George Osborne produces one of the most radical British budgets

British chancellor of the exchequer George Osborne has taken full advantage of the Conservative Party's House of Commons majority to produce one of the most radical budgets in years, increasing wages for the low-paid but cutting welfare substantially.

Mr Osborne insisted that progress made since 2010 proved that Conservative economic plan was working. “But the greatest mistake this country could make would be to think all our problems are solved,” he told MPs. “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.”

Promising to run a surplus by 2019/20, Mr Osborne has slowed the pace of public spending cuts that are to be inflicted now, telling MPs that nothing to come will be as tough as the cuts made during 2010 and 2012.

“We should cut the deficit at the same pace as we did in the last parliament,” he said, though this is the second major change to his deficit plans he has made since taking over the treasury five years ago.

Welfare cuts, which will include denying housing benefit to under-21s, will raise nearly £35 billion (€49 billion) over five years, though local authorities will be forced to cut rents but also charge more to higher-earning tenants.

Bequests

Inheritance tax will not be paid on bequests worth less than £1 million.

“The wish to pass something on to your children is about the most basic, human and natural aspiration there is. Inheritance tax was designed to be paid by the very rich,” Mr Osborne said.

Landlords, however, were left unhappy by the chancellor’s decision to reduce mortgage interest relief on buy-to-let properties.

Facing threats from global banks, such as HSBC, to quit the City of London, Mr Osborne has moved to replace the unpopular bank levy over the next six years with an 8 per cent surcharge on profits.

The minimum wage, rebranded as a “living wage”, will rise by 50p an hour from next October, but Mr Osborne vowed that it will reach £9 an hour before the next election.