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 409.

    Why are they still here? Surely, there must be a way to get the worst government this country has ever had out of office? We have a government we did not vote for, implementing polices which are damaging the country, possibly for many generations. There must be some way that we can legally stop them.

  • rate this

    Comment number 408.

    Child allowance should be scrapped. Full stop. If you want to bring up a child (a luxury, not a right) then you should make sure you are in a financial position to do so.

  • rate this

    Comment number 407.

    The difference between raising tax and cutting benefits is that taxpayers create wealth whereas benefit recipients are a drain on resources. Everyone should pay a fair share of tax, but it must not become a penalty for success or thrift. Benefits are a necessary safety net but not an alternative career option. We should cease paying child benefit after the third child. Procreation is optional.

  • rate this

    Comment number 406.

    Please Mr Cameron & Mr Osborne, in your next Party Political Broadcast, could you please announce to children, there is no such thing as Father Christmas.
    It will stop me worrying about approaching December as I do not know where I am to find the money from and will stop me and many others from being tempted by these high street lending shops who charge atrocious percentage interest rates.

  • rate this

    Comment number 405.

    "we will finish the job we have started."

    "healing is taking longer than we hoped, because the damage was greater than we feared".

    All this rhetoric just to hit us with the same old Tory policies. Sounds like excuses and buck passing to me.

    There attitude and opinions towards the plebs hasn't changed for decades.

  • rate this

    Comment number 404.

    The Tories used to have a reputation as Heartless ***stards but economically competent Heartless ***stards.

    The Tories’ big problem these days is that many see them as incompetent ***stards : not just heartless, but hopeless.

    If this lot get re-elected I will eat my own weight in manifestos

  • Comment number 403.

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

  • rate this

    Comment number 402.

    Re :356. Les Baxby

    Because vouchers wouldn't do anything. People who are determined not to get a job would just sell their vouchers and use the cash to buy the fags and booze anyway!

  • rate this

    Comment number 401.

    Is this the big idea?
    He has already cut housing benefit from April !£ by limiting housing benefit to a single room in a shared house from age 25 - age 35 and reducing the rent allowed from the 50th to the 35th centile of rents.
    Well he has to get the reduced tax revenues due to low employment and the cut in the 45% rate from somewhere.
    Don't be poor, unemployed, old or sick under this shower.

  • Comment number 400.

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

  • rate this

    Comment number 399.

    @390, Trevor, its a shame that ALL parties cant work together like they did during the WWII with no party politcal points being scored, and putting the country first.

  • rate this

    Comment number 398.

    Single man decent job moans about people 'living' on Benefits then loses his job. He then get benefit and says i don't know how i'm going to survive on this amount. Benefits aren't fit to be 'lived on' and this winter isn't going to be good for a lot of people who have lost their jobs.

  • rate this

    Comment number 397.

    Housing benefits should all be replaced by low-interest mortgage loans. The ownership of properties is the drive for people to work hard.

  • rate this

    Comment number 396.

    8) Suspend EU membeship"

    What would our exporters do if they were not able to ship the 50% of our exports that go to the EU? Do you think they might move their plants to eastern Europe?

  • rate this

    Comment number 395.

    Doubt very much if the Chancellor can deliver on the 'reduction in welfare' plans before the next election. Two main reason for this, namely,
    a. closeness of the next election ..majority of those elected will be more interested in perserving their protected lifestyles, the minority members of the Coalition will be active in flexing their muscles further in their efforts to appear

  • rate this

    Comment number 394.

    I think this is a step in the right direction, too many people see benefits as a way of life rather than the safety net it was designed to be. Sure you will always get some people abusing the system, but it has risen to epidemic levels. I dont think they should be given money, just food stamps and if you have been on the dole for more than 6months then community service should be mandatory.

  • rate this

    Comment number 393.

    319. DennisTheMenace
    Wake up, giving more and more to the wealthiest in the vain hope that they would invest it in the rest of us has been the plan of all the governments of the UK since 1979, Tory and Labour, it hasn’t worked. It has however, created a vast underclass of unemployed, middle incomes have stagnated and the rich have either horded that wealth or invested it where labour is cheap.

  • rate this

    Comment number 392.

    Lets cut benefits again........Ok but if you're going to do that, then create jobs for the unemployed or does that sound too radical !. The tories wouldn't have anyone to kick....

  • rate this

    Comment number 391.

    There should be a new law introduced called perverting the course of politics and lying to the Electorate also laws against Tax avoiders holding public office how can people who actively avoid tax for their own gains be allowed to dictate how taxes are used or collected this is a perversion of our democracy by corrupted individuals too wealthy to understand their own sickness

  • rate this

    Comment number 390.

    377.Rebecca Riot
    I agree with your prediction. However one thinks the country got into the mess it is, whoever gets elcted to fix it will have to make so many hard choices they will become unelectable at next election. So i think labour will get in next then after that conservatives will be back. Good chance on both that they will need a coalition with someone


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