George Osborne won't cut pension to fill Budget '˜black hole'

George Osborne has insisted he will not cut the 'generous' state pension as he tries to deal with a multi-billion-pound black hole in his Budget.

George Osborne will insist that his budget was fair Picture: Jessica Taylor/UK Parliament/PA Wire

The Chancellor faced a hostile reception in the House of Commons as he made his first appearance since being forced into a U-turn on cuts to disability benefits and the resignation of work and pensions secretary Iain Duncan Smith.

A £4.4 billion hole is expected to emerge in the Budget by 2020 due to the decision not to cut Personal Independence Payments (PIP). Mr Osborne reiterated that the government has no plans to make more welfare savings to replace the continued spending. But he launched a defence of the benefits available to pensioners amid suggestions they need to be reduced to spread the impact of the cuts.

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He said: “By not proceeding with the PIP changes it means spending on disabled people will be just over £1bn a year higher by the end of the decade than was set out in the Budget.”

Mr Osborne – who noted he was the first Chancellor in 20 years to speak on the final day of the Budget debate – repeatedly ignored Labour calls to apologise to disabled people for his handling of the PIP proposals. He also said he was “sorry” that Mr Duncan Smith chose to resign.

The Budget was accepted by 310 votes to 275, a government majority of 35.

Labour former minister Yvette Cooper said Mr Duncan Smith described the Budget as “deeply unfair” and risked dividing the country, asking if Mr Osborne believes his former Cabinet colleague is “deluded”.

Mr Osborne replied: “During the period you were chief secretary [to the Treasury] the deficit went from £76 billion a year to £154 billion a year.”

He argued that the measures taken by himself and Mr Duncan Smith were needed to “clear up the mess” left by Labour in government.

Shadow chancellor John McDonnell attacked Mr Osborne, saying: “What we’ve seen is not the actions of a chancellor, a senior government minister, but the grubby, incompetent manipulations of a political chancellor.