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 309.

    I work hard, in the private sector. I pay my taxes.

    I want my taxes to be spent on public services, for the common good.

    But instead, my taxes are used to prop up banks, and to reward City fatcats for their failure. And meanwhile, Osborne stands back and does nothing.....except sneer at folk like me (the plebs).

  • rate this

    Comment number 308.

    Only the Tories would class a property worth millions of pounds a 'home; rather than a 'mansion'.

    What about the tax dodgers? What about growth? This party is truly out of touch and are going to go down in history as an absolute disaster for this country.

  • rate this

    Comment number 307.

    He seems obsessed with making it easier to fire employees.
    There's nothing to fear, Unfair dismissal means exactly what it says on the tin. All the employers need do is treat the work force FAIRLY or is that too much to ask.

  • rate this

    Comment number 306.

    The left have long since abandoned the working classes. They now represent the layabout classes who think its ok to sit at home all day smoking weed, playing on their x-boxes and knocking out babies left, right and centre. The working classes are fed up seeing their hard-earned wages reduced by tax in order to fund the layabouts. Welfare should be targeted towards those who genuinely need it.

  • rate this

    Comment number 305.

    I asked the question before the election, where is the Tory plan to create jobs, they still haven’t unveiled it. The bottom dollar is this, the wealth of the lower and middle classes have stagnated over the last 30 years, the wealth of the rich has accelerated. We are in a mess yet appear too want to keep voting for the same dogma that caused it.

  • rate this

    Comment number 304.

    Start with reversing the recent tax breaks to the wealthy. Next end all tax avoidance, of all forms. Dispense with child benefit for those families with an income in excess of £40,000 & further limit the benefit to just the first two children of all lower families. End housing benefit for those people who are aged 24 or less. We might see some sense prevail from thereon.

  • rate this

    Comment number 303.

    I quite like the idea of cuttign child benefit back. I dont mean cut it per child, but say pay for the first 2 to enable the poulation to keep refreshing, but thats it. If you want 10 kids, you pay for the last 8 of them yourselves.

  • rate this

    Comment number 302.

    By all means cut the benefits bill but the Govt.must also stop all the tax avoidance/evasion schemes and STOP paying bonus and retention payments to all the public sector jobsworths who currently receive them.

  • rate this

    Comment number 301.

    Hitting the most vulnerable again is shameful and cynical attempts at "divide and rule" are never going to save the Tories.

    The sooner gone the better.

  • rate this

    Comment number 300.

    The Bedroom Tax being introduced next April."

    Plus, here, having to find 20% of Council Tax from April. Sometime after April we will inevitably have the bailiffs in (income less than bills), that will lead to the person I care for, my wife, being hospitalised and then, since I'd then one in a two bedroom house, me being made homeless. It will cost far *more*, not less.

  • rate this

    Comment number 299.


    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?
    Different tax.

  • rate this

    Comment number 298.

    David H

    "People really do have short term memory issues...
    Hospital Light Bulb £10, School Door Handle £300
    Feckless Labour Government PFI .... "Priceless"

    As soon as you add shareholders divis too the equation then costs go up, thats the nature of capitalism, profit.

    We also forgot that banksters accounted for most of the debt acquired with toxic loans in the US !!

  • rate this

    Comment number 297.

    In the past 30 years:

    -wages have not kept with inflation
    -cost of living has risen in every imaginable way
    -one income is no longer enough to support an average family, now you need two

    and yet at the same time

    -the wealth of the super-rich went into the stratosphere.

    Something's not right here, and I mean _really_ not right.

  • rate this

    Comment number 296.

    Rent control is a far better way to control housing benefit spend.

  • rate this

    Comment number 295.

    Tory Manifesto
    you will not get your fair share in the good times(i will your part) but you will pay for me in the bad times
    Thank you Turkeys for voting for christmas
    SME business are know realising this is not fair economics and turning their backs on the party of lawlessness and disorder

  • rate this

    Comment number 294.

    Right wing nasty party getting their cherished old favourites out of the closet and on the excuse of reducing the deficit. Any old excuse to roast the old chestnuts.Conked out Toryism is all these scroungers have to offer

    Nothing new on the horizon? Like getting the economy going again. C'mon George. How will you get the country back to work??

  • rate this

    Comment number 293.

    Get preggers and they give you a council house. For some people its a no brainer and easier than work. This must be stopped.

  • rate this

    Comment number 292.

    The reason the economy is in such a bad shape is that we allow private banks to essentially create digital money, often referred to as "increasing the money supply".

    If you don't think that's the case, then do some research on the subject, the 1844 Bank Charter Act prevented the private creation of money, but hasn't been updated to cover electronic forms of money.

    Close this loophole!

  • rate this

    Comment number 291.

    So basically the Tories are against people getting 60 quid a week because they didn't earn it, but think people who have made several hundred thousand pounds profit simply by buying a house should be left alone.

  • rate this

    Comment number 290.

    So Osbourne wants to take more rights away from people who are less well off than others in a still deteriorating economy. How far do you think people will be pushed before another riot starts? The more rights you take away from people with a lot of people struggling to feed their homes, desperate people will make desperate actions as a result of poor leadership.


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