Tory conference: George Osborne in £10bn benefit cut vow


George Osborne on tax rates 'for the very richest', the 50p tax rate and cap on benefits

The government is determined to cut a further £10bn from the benefits budget to fight the deficit, Chancellor George Osborne has told the Tory conference.

One idea he suggested was limiting the number of children in a family that should be supported on benefits.

He said the better-off would pay more in taxes, but the budget could not be balanced "on the wallets of the rich".

He also unveiled a plan for workers to give up a string of employment rights in return for shares in their employer.

The new owner-employee contract allows owners to award shares worth up to £50,000 to their staff, in return for the employee giving up their unfair dismissal, redundancy and training rights and also the right to ask for flexible working.

He said there would be no capital gains tax on the profits from the shares, so it would be "owners, workers and the taxman all in it together".

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The difficult reality for Mr Osborne is that the coalition has been struggling to deliver on the two goals that were right at the centre of its economic strategy”

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Mr Osborne's speech comes with the UK economy in recession, hitting the government's tax takings and its plans to reduce the deficit (the difference between the amount spent by government and the amount it receives from tax etc).

In his speech in Birmingham, the chancellor made clear he was not planning to change course and said a further £16bn of savings must be found by 2015/16 to meet his target of balancing the budget within five years.

This, he said, would include cutting £10bn more from the welfare bill by 2016-17, on top of the £18bn announced in 2010.

Mr Osborne said: "Let the message from this conference be clear: we will finish the job we have started."

'Large bill'

He told party members that "the economy is healing" but added that "healing is taking longer than we hoped, because the damage was greater than we feared".

Mr Osborne spelt out ideas for cutting the welfare bill, such as limiting housing benefit for the under-25s, so that young people without a job have to live at home; possible further curbs on child tax credits; and allowing benefit increases to be lower than the rate of inflation.

Comparison of welfare savings with the expected size of welfare programmes in 2017

Deputy Prime Minister Nick Clegg told his own party's conference last month that he would not allow "wild suggestions" of a £10bn cut in welfare and Chief Secretary to the Treasury Danny Alexander told delegates: "We simply will not allow the books to be balanced in a way that hits the poorest hardest."

The Lib Dems advocate a "mansion tax", under which owners of homes worth more than £2m would pay a 1% annual charge on property values above that level.

Mr Osborne ruled out such a measure, which is unpopular among Conservative MPs, saying: "It would be sold as a mansion tax, but once the tax inspector has been let in the door, we would soon find most homes in the country incur a mansion tax.

"It's not a mansion tax but a homes tax, and this party of homeowners will have no truck with it."

But he said taxes for the most well-off would be increased in some form in the next few years, so that those "with the broadest shoulders" paid most.

However, he said: "Just as we should never balance the budget on the backs of the poor, it's a delusion to say we can balance it on the wallets of the rich."

Universities money

BBC political editor Nick Robinson said the comments by Mr Osborne and senior Lib Dems amounted to "haggling in public" over the size of tax rises and welfare cuts.

Mr Osborne presented a united front with Work and Pensions Secretary Iain Duncan Smith, following reports the Treasury wanted to scrap the work and pensions secretary's new Universal Credit over fears costs and complexity were spiralling out of control.

Mr Duncan Smith is understood to have initially resisted the welfare cuts proposal, arguing savings should be found by means-testing benefits such as free bus passes and winter fuel payments for better-off pensioners.


  • The Office for Budget Responsibility forecasts that the government will spend £209.2bn on social security benefits and tax credits during this financial year
  • This figure is predicted to increase to £229bn by 2016/17
  • Total government spending is expected to rise from £683.4bn to £756.3bn during the same period
  • In 2010 the government announced welfare cuts of £18bn a year by 2014/15 -
  • George Osborne wants to see £10bn welfare cuts over two years 2015-2017

In his speech, Mr Osborne accused Ed Miliband of lacking an alternative economy strategy, claiming the Labour leader did not mention the budget deficit once in his Labour conference speech last week.

He also announced an extra £200m in government funding for scientific research in English universities and restated his belief in the future possibilities of shale gas.

The Research Partnership Investment Fund was launched with £100m of government funding by Mr Osborne in his March Budget.

Universities must match any public money with at least double the amount of cash from the private sector or charities, which the government claims could add up to a total investment in research of more than £1bn.

The Conservatives began their annual conference with policy announcements aimed at easing the cost of living as they attempt to show they are on the side of hard-pressed families.

These include extending the council tax freeze in England for the third year in a succession and capping some rail fare increases to inflation plus 1%.

David Cameron also said he would be prepared to veto a new EU budget to prevent "massive" increases.


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  • rate this

    Comment number 29.

    'Limiting the number of children in a family that should be supported on benefits' is a tricky one. I don't have children but appreciate my taxes should go towards schools, child care etc. Hopefully their future employment will add to the economy (and fund my pension) but not holding too much confidence in that.

  • rate this

    Comment number 28.

    Osborne said better-off would pay more in taxes, but the budget could not be balanced "on the wallets of the rich". Is this because they have offshore accounts with loopholes open, or is it because they have outstanding accountants that find ways to taxable income, or a combination of both. Either way, these "oversights" need plugging. And yes I think tagging the rich would be a good strart.

  • rate this

    Comment number 27.

    If we are going to have benefits cuts, can we please just stop rent payments completely? That 'benefit' is only of benefit to the UK's landlord class, who in turn are propping up the banks. I quite fancy an affordable house - can you please pull the plug on the buy-to-let industry so I can have one?

  • rate this

    Comment number 26.

    One idea he suggested was limiting the number of children in a family that should be supported on benefits.

    Why doesn't this already happen? The country is both full and poor...

  • rate this

    Comment number 25.

    Their policies have failed

  • rate this

    Comment number 24.

    If these plans went ahead then only companies that don't value their staff would take the option of reducing their employees' rights. What good are shares in a company that treats its employees badly - doesn't sound like a company with a long term future to me; certainly not one, I'd want to work at.

  • rate this

    Comment number 23.

    This shows MPs live in a world of their own. All MPs expenses should be cut by 30% and when the rail fares go up the increase should come out of their own pockets. This will reduce the deficit by a large amount. I have not heard that MPs have been "in this together". I think Obourne ought to live on reduced benefits and a council house for a year to see what life is like without much money.

  • rate this

    Comment number 22.

    Like most problems such as pensions the benefit bill hasn’t happened overnight it’s been growing since the 1970’s and NO government of either colour has done anything about it. They have stood idly by and watched as the rich took their money abroad to create jobs where wages were low and profits high. They called it globalisation.

    They could end up looking after many unwanted kids.

  • rate this

    Comment number 21.

    6. pulanama
    This is the same Chancellor that has just ruled out taxes on big property owners right? Just making sure I'm not living in some parallel universe.

    No.This is the same Chancellor who has ruled out YET MORE taxes on big property owners. That is, above and beyond the huge amounts of tax they have already paid earning enough to buy the big property.

  • rate this

    Comment number 20.

    Same old Tory’s take from the poor to give to the rich

  • rate this

    Comment number 19.

    OK - now perhaps David Cameron can invoke this new scheme by letting go an under-performing chancellor.

  • rate this

    Comment number 18.

    The owner-employee contract is curious in that it seems to apply only new employees and then presumably that employee gets rights once they've proved their value? Or maybe never? Two tier workforce? No doubt start-ups will welcome this but I'm unsure how a 'them and us' workforce will increase consumer confidence, promote ethical employment or foster company loyalty.

  • rate this

    Comment number 17.

    People with large families eh? If only one could work out the groups most stereotypically likely to have them. Subtle (not actually subtle) racist dog whistle there.

  • rate this

    Comment number 16.

    I predict the majority of posts on here will says it's an outrage and an attack on the poor.

    Okay, so the other options are we call pay more in tax (not very popular), or we cut public spending (again, not popular) or we borrow more (which is Labour's preferred option).

    So which is it to be ?

  • rate this

    Comment number 15.

    The relaxing worker rights idea is an interesting thought. Small businesses really do have problems with being able to take on staff and then get rid of them when times are bad. I do wonder though if people will take this 'opportunity'.

  • rate this

    Comment number 14.

    Still no word from Gideon about how he intends to tackle tax evasion by the super-rich. That loses the treasury billions more than welfare fraud.

  • rate this

    Comment number 13.

    Great news.
    Will be nice to see the 40% of my hard earned salary not being spent on the lazy people who churn out kids for a living and never worry where their next pay cheque is coming from because they know the state will pay. I'd suggest those who think its a bad idea have never lived in an area where most people dont go to work whilst the rest get up at 6am to start the daily commute.

  • rate this

    Comment number 12.

    If we are limiting the number of children we are paying for in benefits, I look forward to saving a great deal from those prolific breeders in the Royal Family.

  • Comment number 11.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 10.

    "He also unveiled a plan for workers to give up a string of employment rights in return for shares in their employer"

    Clearly George nee Gideon is vying for the most unattractive policy proposal of the year award – his Olympics humiliation clearly had no effect.


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