Osborne Fast-Tracks Pension And Care Reforms

Osborne Fast-Tracks Pension And Care Reforms

Chancellor George Osborne is bringing forward the introduction of a new, simple state pensions system and a cap on the cost of social care.

Ahead of his Budget on Wednesday, Mr Osborne announced that the single-tier pension would be introduced in 2016 - a year earlier than previously planned.

The cap on social care costs, originally set for £75,000 and due for introduction in 2017, will now start in 2016 as well but at £72,000.

Mr Osborne said the changes would be a "huge boost" for people trying to save for their retirement.

The announcement came as he warned there are no "miracle cures" for the UK economy and raised the spectre of Britain following Cyprus if he changes tack.

The Chancellor is under mounting pressure to ditch his economic "Plan A" and to find some way of kickstarting growth.

A new opinion poll suggests most voters - including more than a quarter of Conservative supporters - think his policies are failing.

But Mr Osborne said the UK could end up facing an economic disaster like Cyprus if he does not stick to his austerity plans.

He dismissed calls for extra borrowing to cut taxes or finance a "spending spree" and warned changing now would be a "disaster".

The Chancellor said the crisis in Cyprus was an example of "what happens if you don't show the world you can pay your way".

He told the BBC's Andrew Marr Show: "That is why in Britain we have got to retain the confidence of world markets."

Mr Osborne acknowledged his austerity measures were "difficult" and the effort to rebalance and repair the economy was "painstaking work".

But he said that "unless we in Britain front up to our own problems ... then the difficult economic situation in Britain will get very much worse".

"There is no easy answer to Britain's problems, there is no miracle cure because if there was a miracle cure it would have been deployed," he said.

"It's just a lot of hard work of dealing with Britain's debts, helping businesses create jobs, helping families who want to work hard and get on."

Writing in The Sun on Sunday, Mr Osborne hinted he would also do more to help homebuyers, business start-ups and apprentices in his Budget on Wednesday.

Helping create jobs would mean "cutting tax rates and red tape, backing scientific advance, building new roads and broadband" and making the UK an attractive investment option, he said.

However he warned of "more tough choices" to be made on further slashing public spending from 2015 - with the scale of the squeeze to be unveiled in his statement.

"It won't be easy," he warned, amid rows between ministers over where the axe should fall.

His comments came as a report revealed families have cut back on spending by more than £3,000 a year since the start of the credit crunch.

Consumer watchdog Which? found the cut in discretionary spending's opening up a £136bn black hole in the economy over the last five years.

Former cabinet minister Liam Fox is leading Tory calls for a change of course on the economy, suggesting Corporation Tax be reduced to zero and far bigger cuts to public spending.

Other prominent backbench demands include cancelling a fuel duty rise due in the autumn and scrapping the beer duty escalator that automatically ups the price of a pint.

Mr Osborne is tipped to announce extra investment in housebuilding and road projects - called for by leading business groups - and help for people to buy homes.

But he will not abandon "Plan A" by increasing borrowing to fund it - a move being mooted within the coalition by Liberal Democrat Business Secretary Vince Cable.

Shadow chancellor Ed Balls said he would welcome extra borrowing to fund a cut in the basic rate of income tax to put more money into people's pockets.

But Mr Osborne hit back: "I think the British people know there are no easy answers in today's world. They aren't fooled by the miracle cures peddled by the same snake oil politicians who got us into this mess.

"Labour's answer to Britain's borrowing problems is to borrow even more - that simply doesn't make sense. If there were easy options and miracle cures then of course I would take them, but sadly there aren't."