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
    +1

    Comment number 109.

    @ClaudeBalls
    Newsflash. Big property isn't just bought, it is also inherited. If an inheritor family with not-that-high income or who bought it when property prices weren't ridiculous gets hit with a high tax, then what? (1% of 2million is £20000 per year)

  • rate this
    +5

    Comment number 108.

    11. Tony Soprano
    6 MINUTES AGO
    "Good. That's him lost them the next election, then!"

    not to worry. 4 weeks before the election they'll give it all back so people with short term memories will be fooled into thinking tories are nice caring people. or not; people unlucky enough to need welfare and the under 25s generally don't vote anyway so the government can do what they like to them

  • rate this
    +1

    Comment number 107.

    Children are a source of income under the present benefits system, they represent money, better housing and a wider range of benefits. They are not wanted for themselves and therefore neglected when they arrive, ensuring yet another generation of damaged kids wandering the streets and not working for a living. It is simple cause and effect.

  • rate this
    +3

    Comment number 106.

    No ideas George does it again, "lets hit the poor even harder". Even though the cut, cut, cut policy is failing and the budget deficit is still growing. The chancellor was and still is wrong, it's time to work out a plan B and get the country out of recession. Plan B could be Infrastructure spending. this means more jobs, more spending money, more cash in the system which means More tax revenue.

  • rate this
    +4

    Comment number 105.

    A couple of years ago, a friend who always seems to have his finger on the political pulse said to me: " In times like this, the Fascists tend to come to the fore in the Tory party, then Labour drift to the left to balance it out"

  • rate this
    +2

    Comment number 104.

    How utterly, utterly revolting. How do these people sleep at night?

  • Comment number 103.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +1

    Comment number 102.

    Desparate stuff from a desparate man who has absolutely no idea how to get this country out of the mess his and the subsequent Govt have got us in. Cutting child benefit etc. will have the same affect as cutting jobs - less spending by the general public and so on and on it goes.

  • rate this
    +5

    Comment number 101.

    What we need is big business stepping up to plate and instead of paying slave wages to the bottom workers pay much higher wages as this will put money onto pockets people to then go out and consume

    The wealthy have only become wealthy by exploiting low wages for the unskilled

  • rate this
    +2

    Comment number 100.

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

    I like this idea ! I like it alot !
    Perhaps they should also do a big media campaign to promote contraception !

  • rate this
    -3

    Comment number 99.

    28. BluesBerry
    the budget could not be balanced "on the wallets of the rich". Is this because they have offshore accounts..."

    No, it's because it is (a) unfair to tax the rich much more than the larger amount they are already paying, and (b) if too many of the rich left the country, the rest of the country would sit on its behinds and whinge even more because there'd be no jobs left

  • rate this
    +11

    Comment number 98.

    I will be telling my grandkids horror stories about the Tories.

    Just to keep them on the straight and narrow.

  • rate this
    -1

    Comment number 97.

    Instead of cutting benifits, stop immigration, get out of this stupid, pointless human rights treaty, and start throwing out all the people who should not be here, hiding behind our inability to throw these wasters out of our country, line up the planes at private airports like they did with Hamza and his scum freinds.....

  • rate this
    +125

    Comment number 96.

    He is just tinkering here - the real issue is housing benefit due to high rent levels that is paid to a growing number of people in work who find their wage leaves them below income support level. We either need to increase wages or introduce rent control and build social housing. It is scandalous that working a 40 hours a week leaves you worse of than if you claim income support

  • rate this
    +7

    Comment number 95.

    I whole heartedly agree with fundamental principles behind benefits, but I cannot abide its exploitation. The principle, much the same as the health system, is the provision of something at point of need.

    Frankly, you do not "need" plasma TVs or the latest pair of trainers. The estate near my house has more Sky TV dishes that any of the surrounding private streets.

    There have to be limits!

  • rate this
    -2

    Comment number 94.

    This is just the beginning. The UK economy wil be back to economic growth when all healthcare has been privatised and when the welfare state has been abandoned. The UK, US and Europe are now competing directly with Asia where, like it or not, healthcare and welfare don't exist. Wages will come down because competiton for jobs will be fierce.

  • rate this
    +132

    Comment number 93.

    I've been following the conference this morning. Are they delusional? Their self congratulation to each other over their patently failed policies makes the old Soviet seem quite un-orchestrated.

    And now they think giving up all you employment rights for £2k of (worthless) shares is going help? Help whom, the bad employers?

    I don't know what planet the Tories are on, but it 'aint Earth.

  • rate this
    +3

    Comment number 92.

    £10 billion in benefits to be cut? How? There seems to be very little in the way of job creation these days - perhaps the government needs to focus on getting people into work. Surely that would be a 2-fold bonus for them. Fewer people claiming, more people paying tax....

  • rate this
    +8

    Comment number 91.

    "ronnieboy1
    europe is killing the uk...get out now and save 350 mill a day"

    The ENTIRE EU budget for all 27 members is about £350m a day. If you're going to hold an opinion at least attempt to base it on objective facts if you wish to be taken seriously.

  • rate this
    +4

    Comment number 90.

    Re 16
    HaveIGotThatWrong
    “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 ?”


    It’s very simple, make the rich pay their tax including big business, we could clear the deficit without cuts

 

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