'Every penny matters': Osborne borrows Morrisons slogan in 'man of the people' speech to supermarket staff defending cuts to benefits
Osborne says his reforms are backing 'people who want to get on in life'He said 'vested interests always complain' about welfare shake ups
14million households will be better off, the Chancellor announcesDefends cutting the 50p top rate of tax for highest earners
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George Osborne's hopes of avoiding an unprecedented triple dip recession are on a knife-edge.
The British Chamber of Commerce today predicted that the economy grew from January to March, averting the devastating second consecutive quarter of decline would have officially returned the UK to recession.
Export deliveries and orders from the services sector – which accounts for more than three quarters of UK economic output – rose close to the all-time highs seen in 1994 during the first three months of 2013, the BCC said.
John Longworth, director general of the BCC, said: 'We should not be satisfied with a long and tortuous road to recovery.
'These results provide a glimpse of the as-yet-distant sunlit uplands of recovery – businesses up and down the country are working hard to drive the economy, create jobs and export, but they cannot accelerate this process alone.'
However, fears of a triple dip recession were fuelled by new figures which suggested Britain's manufacturing sector contracted in the first quarter following another month of sliding output.
The sector's 'winter of discontent' continued into March as overall activity slumped for the second month in a row, with a worse-than-expected headline reading of 48.3 – below the 50 level which separates growth from contraction, the latest Markit/CIPS purchasing managers' index (PMI) revealed.
Samuel Tombs, UK economist at consultancy Capital Economics, said: 'The continued weakness of the UK CIPS manufacturing survey in March keeps the threat of a so-called triple-dip recession alive.'
The one in ten families who will be worse off are those at the top, earning 100,000 a year or more, and those at the bottom on out-of-work benefits. A jobless couple without children will lose about 150 a year.
The main changes include a 1,335
increase in the personal tax allowance to 9,440. This will save
24million taxpayers over 260 a year. The Government is limiting most
benefit rises to 1 per cent – below inflation – for the next three
Mr Osborne said:
‘For too long, we’ve had a system where people who did the right thing –
who get up in the morning and work hard – felt penalised for it, while
people who did the wrong thing got rewarded for it.
wrong. So this month we’re going to put things right. This month,
around nine out of ten working households will be better off as a result
of the changes.
those who defend the current benefit system are going to complain
loudly. These vested interests always complain, with depressingly
predictable outrage, about every change to a system which is failing. I
want to take the argument to them.
'Because defending every line item of
welfare spending isn’t credible. Because defending benefits that trap people in poverty and penalise work is defending the indefensible.
'The benefit system is broken; it penalises those who try to do the right thing; and the British people badly want it fixed. We agree – and those who don't are on the wrong side of the British public.'
Mr Osborne used the speech to workers
at the depot to launch a defiant defence of his decision cut the top
rate of tax for highest earners.
From Saturday, the tax on earnings over 150,000 will be reduced from 50p to 45p.
Mr Osborne conceded it is ''controversial' but insisted that it is an 'economic essential' for Britain to succeed in the world.
'In a modern global economy, where
people can move anywhere in the world, we cannot have a top rate of tax
that discourages people from living here, setting up businesses here,
investing here, creating jobs here.
'The 50p tax was a big tax con. The
Labour Government brought it in just weeks before they were kicked out.
They pretended it would raise more money from the rich.
'But when the 50p rate was introduced, the amount collected in income tax fell by billions of pounds as the wealthy paid less.
'So we got the worst of both worlds: a tax rate that discouraged enterprise and didn't raise more money from the rich.'
Mr Osborne said that for too long people who work were penalised to fund handouts for the jobless
Before delivering his speech on benefit changes, Mr Osborne unveiled a plague to officially open new City watchdog, the Prudential Regulation Authority (PRA), as the Governor of the Bank of England Mervyn King, second left, and Andrew Bailey, left, the Chief Executive of the PRA, look on
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However, Labour claimed that changes to tax and benefits would leave families worse off by 891 compared to 2010.
Shadow chancellor Ed Balls said: 'George Osborne should be straight with the British people and admit that millions on middle and low incomes are paying the price for his economic failure, while he gives a huge tax cut to millionaires this week.
Shadow chancellor Ed Balls said the benefits bill was rising because too many people could not find work
'The benefits bill is rising under this Government because our economy is flatlining, inflation is rising and unemployment is high.
'The best way to get the benefits bill down is to get our economy growing strongly and get people back to work. Ministers must explain why they will not back Labour's plan for a compulsory jobs guarantee for the long-term unemployed.'
Len McCluskey, general secretary of the Unite trade union, said Mr Osborne's speech was simply intended to create division.
'The sight of the Chancellor exhorting the low waged in work to turn their backs on the poor out of work has to mark a new low for one of the highest offices in the land,' he said.
'The misguided bedroom tax will force more people out of affordable social housing and into the more costly private sector – and the benefits system will still have to take up the slack. This is crazy economics.'
Fiona Weir of Gingerbread, which campaigns for single parents, said the welfare changes would do nothing to restore fairness, and would make an unfair situation worse.
'It isn't fair that many single parents can't find the flexible jobs they need; it isn't fair that one in five single parents working part-time is still living in poverty; and it isn't fair that parents who desperately want to work and provide for their families are stigmatised and blamed,' she said.
'These cuts will push more families, both in and out of work, into poverty. This is not fair and is not right.'