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
    +16

    Comment number 89.

    Lib Dems promised more cuts. Labour last week promised more cuts, Today the Tories promise more cuts.

    If Clegg, Miliband and Cameron can only offer cuts then we are going to have social strife on the same scale as in Greece and Spain.

  • rate this
    -1

    Comment number 88.

    59. Free Willy
    Please don't refer to people on benefits as "poor who are paying", unless you're prepared to specify WHAT EXACTLY ARE THEY PAYING

    So far, I can see that my tax is paying their benefits. I could come up with a dozen better uses for that money

  • rate this
    +1

    Comment number 87.

    Over to you Mr Clegg

  • rate this
    +4

    Comment number 86.

    GO says that the rich will pay more but the more these so called 'rich' are chased the more they'll evade. When bankers bonus's were cut they just put up their other pay/perks. FTSE100 bosses have seen fantastic rises in pay in the last 5 years. When the higher tax rate was introduced they just got more put in to their muilt-million pension pots. NOT all in it together !

  • rate this
    0

    Comment number 85.

    But I thought it was a human right not to work and to get paid by the state to sit at home having more children.

  • rate this
    +3

    Comment number 84.

    £10billion ? Is not that almost exactly the same amount as we give in overseas aid each year ?

  • rate this
    0

    Comment number 83.

    Macro Economics for Dummies......

    Dear Gideon - the best way to reduce the welfare bill is to create a gorowing economy & reduce unemplyment. Under your watch the benefits bill has gone UP by 5% because of your self defeating austerity meaures, which has seen the deficit hit a record monthly high this year:

    http://www.bbc.co.uk/news/business-19672660

  • rate this
    -2

    Comment number 82.

    Wow these people on benefits must be raking it in!
    Have they ever thought of creating a Union for the Unemployed they might get a better deal in benefits and looking for work benefits then they could all join a 1 massive Union with trades Unions and Unemployed Unions. lol

  • rate this
    +1

    Comment number 81.

    Good on him. He is unpopular no matter what he does, and any policy to deal with the deficit even more so. A good time to implement true Conservative policies.

  • rate this
    +3

    Comment number 80.

    The capping of child benefit is lng overdue and gets 100% support from me. It is not a right to have children, it's a responsible privelege! If you can't afford them then don't have them.

    My only concern is the human rights brigade saying that the feckless have no money and you can't stop them breeding so what happens? Do the children starve?

  • rate this
    +4

    Comment number 79.

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

    The headline is £10bn cuts from the poorest, and yet £70bn is lost to the richest in tax avoidance.

    This is a one-sided class war in which the wealthiest are winning, and becoming wealthier still - the one nation is their nation, not ours.

  • rate this
    +6

    Comment number 78.

    Every economist of note has stated that the UK's rate of cuts is unnecessary and some have even called it vindictive. I concur with this view. Benefits are paid to those that need it the most, and that list grows longer by the day because of the governments inability to create jobs and stimulate private sector growth effectively. Osbourne is clueless on how to do this and its showing.

  • rate this
    +2

    Comment number 77.

    Tory economic policy in three easy stages:

    1. Maintain high unemployment and homeless figures

    2. Hope that some of those will start businesses

    3. End of

  • rate this
    +4

    Comment number 76.

    It's no wonder the Tories are 10 points behind in the polls. Regardless of whether I receive down arrows, these are the facts.

    Perhaps some Tory voters would care to explain why their government is so unpopular ?

  • rate this
    +3

    Comment number 75.

    If the Government wished to save money they could bring Blair's religious oil wars to an end. The money spent on killing children on the other side of the world would be better spent on the welfare of our own children.

  • rate this
    +7

    Comment number 74.

    Why do we need to take £10 BILLION off benefits? It's been cut, the army's ben cut, the NHS has been cut...where is this money going?

    "I Don't know." Says the MP, from his third home in france.
    "I Don't know." Says the politician, rerouting your money to him.
    "I Don't know." Says the bankers, stuffing their pockets with your cash.

    DONT TRUST THEM!!!

  • rate this
    +5

    Comment number 73.

    "Healing is taking longer than we hoped, because the damage is greater than we feared" is there any chance of a political journo or two asking him what new damage has come to light since his first budget and the claims that his plans would tackle the deficit in one parliament, He's had two and a half years to look at the books after all, it's not like Labour could've fiddled them retrospectively.

  • rate this
    +115

    Comment number 72.

    While you are at it Master Georgie how about sowing up all the loopholes that let the rich shelter their money offshire and avoid taxes???????

  • rate this
    -2

    Comment number 71.

    unfair system . benefit cheats get it all while everyone else is living like they are in a 3rd world country. i know a woman who cheats £300 in disability allowance for her children every week when nothing wrong with them- needs to be stopped! poor show cameron, poor show!

  • rate this
    -1

    Comment number 70.

    @9.Commrade_Dave the feeling is mutual sir!

    Believe me I am proud to be voted down on economic issues on here...

 

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