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
    +2

    Comment number 329.

    #261. DavidH - better include Michael Gove in the memory improvement programme.
    He has just decided to pay for the new bog standard school building for the Plebs kids with a feckless Conservative Govt PFI scheme!

  • rate this
    +1

    Comment number 328.

    Just reading the share option idea, in a nutshell if you give up all your rights you get shares, this sounds to me like victorian work ethics but then the rich would have even more power over us mear mortals.When will this shower get of their high horse and start treating those that elected them with a bit of respect.

  • rate this
    +2

    Comment number 327.

    £80 billion in payments (excluding pensions) is an unsustainable cost

    There are the jobs (as proven by the number of working Eastern Europeans) but benefits for low skilled people with families pay more

    And all the money meant to reduce child poverty just encouraged poorer people to have more children for the benefits

    The solution is to strictly time limit benefits & cap housing benefits

  • rate this
    +4

    Comment number 326.

    Its amazing that so many people believe that those on benefits are feckless, work shy, baby producing, council house dwelling criminals. What planet are you from? Stop with the stereotypes. Anyone can be put in a position of losing their job and not being able to support their family. The welfare system is there to help and I can tell you most of those on benefits would prefer not to be.

  • rate this
    +1

    Comment number 325.

    TAX THE RICH! TAX THE RICH!

  • rate this
    -2

    Comment number 324.

    All benefits should be stopped.
    If unemployed people have children, they should be taken into care and perhaps utilized for light labour. Unemployed people should be put into labour camps to provide large businesses and the state with cheap manpower. It is not right that the rich and successful should be penalized when feckless scroungers are laying around idle.

  • rate this
    +28

    Comment number 323.

    "We speak for those who want to work".
    I've been a qualified nurse for 20 years, and I've always worked. That is, until February this year, when I lost my job and haven't been able to find another. I want to work. So, Mr Osborne, if you, and your silver spooned friends could point me in the direction of some gainful employment, I'll take the job!
    And how does more welfare cuts get people a job?

  • rate this
    +14

    Comment number 322.

    This under 25's and housing benefit policy is a car crash waiting to happen, it is unworkable and unfeasible, for a start how will they enforce it? The fact that the housing benefit is so big has a lot to do with the price of private rents, this also affects those who work, might be more feasible to tackle affordable housing!

  • rate this
    +1

    Comment number 321.

    Chuka Umunna needs to take the Labour Party, and I do not even support Labour but the way these Sixth Form thinkers are in coalition and Milliband (The Prof) is I would vote Labour if Umunna takes leadership for Prime Minister.

  • rate this
    -3

    Comment number 320.

    The 50p rate raises little or nothing in terms of revenue but did give Labour's shameless administration the opportunity to plant a political timebomb under the incoming government and kick-off its new-found class-war! Very cynical! The conservatives may represent the interests of a part of the population, but Labour just seems to represent itself in the cynical pursuit of power for power's sake.

  • rate this
    -2

    Comment number 319.

    45.DisgustedTW
    Penalising the rich is wrong. They can invest their cash, create jobs: that is what we need to dig us out of this hole. The welfare bill is out of control. Labour convinced too many people they are entitled to something for nothing. Where did they think the money would come from? Eventually the bill must be paid.

  • rate this
    +38

    Comment number 318.

    So let me get this right.
    If you are unfortunate to be born to poor parents it's your fault.

    If you are a young adult you don't need housing

    If you have 2 kids and are a "striver" it's OK for you to lose £2000 in Child benefit .

    But if you are a millionaire retiree living in Bermuda you need your winter fuel allowance

    If you are just a millionaire CEO you need a £40,000 tax cut!

    Bonkers

  • rate this
    +2

    Comment number 317.

    Tories: Barking mad crypto fascists, laughing all the way to the bank. Osbourne's got no heart it seems & can only smirk with delight as he hits the poorest & most vulnerable.

  • rate this
    -3

    Comment number 316.

    Report from earlier today (sorry don't have link) suggested 53% of the country receive back from the state more than they pay in. I think this must build in education health costs etc, but clearly demonstrates that the status quo isn't sustainable

    I think most people understand and acknowledge that cuts need to be made, just as long as they affect someone else. We are all self centred ultimately

  • rate this
    +6

    Comment number 315.

    @ 288. Aurora

    I don't think its the babies fault! I think part of the problem is that people have children who have no income to support them. And then the state picks up the bill. Its unfair on the rest of us, who work hard pay our taxes and wait until we are fully able to support our children before having them!

  • rate this
    +25

    Comment number 314.

    The saddest thing of all is that Cameron and Osbourne believe this. Making sure that there are tax loopholes for people like them is also a given to them. France has a wealth tax and so does the USA and it includes all assets each person has anywhere in the world. To avoid the tax a US citizen can pay a one-off lump sum and surrender their US citizenship and US passport.

  • rate this
    +8

    Comment number 313.

    '...we would soon find most homes in the country incur a mansion tax...'- Only if most homes in the country is limited exclusively to the homes of Tory MPs. In that case, yes, Mr Osbourne, certainly most homes would be worth more than 2 million pounds. Otherwise, no, who on earth do you think lives in this country of yours? We're not all waiting to inherit our father's title of 'Baronet'.

  • rate this
    +3

    Comment number 312.

    @240 - it was the original muppets figures i was using. he said there was 'only' 5% that could be cut as fraudulent - i was just illustrating how pathetically brain dead he was by making such a statement - going by what he said there would be £11bn of savings so his point (and probably his vote to) is totally invalid

  • rate this
    +10

    Comment number 311.

    This awful excuse for a government is an absolute disgrace. Instead of stopping all benefits to anyone other than the poor & unwaged, they seek again to punish those who struggle most. Clegg has let supporters & the country down & has probably permantently destroyed the party. They should do the decent thing and resign forcing a General Election, before the UK is dragged back into the dark ages.

  • rate this
    -8

    Comment number 310.

    @59.Free Willy

    "As always the rich cause the mess,without sanction,and the poor pay for it."

    I suppose by most people's standards Mr Gordon Brown, Mr Ed Balls and Mr Ed Miliband _are_ rich yes...

 

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