OSBORNE'S PAY FREEZE ON PUBLIC WORKERS ; AUSTERITY PLANS WILL HIT MILLIONSMIDDLE CLASSES TO LOSE BENEFITSAusterity Speech Wins ovation'We Cannot Afford the Luxury of Baby Bonds for the Middle Class' [Edition 2]

By Murphy, Joe | The Evening Standard (London, England), October 6, 2009 | Go to article overview
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OSBORNE'S PAY FREEZE ON PUBLIC WORKERS ; AUSTERITY PLANS WILL HIT MILLIONSMIDDLE CLASSES TO LOSE BENEFITSAusterity Speech Wins ovation'We Cannot Afford the Luxury of Baby Bonds for the Middle Class' [Edition 2]


Murphy, Joe, The Evening Standard (London, England)


GEORGE OSBORNE heralded an age of austerity if the Tories take power with a speech today ordering the nation to tighten its belt.

He promised to slash civil service pensions, hack back benefits to the middle classes and put a squeeze on the pay packets of millions.

In remarkably frank and even brutal terms, the shadow chancellor said Britain was "sinking in a sea of debt" and could not carry on in the same way. Then he rattled out where the axe should fall, claiming to have identified Pounds 23 billion of cutbacks that would be brought in during the next parliament.

Top civil servants face a cap of Pounds 50,000 a year on their pension payouts, saving hundreds of millions of pounds.

Middle class families with household incomes of more than Pounds 50,000 would be stripped of tax credit handouts, costing some Pounds 10 a week and saving the taxpayer Pounds 400 million a year.

"Baby bonds" worth Pounds 250 brought in by Gordon

Brown would be axed for all but the poorest households and for disabled children.

Whitehall bureaucrats and quangos would be ordered to slash a third from their budgets, cutting overall spending by Pounds 3 billion a year by the end of the parliament.

All public sector workers except for the lowest paid million will get no pay rise in 2011, saving Pounds 3.2 billion a year -- but, according to Mr Osborne, it will also enable 100,000 jobs to be protected from cuts.

The 50p top rate of tax of high earners, to be introduced by Labour from next April, will stay for "at least as long as the public sector pay freeze" lasts, as a symbol of making the rich pay a fair share.

Banks were threatened with unspecified tax rises to punish them if the new international rules curbing bonuses are ignored or flouted.

There was one giveaway to reflect public concern for the welfare of troops in Afghanistan -- the doubling of the allowance for personnel on operational tours overseas to an average of Pounds 4,800.

All public sector workers earning more than Pounds 18,000 would be hit.

In addition, Mr Osborne confirmed plans trailed before his speech, including that the retirement age for men may be raised to 66 by 2016 and that incapacity benefit would be cut by Pounds 25 a week for claimants deemed by a doctor to be capable of some form of paid work.

It was the sort of doom-laden speech normally expected to be hushed out of sight before a general election -- but Mr Osborne tried to make a virtue out of delivering bad news with brutal honesty.

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OSBORNE'S PAY FREEZE ON PUBLIC WORKERS ; AUSTERITY PLANS WILL HIT MILLIONSMIDDLE CLASSES TO LOSE BENEFITSAusterity Speech Wins ovation'We Cannot Afford the Luxury of Baby Bonds for the Middle Class' [Edition 2]
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