'Don't blame me... blame Gordon': Osborne attacks Labour 'snipers' as he warns everyone will pay for his 'bloodbath' Budget

Osborne insists economy cuts are 'tough but fair'

FTSE down 40 points to 5207 on opening

Two-year pay freeze for public sector workers earning over £21,000

Child benefit frozen for three years and tax credits cut

Corporation tax cut from 28% to 24% over four years

Capital Gains Tax hiked to 28% for top-rate taxpayers

Income tax threshold raised £1,000 to £7,495

Pension link to earnings restored or 2.5% rise from next April

Whistlestop tour: George Osborne did a series of interviews today to defend his emergency budget

George Osborne today revealed the agonising decisions behind his 'bloodbath' emergency Budget as he faced a backlash from ordinary families stung by his tax hikes.

The Chancellor insisted that he had been forced to raise VAT and freeze child benefit because of the 'massive mess' the country's finances had been left in by Labour.

Millions of middle-class families will bear the brunt of his emergency Budget, losing tax credits, facing a three-year child benefit freeze and paying £500 a year more in VAT.

But Mr Osborne today defended his decision to slash £11 billion from the annual welfare budget and said he had been left with no choice but to take 'tough but fair' decisions.

'It is not because I want to do these things, it is because this country faces a very, very serious debt problem,' he told GMTV.

And Mr Osborne said it would be better if Labour could come up with something constructive instead of 'sniping from the sidelines'.

'The damage to the economy, the people losing their jobs, will come if we do not sort out our problems in this country, and the welfare bills have got out of control,' he said.

'The hole in the public finances was so great and the debts were so large, and people at home know, if you have got a debt problem, you have got to deal with it.'

The Chancellor was forced to listen as he was played angry messages by GMTV viewers, worried by the decision to freeze child benefit.

Business department 'facing £700m budget cut'

Plans to reduce public spending by £6bn include cutting the business department budget by £700m, the BBC has learned.

The government is to set out where this year's cuts will be made this week.


But the BBC's Carole Walker says £700m will come from Lib Dem Vince Cable's department, while £500m is to come from trimming or axing public bodies.

Ministers say cuts must be made quickly to show Britain is serious about cutting the deficit but Labour says this could put the recovery at risk.

Universities

Ministers have insisted that front-line services will be protected, despite the cuts that will be made.

Chancellor George Osborne said on 17 May that plans for £6bn cuts would be announced this week, while setting a date for an "emergency Budget" for 22 June.

BBC political correspondent Carole Walker said savings at the Department for Business, Innovation and Skills would mean "significant cuts" to regional development agencies in the south of England.