BRITISH taxpayers will have to work a year longer to earn a pension as one of the major surprises in the heaviest budget cuts in decades.
The measures will slash 490,000 public sector jobs over the next four years.
Chancellor George Osborne last night announced that the pension age for both men and women would rise to 66 as he unveiled cuts of pound stg. 83 billion ($133.7bn) from annual spending costs.
The rise in the pension age will be introduced between 2018 and 2020, four years earlier than planned, to save pound stg. 5bn a year.
“It is a hard road, but it leads to a better future,” Mr Osborne told the House of Commons.
Declaring that public job losses were inevitable “when the country has run out of money”, Mr Osborne said there would also be cuts of more than a quarter in local council spending, which covers many social services.
Spending on law and order would also be cut heavily, with deep reductions in the legal aid, prison and court budgets, and falls in police spending by 4 per cent each year.
But spending on tackling terrorism would be maintained to help Britain guard against al-Qa’ida and dissident Irish republicans, and to ensure the safety of the 2012 London Olympic Games.
Mr Osborne insisted that reducing bureaucracy would free up enough police officers to avoid frontline cuts, but police chiefs immediately said that was impossible and cuts to frontline services were inevitable.
Giving the green light to a massive overhaul and simplification of welfare payments, Mr Osborne said the welfare bill would be cut by more than pound stg. 7bn a year, including the removal of child benefits from those earning more than pound stg. 50,000 a year.
Health spending and foreign aid were protected as promised, but there were wide-ranging cuts in almost all other programs, with most new public housing tenants, for instance, facing higher rents.
Hundreds of London-based diplomats will lose their jobs under a 24 per cent cut to the Foreign Ministry’s budget, while the BBC must take on the full costs of running the World Service – previously subsidised by the Foreign Office.
“The decisions we have taken today bring sanity to our public finances,” Mr Osborne told the Commons.
“They deal decisively with the largest budget deficit we have had to face outside of wartime.”
Shadow chancellor Alan Johnson said the cuts would mainly hit low-income earners and would risk tipping Britain back into recession at a time when economic investment was required.
“In the context of reducing the deficit, speed kills,” Mr Johnson said.
The government claimed that its cuts had been forced on it by the deficit inherited from the previous Labour government but for many government MPs “this is their ideological objective,” Mr Johnson said.
“For many of them this is what they came into politics for – the heaviest cuts to public spending in living memory.”
In a challenge to the Australian government’s ambitions for leading the world on carbon capture, Mr Osborne announced pound stg. 1bn in spending for the world’s first commercial-scale carbon-capture scheme, as a sign of the Conservative-Liberal Democrats government’s commitment to climate change action.
The government also kept its promise to protect foreign aid spending, saying that in 2013 the UK would become the first major economy to keep its promise to the UN to lift its aid budget to 0.7 per cent of GDP.
“Britons can hold their heads up high and say that even in these difficult times we will honour our promise to some of the poorest in the world,” Mr Osborne said.
The Chancellor announced the cuts a day after Prime Minister David Cameron unveiled the biggest cut to British military expenditure in 30 years, including 42,000 job losses among civilians and servicemen.
After spending billions bailing out indebted banks, and suffering a squeeze on tax revenue and a hike in welfare bills, Mr Osborne said last night it would take “time to turn around the debt supertanker”.
Mr Osborne said that a temporary levy on bank balance sheets being introduced in January will be made permanent, potentially raising billions of pounds.
“We will extract the maximum sustainable taxes from the banking system,” he said.
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