The chancellor says he is scrapping employers’ national insurance contribution for under 21s from April 2015 and insists his austerity measures are working, but says the hard work is not over yet.
Mr Osborne said that all contributions for a million and a half young people would be abolished, which would save £500 on the cost of employing an under 21-year-old earning £12,000 or over £1,000 on the cost of a young worker earning £16,000.
“We are going to abolish the jobs tax on young people under the age of 21… we are not going to leave young people behind as the economy grows”.
The change, which requires legislation, would come into force in April 2015.
WE DID IT! Govt announces it will scrap NI for under-21s. Great news for young unemployed. #AS2013
— Million Jobs (@MillionJobs_) December 5, 2013
The chancellor is hoping that a new crackdown on tax avoidance, more departmental savings and an increase in the levy on banks will bring in the money he needs to fund his policies.
He is bringing in a smorgasbord of tax evasion and avoidance measures, which he believes in total will raise £9bn over the next five years.
He is cutting approximately £1bn a year from the amount government departments can spend. Schools and the NHS will be excluded.
And he is extending the existing levy on the assets of banks to raise a further £0.5bn.
Mr Osborne intends to spend this money on a series of eye-catching and voter-friendly measures.
The most expensive is the previously-announced plan to extend free school meals to all children from the age of four to seven.
He has cancelled an increase in fuel duty, scheduled for next year, at a cost of £415m.
A transferrable allowance of up to £1,000 for couples who are married or in a civil partnership will begin in 2015. Mr Osborne told the House that this measure would benefit four milion families. However Labour were quick to point out that five out of six families with children would not benefit at all:
The Tory marriage tax plan won’t help 5 out of 6 families with children #AS2013
— Labour Press Team (@labourpress) December 5, 2013
In a confident performance, the chancellor mounted a robust defence of his record in office, saying “the stability and low mortgage rates, lower deficit and falling borrowing have been hard won by this country, but let us be clear: they cuold easily be lost.”
Read Gary Gibbon's blog: Christmas comes early for Osborne - if unemployment doesn't slip
As well as moving to improve the employment prospects of the under 21s, the chancellor confirmed that the length of time young people will have to work before drawing a state pension will be extended.
Mr Osborne confirmed the widely-trailed announcement that by the mid-2030s the state pension age will rise to 68 and to 69 by the late 2040s.
Mr Osborne promised support for small businesses, especially on the high street through a package of measures including a cap on buisness rates of 2 per cent next year.
For the smallest shops, pubs and restaurants there will be a £1,000 discount on their business rates, while new occupants of empty shops will get their rates halved in order to encourage the opening of new branches.
The chancellor announced that £100m raised in fines on banks for the Libor rate-fixing scandal will be given to charities supporting military, police, fire and ambulance workers.
He also announced that tax relief on film projects will be made more generous and may be extended to benefit regional theatres too.
The nobel-prize winning scientist Peter Higgs, who first theorised the concept of the Higgs boson particle, will have a new research centre at Edinburgh University named after him.
The number of student places at universities will be increased by 30,000 next year, and the following year there will be no cap at all on how many places instututions can offer. The new student loans required for this will be funded by selling off the old student loan book.
For those who struggle with the basics in English and maths, there will be more sanctions.
Mr Osborne announced the roll-out of a programme meaning anyone aged 18-21 signing on without basic skills in these subjects “will be required to undertake training from day one, or lose their benefits.”
If they are still unemployed after six months they will have to take a traineeship, take a work placement or do community work placement. Non-attendance will lead to the withdrawal of benefits.
An increase in the funding available to job centres to support 16 and 17-year olds was welcomed by Lizze Crowley of the Work Foundation who said “this will help to plug an important gap in the support available to young people.” However Ms Crowley said more action was needed to improve careers advice as this would have “a much greater impact than scrapping national insurance contributions for under-21s.”
Mr Osborne’s announcement that he would be bringing in a tax break for firms producing shale gas drew criticism from the Green party MP Caroline Lucas, who tweeted: “Halving tax on dirty fracking projects? Madness, especially when oil & gas tax breaks last year already at £2bn”.