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.

WELFARE SPENDING

  • 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
    0

    Comment number 49.

    If they are claiming that low income families are not planning for when they can afford children and having them anyway, how will a reduction in benefits hurt anyone except the children? If money was a factor they would already not have more children than they can support. this will only increase children being raised in poverty. maybe next they will suggest means-tested chemical castration...

  • rate this
    +2

    Comment number 48.

    Fact, in the period when the GDP of the UK has increased 3 times, the spending by the state has increased 7 times.
    This is unsustainable.
    You can listen to the deluded left who heads are up their nether regions or face reality and get rid of this debt for our kids and grandkids future.

  • rate this
    +52

    Comment number 47.

    Clamping down on benefit cheats is very popular but George Osborne has made a serious miscalculation if he thinks the 'wallets of the rich' comment will be seen as anything other than elitist crassness.

  • rate this
    +4

    Comment number 46.

    Maybe we should ALL decide what tax we pay. I bet it would not be long before there was NO money for benfits at all.

  • rate this
    +159

    Comment number 45.

    If he wants to save £10bn then surely the answer is to cut the near-criminal levels of tax avoidance by the rich minority.

    Or would that upset the Tory party donors too much?

  • rate this
    +4

    Comment number 44.

    In response to Andy at 13, he seems to not be aware a) that the vast majority of people whose benefits are and will continue to be cut are employed and b) that many people who are not employed would love to be, but in many areas the jobs are not there!

  • rate this
    -5

    Comment number 43.

    The 3 minutes of George Osbourne's speech made way more sense to me than Miliband's vacuous 'One Nation' concept. All Miliband did was talk about how the rich need to pay their fair share. As if 1% of the population paying 26% of the revenue wasn't fair enough. Osbourne's speech actually made logical sense...

  • rate this
    +3

    Comment number 42.

    I feel internal conflicts within the coalition government. George, it is not nice to slap your Lib Dem colleagues’ faces, if you actually possess similar ideas on taxing rich.

  • rate this
    +5

    Comment number 41.

    It’s a known fact that everyone who claims the benefits that I don’t get or qualify for is a feckless scrounger – It must be true, that’s what my pensioner Gran and my MP both of whom have never worked told me.

  • rate this
    +4

    Comment number 40.

    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".

    What if your wife and other relatives are also "employees" Another tax dodge ?

    Very interesting to hear the phrase "All in together.Havent heard that one for a while.

  • rate this
    +4

    Comment number 39.

    all he seems to do is go round in a big circle - understandable that cuts are needed here, but why dont we focus some attention on how to stop the rest of europe milking our system.
    supporting the uk is a strain - let alone europe as well!

  • rate this
    +4

    Comment number 38.

    It is about time combined incomes were taken into account - there are many whose total household income far exceeds the higher rate of tax, yet their shoulders are not bearing any weight.

  • rate this
    +6

    Comment number 37.

    And to imagine this cretin is in charge of the economy *shudder* Give up my employee rights in exchange for shares that could quite easily end up worthless?!! What planet does he and the rest of the Tories live on?

    Well said 11!

  • rate this
    +37

    Comment number 36.

    Politicians (of every hue) frustrate me beyound belief.

    Even when they occasionally come up with a half-reasonable policy or idea, 90% of the population (rightly) dismisses it out of hand, due to the outrageous behaviour, hypocrisy & vested-interest-fawning that they indulge in.

    How can anyone take (worthy) benefit-cuts ideas seriously when the government is in the pocket of the super-rich?

  • rate this
    0

    Comment number 35.

    More attacks on the poor. No doubt the tabloids will run 'Welfare Mothers' stories to prepare the ground for Osborne's cuts.
    What next, time limited welfare benefits?
    For the Right, in the USA it has worked. The unemployment rolls are reduced, those missing haven't got jobs, they've just not on the official lists.
    Charity groups and church soup kitchens are taking the strain.

  • rate this
    +16

    Comment number 34.

    I'd like to see all the unfair benefits that politicians get cut. Anyone else with me?

  • rate this
    +4

    Comment number 33.

    Sounds a good set of ideas. I know some people genuinely need help, its just galling that my moeny is taken to house people long term. I have no problem over the short term, but fail to see why i have to work to put a roof over my head and baby farm mothers get for free what i work for

  • rate this
    +3

    Comment number 32.

    This is nothing more than conference rhetoric, the Lib Dems will quash any changes.

    I think it is reasonable that you should not be able to get more in benefits than you can if you are working; and there needs to be some means of addressing those who use the benefits linked to children as their income but no idea how you could do it reasonably.

  • rate this
    +4

    Comment number 31.

    He cannot announce detail - fair enough.

    £10 billion from welfare - fair enough.

    So to keep things fair the rich will have to pay more - fair enough.

    How much? £100 billion? £500 billion? Surely he can make this clear.

    Surely he doesn't intend the greatest burden for the worst off?

  • rate this
    +5

    Comment number 30.

    Seems sensible, we need to to tackle some of the idleness in this country and i work for a welfare to work provider and see alot of it.

    However it does seem somewhat Tory that they have it all figured how they are going to cut benefits but don't actually mention any concrete details on the extra taxes for the rich except saying it won't be a mansion tax.

 

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