A new National Living Wage was announced by George Osborne today – but only for those aged 25 and over.
In the first Tory-only Budget for 19 years, the Chancellor of the Exchequer revealed the new compulsory living wage would come in next April at the rate of £7.20 an hour.
The National Minimum Wage is currently £6.50 an hour for 21-year-olds and over, and so represents a sizeable increase for those who qualify.
The Chancellor also spelt out details of £12billion of welfare cuts, announcing severe restrictions on tax credits and the abolition of housing benefit for those aged between 18 and 21.
Speaking in the House of Commons this afternoon, Mr Osborne said: “We are moving Britain from a high welfare, high tax economy, to a lower welfare, lower tax society.
“The best way to support working people is to let them keep more of the money they earn.
“Because let me be clear: Britain deserves a pay rise and Britain is getting a pay rise.
“I am today introducing a new National Living Wage.
“We’ve set it to reach £9 an hour by 2020.
“The new National Living Wage will be compulsory, working people aged 25 and over will receive it and it will start next April, at the rate of £7.20.”
Today's Budget saw the Tories follow through on many of their manifesto pledges, especially around cuts to welfare spending.
The Chancellor announced all working age benefits would be frozen for four years, including tax credits and housing allowance.
Mr Osborne claimed a freeze was needed as since the economic crash of 2008 “average earnings have risen by 11 per cent, but most benefits have risen by 21 per cent.”
He added: “Those who oppose any savings to Tax Credits will have to explain how on earth they propose to eliminate the deficit, let alone run a surplus and pay down debt.”
The benefits cap will be reduced from £26,000 to £20,000 – except in London where it will be £23,000.
Young people were hit hard in the Budget, with 18 to 21 year olds losing housing benefit, and grants for university students from poorer backgrounds being replaced by loans.
The threshold at which people starting paying income tax will continue to rise, and from April goes from £10,800, to £11,000.
The higher rate of tax threshold was also increased, from £42,385 to £43,000.
Acting Labour Leader Harriet Harman said there were "measures in the Budget which we will give serious consideration to", but tore into his attack on tax credits.
She said: "At the heart of this Budget is his announcement – heavily trailed in the press, but curiously not mentioned in the election campaign – to cut tax credits for people in work.
"But doing that without an effective across-the-board plan for higher pay will make them worse off.
"He’s saying he’ll cut welfare and wages will magically go up; we say, get wages up and the welfare bill will come down.
"We heard the announcement on the national minimum wage and the living wage, but without tax credits, even the living wage is not enough for a family to live on."
Labour leadership candidate Andy Burnham asked in a Facebook post: "What is George Osborne’s problem with young people?"
"In the last Parliament, he made them bear the brunt of the early cuts and today he’s done the same. This was not a One Nation Budget, but the Two Generations Budget – cementing the divide between young and old," he said.
Story continues below...
Summer Budget 2015
In his budget statement, which lasted longer than an hour, Mr Osborne laid out further measures to show "Britain is open for business".
This included cutting corporation tax from its current level of 20 per cent to 18 per cent in order to attract business to the country.
In an attempt to encourage more in-work training, the Chancellor also announced an apprenticeships levy on big businesses, which organisations could claim back from as they employ trainees.
Simon Walker, Director General of the Institute of Directors, praised the "boldness" of introducing the Living Wage.
He said: "Introducing a national living wage at a significantly higher level than the minimum wage was a dramatic announcement, but in return, companies have been provided with a cut to corporation tax and an increase in the employment allowance.
"We should not understate the boldness of this move, and many businesses will have been taken by surprise, but the IoD accepts that after several years of slow wage rises, now is the time for companies to increase pay."
The Chancellor also found the time to make a joke at the expense of Boris Johnson's opposition to the expanding London Heathrow airport.