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Osborne: I don't protect pensioners
George Osborne defends his record after Labour calls on chancellor to tear up his Budget following U-turn on welfare cuts.
(Update) Chancellor George Osborne has defended his management of the economy after a call by Labour that he tear up his Budget and ‘start again’, following his decision to cancel £4 billion of welfare cuts.
Speaking in the House of Commons today after the resignation of work and pensions secretary Iain Duncan Smith in response to a row over cuts to personal independent payments to the disabled, Osborne praised his former colleague and said he was ready to ‘listen and learn’ where mistakes were made.
The chancellor denied accusations that he had protected pensioners at the expense of younger people receiving in-work benefits, claiming he had made ‘substantial’ cuts from the pension budget while also giving people a ‘generous’ offering.
Osborne claimed he was committed to maintaining the current state pension model in defiance of Duncan Smith who at the weekend urged the government to re-think its expensive ‘triple lock’ on the state pension.
‘Some people say to me, in the same breath, that we are not saving enough from pensioners, while at the same time complaining about everything from long-term increases in the state pension age to keep pace with rising life expectancies, to restrictions on the lifetime allowances on the largest pension pots,’ Osborne told MPs.
‘The truth is we have made substantial savings from pensioner welfare, around half a trillion pound saving pot. They are vital to the long-term sustainability of our public finances. But we have made these savings in a way that enables us to go on giving people who have worked hard all their lives, a decent, generous basic state pension that we committed to in our manifesto. I’m not going to take that away from people,’ he said.
In his statement the chancellor confirmed he had dropped the planned cuts to disability benefits, sparking further attacks from Labour MPs over how he will cover the gap in last week’s Budget.
Osborne had earlier suffered the embarrassment of hearing the head of the Budget watchdog tell MPs that his chances of reducing a surplus by 2020 had fallen.
At a hearing of the Treasury Select Committee, Robert Chote, chairman of the Office for Budget Responsibility, said the decision to reverse the cuts would lower the chances of Osborne meeting his goal of having a £10 billion surplus by 2020.
‘You have effectively now something that looks more like £8 [billion] and a bit, rather than £10 billion. At the time horizon it doesn’t make a huge difference to the precise number, but if you have a lower surplus the chances of actually turning out to be a surplus is lower,’ he said.
In a heated commons showdown yesterday evening, shadow chancellor John McDonnell (pictured) told financial secretary to the Treasury David Gauke that his Treasury boss needed to 'start again' over the Budget.
‘Within five days an enormous hole has appeared in the Budget, isn't it the prudent thing for the chancellor to do to is withdraw this Budget and start again?' he asked. 'This is no way to deliver a Budget and no way to manage an economy.'
Labour veteran Dennis Skinner, MP for Bolsover, quipped the chancellor had given eight Budgets but that it was only cats who had nine lives.
Earlier prime minister David Cameron had praised Osborne: 'In two weeks’ time we will introduce the first ever national living wage, giving a pay rise to the poorest people in our country,' he said.
'None of this would be possible if it wasn't for the actions of this government and the work of my right honourable friend the chancellor, in turning our economy around.'
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