Budget: Ministers defend tax rises and welfare cuts

　　George Osborne has said the Budget's tough medicine was "unavoidable" The government has defended the toughest Budget package of spending cuts and tax increases in a generation.

　　Chancellor George Osborne said the measures, which will raise VAT to 20% and cut welfare spending by £11bn, were tough but needed to curb the deficit.

　　Ministers have said they will do all they can to "protect the least well off" from the impact but Labour have warned it will cost thousands of jobs.

　　Labour have accused the Lib Dems of being party to a "raid on the poor".

　　'Unavoidable'

　　Chancellor George Osborne will put the case for the coalition's "tough but fair" Budget - which will leave households on average £400 a year worse off - in a series of media interviews on Wednesday while David Cameron will face scrutiny by MPs at the weekly prime minister's questions.

　　MAIN BUDGET MEASURES

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　　VAT increase

　　Public sector pay freeze

　　Child benefit frozen

　　Housing benefit cuts

　　Disability Living Allowance cuts

　　Tax cut for lowest paid

　　Two year council tax freeze

　　Capital Gains Tax increased

　　Bank levy

　　NI tax holiday for job creation outside South-East of England

　　Budget key points: At-a-glance Shoppers split over VAT rise

　　In his first Budget, Mr Osborne called for a two-year pay freeze for public sector workers earning over £21,000 and substantial welfare savings including a three-year freeze in child benefit, a cap on housing benefit and a reduction in tax credits for families earning more than £40,000.

　　He said the main rate of VAT would rise from 17.5% to 20% from next January, a move which will raise an estimated £13bn and was "unavoidable" given the dire state of the public finances.

　　He also revealed that government departments - excluding health and international aid - face an average 25% real terms squeeze in their budgets over the course of the Parliament, to be determined in an autumn spending review.

　　The government has said it plans to cut the structural budget deficit to zero in the next six years, a goal which the BBC's political editor Nick Robinson said represented a "dramatic change" in political and economic strategy from its Labour predecessor.

　　In an e-mail to Conservative supporters, Mr Cameron said the cuts and tax rises - representing £40bn of extra "fiscal tightening" on top of that already proposed by Labour - would "bring sanity" to the public finances.

　　"Will it cost our coalition some popularity? Possibly," Mr Cameron said.

　　"But is this the right thing to do - for the health of the economy, for the poorest in our society, for the future of our country? I passionately believe it is."

　　'Fair outcome'

　　Lib Dem leader Nick Clegg held a meeting with his MPs after the Budget amid signs that dissent in his party is limited at this stage.

　　Only one Lib Dem MP, Bob Russell, has threatened to vote against the Budget - in opposition to the VAT rise - and senior Lib Dem figures have lined up to back the coalition programme.

　　Chief Secretary to the Treasury Danny Alexander told the BBC's Newsnight programme that the VAT rise was a "necessary" response to the "big gap" in the public finances that the government had inherited.

　　The party's deputy leader Simon Hughes said the Budget had gone some way to making the tax system fairer - a key demand in last month's coalition negotiations.

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　　Lib Dem MPs should vote against this Budget's raid on the poor, the old and the vulnerable

　　Ed Miliband Shadow energy secretary Mixed view of Lib Dem grassroots

　　"We have not got all we wanted," he told the BBC News Channel.

　　"I am not pretending we have. But I am clear that we needed to deal with the huge economic mess we are in and we need to do it a way which is a fair outcome."

　　While acknowledging some people would find the cuts and tax rises "hard", he insisted there was extra support for vulnerable groups and added: "The people with high incomes will have to pay the price in a greater way."

　　And Business Secretary Vince Cable said his party had helped secure some "very big and progressive steps" such as raising tax thresholds for the lowest-paid, restoring the earnings link with the state pension and a £150 annual rise in child tax credits for the poorest families.

　　"In terms of protecting the poorest, the two main groups[children and pensioners] have been safeguarded," he told Channel 4 News.

　　'Raid on the poor'

　　But Labour said the Lib Dems had got very little in return for their support and their backing for the VAT rise - after they warned of a "Tory VAT bombshell" during the election - meant the public would not trust them again.

　　"What we are seeing is a lot of familiar Tory songs - VAT increased, child benefit frozen," Shadow business secretary Pat McFadden said. "The difference this time is that the Lib Dems are leading the chorus."

　　And Labour leadership contender Ed Miliband said the Budget "exposed the depth of the Lib Dem betrayal".

　　"They have sold their consciences for the chance of power," he said.

　　Chancellor George Osborne unveils his first Budget

　　"Lib Dem MPs should vote against this Budget's raid on the poor, the old and the vulnerable just as they promised to do during the election campaign."

　　Unions say the combination of a public sector pay freeze and a 25% reduction in most departmental budgets will bring real pain and leave many people feeling angry.

　　"It is savage," said Jonathan Baume, from the First Division Association - which represents public servants.

　　"There has not been anything on this scale since the 1920s."