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 149.

    What about going about getting your 6b from Vodafone or the 95m Glasgow Rangers owe you. That's just two companies. Who else owes the Gov money? That's right, take it from the people who can't fight back with lawyers.

  • rate this

    Comment number 148.

    Coming from a man who actively legally tax avoids with his £25 million in a trust fund in the cayman islands is no surprise this country is rapidly reverting to the days of the 1930s except theres no tugging of forelocks anymore ,demonise on section of society and it will become impossible to police with consensus but the Tories dont care they will just hide in their gated communities behinds G4S

  • rate this

    Comment number 147.

    Remember the shoes Teresa May wore when promising to cast off the 'Nasty Party' image? Leopardskin. Was that a subtle signal to the die-hards worried their beloved party was going soft? Because if she still has the shoes, they won't have changed their spots either!

  • rate this

    Comment number 146.

    It is all very well cutting beneifts to the bone, but why should those who are seeking jobs that are just not there and those who are genuinely in need of help and support, be penalised for the sake of the few real scroungers. Tackle the benefits abuse problem first along with tax abuse problem at the top and there would probably be no need to cut benefits for those that need it.

  • rate this

    Comment number 145.

    Regardless of what George Osbourne says about benefit cuts or reductions in employee rights, it's going to get vetoed by the Lib Dems.

    It's funny to think that we've now now had three party conferences all suggesting new policies which none of them have the ability to implement.

  • rate this

    Comment number 144.

    ‘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. Either increase wages or introduce rent control and build social housing.’
    Finally, there are more people like me who don’t fall for the same bull time and time again.

    Maybe there is hope for this country.

  • rate this

    Comment number 143.

    New owner-employee contract = owners award shares worth up to £50,000 to their staff, in return for employee giving up unfair dismissal, redundancy & training rights & also the right to ask for flexible working.
    Great! If company goes under, then what?
    If worker is eg unfairly dismised, then what?

  • rate this

    Comment number 142.

    A lot of people here seem to be making the same short sighted mistake. Cutting benefits for children will **not** limit the number of children people have, it will just increase the number of children living in poverty.

    People point to the people having children purely for the benefits, but that is a tiny exception, not the rule. Stop letting yourself be distracted by the exceptions.

  • rate this

    Comment number 141.


    so it should be a race to the bottom in terms of protecting those most vulnerable in society.
    No healthcare unless you can pay for it
    No support if you lose your job - just sell the shares given to you for signing away employee rights

    We are a civilised society where there should be a saftey net to protect people but I agree that claiming benefits is not a career & needs addressing

  • rate this

    Comment number 140.

    The government’s attempts to kick start the economy have failed miserably so what do they do? Kick the poor once again.

    A small minority may be scroungers but the vast majority are just trying to survive.

  • rate this

    Comment number 139.

    At least 150,000 UK children have parents aged 24 or under. Cuts to HB for under 25's will hit these families and children the hardest. Clearly they don’t plan an exemption for households with children, or with the next breath will be accusing people of having children to get round benefit rules. The proposals are ill thought through, shocking, and will have long term catastrophic consequences.

  • rate this

    Comment number 138.

    It saddens me how many people believe the Tory/Daily Mail propaganda concerning benefits claimants. People on benefits did not cause the mess the country is in and yet they are being systematically targeted by the Tories in their ideological pursuit of 'pull the ladder up and sod the rest'.

  • rate this

    Comment number 137.

    II think everyone has forgot the HMRC deals with bıg businesses that one the last count £26 billion was written off. Maybe we sould start passing the cap around there before we look at the poorest in this country. And limit the amount of children couples can have to two??? Most people can only afford two anyway. And if you work you should greater benefits ontop of your wage to boost spending.

  • rate this

    Comment number 136.

    So the well off will not be able to have extra children as well as we should not pay people to have kids, hope it also applies to MPs etc.Fine always believed it was parents responsibility anyway. Notice once again he is after the people who pay most the workers so no doubt he will be able later on to give the rich an other Tax Cut.

  • rate this

    Comment number 135.

    Has anybody else noticed that whilst Osborne lacks any qualifications for his job Cameron did study economics as part of his degree and worked for Lamont.

    So two questions ?

    1. Is Cameron really behind the Tory economic policy

    2. How come he learned nothing whilst in his time with Lamont.

  • rate this

    Comment number 134.

    It has got to be sensible to limit the number of children that will be supported surely. I had to wait until I could afford to have kids, i.e. save up for when my wife was on maternity leave, save up for nursery costs, equipment etc to make sure the child had a good start. It seemed somewhat unfair that the state was essentially paying for people to have lots of kids whilst I was working hard...

  • rate this

    Comment number 133.

    £2K in shares will look pretty useless if your firm starts going down the pan and you get made redundant, and that is when you'll actually need the money.
    Of course, your firm may never downsize, but with our Georgie in charge of the exchequer, I wouldn't bank on it, would you?

  • rate this

    Comment number 132.

    I like where Osbourne says we can't expect the wealthy to get us out of this mess, why not they made it, I guess that means the poor and the middle classes should foot the bill.

  • rate this

    Comment number 131.

    A speech which neither adjusted economic policies, the public's perception of the Chancellor, the Government or the Conservative Party. Stagnation everywhere.

  • rate this

    Comment number 130.

    They know that Welfare talk raises the Nasty Party morale - attack the poor and the rest will take care of itself- all the Right Wingers go home happy!
    This useless Chancellor is forcing people onto Welfare. Gideon & IDS believe being on a Welfare is a life-style choice. So it is cheap talk to please their followers, who are bleating all the way!


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