urging the Government to reject these ideas."

Except, perhaps, his vow to introduce a minimum 'living wage' of £9 an hour by 2020, which has wrong-footed his opponents.

There will be many businesses who will question how much it will cost to keep people in work.

For the Treasury and public finances, however, it is the right thing to do.

Tax credits, vital as they have clearly been to families all over the Black Country, are effectively a handout to top up low pay. How much better is it for the person working to be paid more for their efforts, than to rely on the State for support?

In cutting the threshold for tax credits and limiting them to families with two children, the Chancellor has also made sure the reduction kicks in long before the 'living wage' reaches its £9 an hour level.

This must not be allowed to risk a situation where it no longer pays to be in work.

The abolition of support for a third child only affects those born after 2017. This is at least fairer on those who already have large families.

To anyone else thinking about their future, it ensures everyone, whether being supported or not, thinks about whether or not they can afford more children. In spirit, can anyone really argue with this?

The Chancellor must still lance the boil of fuel duty. Again he has won praise for freezing the tax, as he has done every since 2011. But how much longer will he be able to do so?

Britain continues to pay more in tax for its fuel than any other European country. Every freeze, welcome as it is, appears to be merely delaying an inevitable rise when campaigners favour a drop.

The reform of road tax is, however, long overdue. Motorists have felt for years that they are not receiving anything back for their money because their vehicle excise duty goes straight into Treasury coffers.