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 289.

    Thank you lucky stars you don't live in Greece or Spain!

    Give it time. With housing benefit cuts and no housingbeing built to protect the bankers profits and bonuses we'll be waving to the Greeks and Spanish as we pass them on the way down to the shanty towns and street children levels of India and Pakistan

  • rate this

    Comment number 288.

    I can't believe that people are now actually blaming babies for the financial crisis! yes, those evil babies sucking the country dry lets make them pay...Muuhahahaa!!
    Strange, I thought all our money went to prop up the banks, shouldn't they start paying it back?

  • rate this

    Comment number 287.

    Quite a mixture of responses here...

    I am glad that the Tories have now found some way to deter people who deliberately have children to get more benefits, however there is still the question of the loopholes in the tax system.

    And I'm expecting more taxes on the rich, such as more taxes on richer items etc...but not too far that I'll feel guilty of being successful if I, myself become rich.

  • rate this

    Comment number 286.

    Suggestion for you all "reality tv" that you are made redundant we then follow you for 1 full year as you live without your wage..some of you will not be able to claim as you received redundancy/partner working.have the stigma of being called "scrounger" see you as you go to "Workfare" or part time job that does not cover enough hours to get benefit. Also no help from your family who are employed

  • rate this

    Comment number 285.

    This talk of limiting the number of children in a family that should be supported on benefits will deprive not just the parents but the children. This is a callous act perpetrated by people that have no experience of hardship, quite the opposite. I wonder how these privileged people would cope if they were made to suffer hardship?

  • rate this

    Comment number 284.

    When do we hear anything about the £120 billion Tax dodgers? As ever the Scary Party who have just written themselves and their pals a cheque for £40,000 a year, are now persecuting the working poor and unemployed who are being kicked, booted, and kicked again.
    These Monsters should be brought to book.

  • rate this

    Comment number 283.

    Let me get this right. At the budget Osborne says he has to cut taxes on the rich because they won't pay them if they're increased. Now he's going to increase them. What changed?

  • rate this

    Comment number 282.

    @240 & 169 A billion here, a billion there - pretty soon thats serious money......

  • rate this

    Comment number 281.

    When I worked for a very prominent newspaper, my boss said to his PA, 'I may be paid more than you, but I may not earn more than you'. There is no direct link between wealth, skill, effort and remuneration in the UK. There are very wealthy people who have earned nothing and pay little or no tax. It is these people who need to bear the burden of the country's deficit.

  • rate this

    Comment number 280.

    One alternative is to clamp down on tax avoidance by corporations and the rich and tax evasion, estimated to cost the state £95bn a year

    UK Uncut

  • rate this

    Comment number 279.

    "...taxes for the most well-off would be increased in some form in the next few years..."
    In other words:-
    'I'm giving the rich three years grace to properly ensure their £millions are well beyond the grasp of the next government.'

    Meanwhile, working plebs can sell their souls for £50,000.

  • rate this

    Comment number 278.

    easy to save money in the UK, stop foreigners benefiting from the UK. Simple really, this country is over populated. nearly 63 million people in the UK. We are talking about the lights going out because of not enough power supply...again previous governments did not plan for the number of people in the UK. We are over populated, not enough jobs for the people born in this country.

  • rate this

    Comment number 277.

    Tell that to a 55 year old woman I know who can hardly get around and is raking it in on Jobseekers Allowance all £50 a week of it.

    Incapacity benefit is only £100 a week.

  • rate this

    Comment number 276.

    Where are these benefit claimants who are so adept at finance they're able to live the life of Riley while on the dole. Instead of vilifying them surely we should be seeking them out and putting them in charge. Sounds like they'd do better than the encumbent.

  • rate this

    Comment number 275.

    Benefit fraud £1.1bn, tax avoidance £4.7bn. I pay c.£5k in tax. I calculate that taxes of 220k people similar to me are stolen by sc*m while takings equivalent to 940k people are avoided by sc*m who think they have some divine right not to pay tax - I include in this airline pilots who think they shouldn't be classed as UK residents for tax purposes. Is it not my turn now not to pay tax ?

  • rate this

    Comment number 274.

    The welfare state is undoubtedly over generous and needs to be reined back in some areas.

    But I bet you could easily find that the so-called 'consultancy' companies are over-charging for the management of the 'cost-savings'.

    And, isn't it funny how there never seems to be something to balance the scales. Like cutting tax avoidance. Like trying to control high earner's wage inflation.

  • rate this

    Comment number 273.

    @13 'Andy 1'
    Pull your horns in. Lots of people work shifts, and work while you sleep and sleep while you work.

    Services that keep the UK going are on duty 24/7: hospitals and staff, armed services, police, firefighters, power station and water treatment workers. The list is endless - or do you think these services are run remotely by invisible pixies who never sleep at the wrong times?

  • rate this

    Comment number 272.

    Gormless, smug ideologue; like the 'leaders' of the poor Tommies in WW I, ordered to keep walking into the German guns that hadn't been destroyed by eternal bombardment, George just keeps on failing to learn ... Some see this as 'resolve', 'character' or Stiff Upper Lip; in fact it's the clearest possible indication that he simply hasn't got a clue what to do ...

    But then who really has ??? ...

  • rate this

    Comment number 271.

    During my medical training I recall a 21yr old girl who was having her 4th child from a 4th this right??? Of course Tories will be out next time - the working class outnumber the middle + upper, that's basic demographics. In then Labour who will raise child benefit, ESA, JSA, 'disability' benefit and so on...the UK brain drain continues, in 50 yrs you'll have your own Gotham City...

  • rate this

    Comment number 270.

    Ideas seem scattered to me, not cohesive, & certainly have an air of "iffy-wiffy"; in fact, The shot-gunned plan (full of holes) that I can faguely make out, seems to put workers in more jeopardy & gamble on private industry & charity to match university reseach. One idea makes sense -means-testing benefits such as free bus passes.
    If this is a plan, Britain is in trouble.


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