Millions of the UK's lowest paid workers will keep an extra £5,000 of their own money under radical plans to slash taxes for people across the country.
In the first all-conservative budget for almost 20 years , the Chancellor said he was putting "economic security first".
And he used the crisis in Greece to emphasise the need for continued austerity to balance the books by 2020.
The Chancellor confirmed radical reforms to the hated inheritance tax system – freeing families in homes worth up to £1million from the financial burden of paying the death duty.
Running a surplus is not now expected until 2018/19 – a year later than planned.
However, Mr Osborne struck an optimistic note, revealing that growth forecasts have been revised UP to 2.4 per cent from 2017 onwards.
He also announced a rise in the tax-free personal allowance - to £11,000 - and the threshold at which the higher 40p rate kicks in.
PA
Twitter feed of George Osborne shows the Chancellor putting the finishing touches to his speech Chief among the policy announcements was the creation of a new compulsory National Living Wage, which will reach £9 an hour by 2020.
Work and Pensions Secretary Iain Duncan Smith shouted "fantastic" as Mr Osborne told MPs: "Working people aged 25 and over will receive it. It will start next April, at the rate of £7.20
"The Low Pay Commission will recommend future rises that achieve the Government's objective of reaching 60% of median earnings by 2020."
Mr Osborne also revealed: Corporation tax will be cut from 20 per cent to 19 per cent in 2017 and 18 per cent by 2020; rises in public sector pay will be restricted to one per cent per year for the next four years; and reforms to the non-dom tax status - which allows some UK residents to limit the tax paid on earnings outside the country.
The much-anticipated £12bn of welfare cuts were outlined, with the cap on benefits to be reduced from £26,000 per household to £23,000 in London and £20,000 in the rest of the country.
The Chancellor said social housing tenants earning more than £40,000 in London and £30,000 elsewhere would now be forced to pay rent at the market rate.
And tax credits will be limited to two children, affecting only those born after April 2017.
12:47Tom Batchelor08.07.2015Osborne is speaking to a full House of Commons12:47Tom BatchelorThe Chancellor says further difficult decisions lie ahead12:46Tom BatchelorOsborne says there can be "no turning back" - tells MPs in normal economic times, governments should run an overall surplus - "we should always fix the roof while the sun is shining", he adds.12:45@ShippersUnboundBoris seated on the back row of the seats at the bar end of the house, gazing at his blackberry rather than his rival at the despatch box12:44Tom BatchelorOsborne says he plans to run a bigger surplus by the end of this parliament than seen in the last 40 years.Osborne said his plans will leave the national debt lower as a share of GDP in every future year than was predicted in March and will avoid a "rollercoaster ride" in public spending.12:42Tom BatchelorOsborne says he remains committed to achieving a surplus by 2019/2020.He says: "We should cut the national debt at the same pace - we shouldn't go faster and we shouldn't go slower.""Tax receipts are stronger than forecast", Osborne adds.12:40Tom BatchelorOn employment: Osborne says one million more jobs are expected to be created over the next five years - but the Chancellor says he wants to create two million more jobs.12:39Tom BatchelorIn 2016, the Office for Budget Responsibility says growth will be 2.3% in 2016, and 2.4% the following year - with strong steady growth predicted for the rest of the decade.12:38Tom BatchelorThe Chancellor says: "The British economy is fundamentally stronger than it was five years ago."Living standards are rising, our long term economic plan is working."The greatest mistake that this country could make is to think threat all our problems are solved."And he points to the crisis in Greece as evidence of the need to "get our own house in order".12:36Tom BatchelorOsborne says it will be a Budget that says this will be a Budget for working people - moving Britain from low wage, high tax country to a high wage, low tax.12:35Tom BatchelorHouse of Commons rules dictate that Speaker John Bercow steps aside for his deputy, Lindsay Hoyle, the Chairman of Ways and Means, when Budget statements are made.So that will explain his notable absence from his usual seat in the Commons.12:34Tom BatchelorThat's pretty much it for PMQs this week. Now for the small issue of the Summer Budget 2015.12:33Tom BatchelorThe highly controversial hunting ban gets a brief mention. Cameron defends bringing the issue back before MPs for a vote as early as next week.The PM is pressed again whether the issue should be a "priority" for the Government - which the Cameron uses as a segue to reel off the Tories' economic achievements over the last five years.David Cameron gave a manifesto pledge to allow a free vote on repealing the ban on hunting with dogs.12:30Tom BatchelorOn the Calais migrant crisis, Cameron says the issue is a "shared problem" with the French authorities and advises against "finger pointing".That follows a story on Express.co.uk that British supermarkets were running low on some food supplies because of the ongoing crisis at the French port.12:28Tom Batchelor"Pensioner poverty is at an all time low in this country," Cameron says, because the Government has promised to protect the pensions budget.We should hear more about that in the Chancellor's budget shortly.12:26Tom BatchelorThe Prime Minister says he "fears for the future of Greece"."We have to be prepared for all eventualities," he says.12:26Tom BatchelorCommons Speaker John Bercow has his work cut out for him today managing a lively group of MPs - and a particularly packed house before the Budget. There are only 427 seats in the House of Commons chamber - and 650 MPs.12:24Tom BatchelorTunisia terror attack question now: Labour MP Valerie Vaz asks what help there will be for the victims and their families.Cameron pays tribute to those who died in the attack on a tourist resort in Sousse and says there should be a ministerial committee to ensure victims are properly supported by Government.12:22@nickedmoI see that #pmqs is another scene of embarrassing jeering. It sounds like a farmyard.12:22Tom BatchelorFor the bingo fans, Cameron just said "strong economy" - he adds that parking should be "easier" and if not "free" for shoppers wishing to use the high street in market towns.And that's followed by mention of the "northern powerhouse". It was only a matter of time.12:20Tom BatchelorAnd we're back to the subject of EVEL - SNPs are laying it on thick now, with jeers from their corner of the Commons.The PM isn't budging though, calling Tory plans to give English MPs a greater say over matters that only affect England "a modest proposal".12:18Tom BatchelorTory MP Caroline Nokes raises the issue of funding for drugs for those suffering from muscular dystrophy.Cameron says it is right to ask "challenging questions" of the pharmaceutical companies.12:15Tom BatchelorThe SNP MP Angus Robertson brings up the anniversary of the Srebrenica massacre - Cameron says we must "keep it front and centre" of European politics and learn lessons from it12:14Tom BatchelorHarman replies that any changes to allow English votes on English laws should be properly consulted on.The PM responds: "We have published proposals, we're having a debate in Parliament and there'll be a vote in Parliament..."12:12Tom BatchelorDevolution up next...Cameron says: "English MPs have no say on Scottish issues and yet Scottish MPs have a say on English issues...legislation shouldn't be passed on English matters against the will of English MPs. It's a very modest proposal, is she saying the Labour party is going to oppose that proposal?"12:10@Mike_Fabricant#PMQs Now Harriet Harman is banging on about sport. Anything, but #Grexit, #Budget2015, #Economy, #Unemployment. Bizarre!12:09Tom BatchelorCameron is defending the Government's handling of the legacy of the London 2012 Olympics - lots of disagreement over how long children are spending doing PE in school...12:07Tom BatchelorHarman says Cameron is "completely wrong" to say the number of people taking part in sport has increased since the Olympics.12:06Tom BatchelorCameron responds that "we had human rights in this country long before Labour's Human Rights Act".12:04Tom BatchelorHarriet Harman up next - and she presses the PM to abandon plans to "water down" the Human Rights Act. Both Cameron and Harman also pay their respects to the victims of the 7/7 attacks.12:03Tom BatchelorPredictably, Cameron brings defence back to the economy - it is Budget day after all. The only way to have a safe country is to have a strong economy, he says.12:02Tom BatchelorPMQs is now underway - first question is on defence spending. The PM says the Government is meeting the 2% GDP Nato spending target. A hot political issue, particularly for Tory backbenchers.12:00Tom BatchelorSpeaking a little earlier, the Prime Minister's official spokeswoman said: "This is a Budget that will put our country firmly on the path from a high tax, high welfare society to a lower tax, lower welfare society."It will provide a strong and solid foundation to secure a better future for people across the UK in the years ahead."11:59Tom BatchelorDavid Cameron was among Cabinet members briefed on the Budget by Mr Osborne - he's up for PMQs in a minute's time11:58Tom BatchelorSummer Budget 2015 debate and analysis has been flooding social media. According to BrandWatch, two hours before Mr Osborne took to the despatch box, tweets were coming in at 130 per minute.11:54Tom BatchelorLabour's acting leader Harriet Harman has given her take on the situation.She says: "We want to see things which help the economy be more productive. And what we don’t want to see is any measures which make working people worse off.”11:53Tom BatchelorAs a side note, protests are expected around the country from around 5.30pm today to coincide with the Chancellor's Budget. We'll have more on reaction to the Budget on Express.co.uk throughout the day and evening.11:50Tom BatchelorThe Lib Dems are pre-empting a measure to cut Employment Support Allowance (ESA) for people with disabilities, sickness or mental health problems who are looking for work.They claim Mr Osborne will slash the handout by "over £30 a week for half a million people".The party says: "This cut is not needed and is the wrong thing to do. The Liberal Democrats will not support it."We don't expect to disagree with everything the Chancellor says, but any changes to welfare have to be fair and protect the most vulnerable."Cutting ESA is the wrong thing to do when the Chancellor is also planning to spend millions of pounds cutting inheritance tax for the very rich."11:49Tom BatchelorThat's one way to get a good picture in the midst of a scrum of journalists on Downing Street11:48Tom BatchelorWhile much of the detail of today's Budget has remained a secret, we have been given a flavour of what the Chancellor will say in the Commons later."Our long-term economic plan is working," Mr Osborne is due to tell MPs. "But the greatest mistake this country could make would be to think all our problems are solved."You only have to look at the crisis unfolding in Greece as I speak to realise that if a country's not in control of its borrowing, the borrowing takes control of the country."11:45Tom BatchelorIn case 1996 - the last Tory Budget year - is all but a distant memory - or if you are lucky enough to not even have been born by then - here are some facts about that year.Prince Harry was just 12 and Prince William, 14. Their parents, Prince Charles and Diana, had divorced three months earlier on August 28.A first class stamp was 26p. Today it costs 63p.Sir Cliff Richard entertained the Centre Court crowd during a long rain delay on men's quarter-final day, leading a sing-along for the crowd.The Prodigy were top of the singles chart with Breathe - their second and last number one hit.What are the other key events of 1996?11:45@DouglasCarswellLIVE on #Periscope: On way to Parliament for the Budget periscope.tv/w/aGz0tDMyMTg4…11:43Tom BatchelorThe Chancellor was joined by some of his Treasury colleagues on the steps of No 11 Downing Street a little earlier11:40Tom BatchelorAs the last Tory Budget was in 1996, my colleague Levi Winchester has taken a look back at what was promised by the then-Chancellor Ken Clarke. It makes for interesting reading...11:38Tom BatchelorThis will be Mr Osborne's seventh Budget - and he's already wheeling out some of his favourite slogans.Seasoned political spectators have produced a Budget 2015 bingo game - poking fun at some of the cliched phrases we're likely to hear today.But the Chancellor has already rewarded us with one or two catchphrases before he's even taken his place at the dispatch box.On Twitter (see below) the MP for Tatton declared it would be a Budget "that puts economic security first".He's also promising to "secure Britain's future" - although there has been one startling omission so far: "a long-term economic plan for hard working families."Felt tip pens and bingo cards at the ready.11:36Tom BatchelorWe've just had the traditional red-box shot on Downing Street - Mr Osborne should be at the dispatch box in just under an hour11:35Tom BatchelorThe Chancellor has tweeted the usual 'final touches' pre-Budget picture - but commentators were quick to poke fun at Mr Osborne for posing with a pen when the font on the document is clearly printed text. Oops11:33@George_OsborneToday I will present a Conservative Budget - a Budget that puts economic security first http://pbs.twimg.com/media/CJYasCgXAAA79_3.jpg11:31Tom BatchelorChancellor George Osborne has already outlined his economic vision for the country - back in March - but that was with the Liberal Democrats as a partner in the Coalition government.Today's Budget represents something Britain hasn't seen in almost two decades - a Conservative-only statement on the health of the economy, how the Government will raise money and where it plans to spend it.11:30Tom BatchelorGood morning and welcome to our live coverage of today's Budget - the SECOND of 2015.We'll start off with coverage of Prime Minister's Questions at midday before the main order of the day gets underway.
Mr Osborne also conceded to pressure from members of his own party and calls from UK and international military chiefs in committing to spend two per cent of GDP on defence.
The Ministry of Defence was guaranteed real-terms increases in its annual budget, with the chancellor saying a safe country was reliant on a strong economy.
Fuel duty will remain frozen this year, Mr Osborne announced, and a "new roads fund" will be created to improve productivity.
Mr Osborne told MPs: "Taken together with all the welfare savings and the tax cuts in this Budget, it means that a typical family where someone is working full-time on the minimum wage will be better off.”
PA
The Chancellor spoke to a packed Commons Other pledges included a further £8bn for the NHS by 2020 and university student maintenance grants are to be scrapped and replaced by loans.
The FTSE stock exchange rose by one per cent following the Chancellor's announcements.
But unions were quick to attack the Budget, describing it as a "beautifully crafted con trick".
And acting Labour leader Harriet Harman responded by claiming the Budget was "making working people worse off" by cutting tax credits for the low paid and grants for students from poorer backgrounds.
