The chancellor (pictured) said pensioners would be “better off” despite his shock decision to phase out their age-related allowances, first introduced by Winston Churchill in 1925.
Saga boss Ros Altmann criticised the move, at a time when record low interest rates have hit savings, but Osborne claimed the freezing of age-related allowances and raising of the threshold at which under-65s start to pay tax was the “biggest tax cut for a generation”.
“It creates a much simpler system for everyone. I’m not embarrassed to say that pensioners are going to get the largest increase in the state pension from next month,” he told Today on the BBC.
The changes to age-related allowances will leave 4.41m pensions worse off by an average of £83 a year, HM Revenue & Customs said, but Osborne insisted his package of reforms would boost pensioners and said state pensions would rise in line with average earnings or by 2.5 per cent, whichever is greater. Think tank the IFS said pensioners would lose only an average 0.25 per cent of their income in 2014 as a result of the Budget.
Osborne also said he would not personally benefit from the cut in the 50p tax rate and said he is not a top-rate taxpayer. As chancellor he earns £134,565 a year and he also benefits from a trust which has a stake in family wallpaper business Osborne & Little.