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 429.

    It is about time they put a cap on the loans that people keep taking out to keep appearences with the neighbours and not be like them benefit dossers who manage on £70 a week, within thier means.

  • rate this

    Comment number 428.

    The Royals, while an expense, is only a drop in the ocean compared to the £100billion welfare bill. They are also ambassadors and bring in trade and tourism unlike the career benefits scroungers who do nothing and are a drain on resources. I want my tax to be used as a safety net but the proposals here seem to be focused on reducing payments to the 'do nothings' which I'm all for

  • rate this

    Comment number 427.

    You all seem to be missing the point. It's not really whether people deserve to be on benefits or not, or if they are abusing the system. If cuts needs to be made, is this the way for cuts to be made? Why is a mansion tax of 1% on properties over £2 million so unreasonable?

  • rate this

    Comment number 426.

    If George Osbourne limits the number of children per household who will be supported on benefits, and cuts housing benefits to under-25s, he will get my vote, regardless of whatever else he does. These measures MUST be permanent, to be clear that having children is a lifelong responsibility and financial responsibility is integral to this. Stop the benefits culture, support workers!

  • rate this

    Comment number 425.

    I wish they'd quit dithering and cut harder (public sector). Now is not the time for populist politics.

  • rate this

    Comment number 424.

    Another way to hit the lower classes, try to stop them having less kids. More social engineering from the Tories!

  • rate this

    Comment number 423.

    Bring all our troops home from illegal foreign wars.
    Stop NHS tourism.
    Round up all illegal immigrants and send them home immediately.
    Get out of the EU.
    Stop paying obscene amounts of money to "royalty" and all their hangers on.
    Penalise the hedge fund bankers who caused the problem in the first place.

    Job Done!

  • rate this

    Comment number 422.

    The plans will create even more social misery thus a rise in crime. It will not be possible for parents to support under 25 year olds when they have to return home. The Thatcher years are with us yet again very sad indeed no mention of the Eastern European children receiving child benefit without a need to live in the UK.

  • rate this

    Comment number 421.

    Look, this man's family made their fortune by helping the wealthy move their money offshore to avoid paying tax. Yet he preaches from his gilded pulpit about how the country is being sucked dry by people abusing the benefits system.

    What's the difference between someone claiming £20k in benefits and someone avoiding £20k in tax?

    The benefit claimant doesn't vote tory - that's the difference.

  • rate this

    Comment number 420.

    I'm of the opinion that welfare incentives to have many children ... and uncontrolled immigration .... were all part of grand plan to try and address the upcoming ageing demographic problem.

    The establishment wont admit to it, but the stupidity of both policies can have no other reason.

  • rate this

    Comment number 419.

    Taxing the rich is shortsighted. If the rich pay more in tax they have less to spend and everyone loses.

    The trouble is, that the rich do not spend their money but tuck it away in tax havens to earn yet more money. It is the middle and lower classes that spend whatever money they have with the poorest spending the largest proportion of their income on necessities.

  • rate this

    Comment number 418.

    I don't know anyone, well off or not, who thinks that universal benefits such as the winter fuel allowance, free television licences and bus passes, are justified for those on incomes more than the national average (c.25k). There must be a way of ensuring that money goes only to those that really need it (like the sick, disabled, and less well off) rather than everyone, regardless of income.

  • rate this

    Comment number 417.

    I'm fed up of hearing about 'poor families'. I work full-time for an average income.

    I cannot afford a family, because I'm taxed to the point where I can just about afford to live. Why should I support other people who had children without any thought to the cost? If I wasn't shelling out so much of my earned money to support them, I might be able to afford a child of my own!

  • rate this

    Comment number 416.

    ONS reported last year that the average birthrate from mothers born in the UK was slightly less than 2.

    Sales of houses worth >2m up 78% in last 12 months


    Think again Mr Osborne!

  • rate this

    Comment number 415.

    33 Minutes ago
    I have 5 children myself with my husband who woks 6 days a week to support my family on a low wage so we do claim working tax and child tax credit. How about making easier for people to get better jobs by subsidising fees to higher education.
    How about less children

  • rate this

    Comment number 414.

    Tax breaks for the Rich because they create jobs and wealth for themselves
    In return you work for the lowest of wage frightened to loose your job if you ask "for more please" or complain if your not treated humanly or bad working conditions you are easily sacked go on benefits then loose your house because you don't receive enough to live then every one is in poverty.
    Makes sense from Osborne lol

  • rate this

    Comment number 413.

    At the extreme end of this argument and we make the care of children to costly with benefit cuts what are we proposing to do with the kids, let them starve, deport them, or take them into care and pay for them through the system as we do now ?
    Certainly having children should not be seen as career but his mad slashing of benefits needs to be toned down or thought through.

  • rate this

    Comment number 412.

    ref 395. Final Sentence incomplete due to house rules and/or moderation not allowing words like strong, credible etc

  • rate this

    Comment number 411.

    Surely it is about time the government moves on from cuts. Cuts without a valid growth strategy means more unemployed that have to be paid for increasing the benefits bill. If we said those unemployed are effectively government employees and the government did something useful and entrepreneur like as Alan Sugar, Richard Branson would with this resource the country would be rolling in it

  • rate this

    Comment number 410.

    Another dodgy promise from a dodgy, discredited government looking after their dodgy, discredited, greedy friends, So no big surprise.


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