Conservative conference: Cameron in benefit cuts warning

David Cameron: "We've capped welfare but we need to go further"

Further cuts to welfare, including curbs on housing benefit, may be needed to help fight the deficit, David Cameron has warned.

Speaking on first day of the Conservative Party conference, the prime minister said housing benefit may be reviewed for under-25s.

He promised "further action" to ensure the rich "pay their fair share".

But senior Tories have ruled out a tax on expensive properties or a one-off "wealth tax" backed by the Lib Dems.

In other developments as Conservative activists gathered in Birmingham for the four-day event:

The government has said it needs to find an extra £16bn in savings in the final year of the Parliament, 2015-6, on top of the billions in spending cuts and tax rises already earmarked.

Mr Cameron said cuts to the multi-billion pound benefits bill was one area that would be considered - something that will be resisted by his Lib Dem coalition partners unless it is accompanied by a tax rise on the wealthy.

"We have to find these spending reductions and if we want to avoid cuts in things like hospitals and schools - services that we all rely on - we have to look at things like the welfare budget," he told the Andrew Marr show.

Analysis

The conference began with a blizzard of mini announcements.

Eye-catching, popular and relatively cheap ideas, on everything from council tax to rail fares to the European Union's budget.

The idea is to focus on the cost of living for ordinary people and ram home that the Conservatives get many families are struggling.

Both the prime minister and the chancellor said there will be new plans to make sure richer people "pay their fair share".

But both also said the idea of a tax on big houses - what Westminster types call a "mansion tax" - isn't a goer.

Which begs an obvious question. What is their plan for getting the better off to pay more?

The chancellor also said he wasn't keen on a "wealth tax," adding, "in the sense of a tax on your wealth levied annually".

So that leaves some wriggle room.

Many will now ask in which direction they intend to wriggle.

For example, the prime minister suggested it was unfair that an unemployed school leaver can claim housing benefit whereas one who finds work or who goes on to university is unable to claim housing benefit.

Government sources say restricting housing benefit for the under-25s is being looked at but pointed out the measure would only save "hundreds of millions" and there had been no agreement with the Lib Dems.

In the BBC interview, Mr Cameron vowed "further action to ensure rich people pay their fair share" and confirmed new measures would be unveiled before the next election.

But asked about an annual tax on property, the so-called "mansion tax" long championed by the Lib Dems, he said "that is not going to happen".

If people worked hard and saved to buy a property, Mr Cameron added, he didn't want the UK to "be a country that comes after you every year with a massive great tax".

And Chancellor George Osborne also ruled out an annual levy on wealth, another idea floated by the Lib Dems, telling Sky News it was not a "sensible" way of getting the better-off to contribute more.

The prime minister again promised to honour his pledge not to cut universal benefits for pensioners - such as free bus passes and winter fuel payments - effectively ringfencing this part of the welfare budget.

Cost of living

Amid concerns that the government is not doing enough to help hard-pressed families, the Conservatives announced a package of measures aimed at helping people struggling with rising living costs.

Council tax bills will be frozen in England for a third year in a row and there is to be a cap on how much regulated train fares can go up by.

Ticket prices will not rise by more than 1% above the rate of retail-price inflation (RPI), lower than the 3% plus inflation limit in place at the moment.

Party chairman Grant Shapps suggested the Conservatives had been too "shy" about trumpeting what they had done to support low and middle-income earners in tough times.

The public were worried about the cost of "paying their bills and filling up their car" and the party had to make clear they were on "the side of every working family".

"People need to know 'they do get it'. But they are not mind readers. We need to go out there and tell them."

A further £5m will be spent on helping injured British troops by improving facilities at Headley Court, Defence Secretary Philip Hammond said.

He added that there would be a "significant reduction" in British troops serving in Afghanistan in 2013 but the UK would not "cut and run".

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