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
    +4

    Comment number 529.

    459. Modicum
    As a bleeding heart liberal I’ll ask the question again, where is the government’s plan to create full time, properly paid jobs that produce something we can sell. It’s easy, more people earning a living wage, means a lower benefits bill, let’s remember that benefits are not just paid to those out of work but to a huge number of people who work hard but are poorly paid.

  • rate this
    +2

    Comment number 528.

    Re : 459. Modicum

    Realistically they aren't going to stimulate the economy by cutting benefits. It isn't even going to save money. stopping housing benefits for under 25's is unworkable and will cost the tax payer more in the long run. They can't even enforce it . what if the parents say no? To get more people of benefits we need more jobs and right now this isn't happening!

  • rate this
    -5

    Comment number 527.

    @461. shan735

    If I was only a 20 year old adult...and I decided to have a child with my girlfriend...and I wasn't financially stable etc

    You would all have to pay to help me rear my child...that I couldn't afford.

    Is that fair?
    ---
    I think it is. You do the work in bringing up a future citizen. I pay you for that work. Time we started treating bringing children up as a job.

  • rate this
    +4

    Comment number 526.

    @ 506 - stop shouting.

    Also, are your rants based on facts, or just something you read in the Current Bun ?

  • rate this
    -2

    Comment number 525.

    @458 - bilko
    Do you even understand what you are talking about? A small limited company still pays 20% Corporation tax (minus certain limited expenses). I know as I run one. Then as a director, I pay personal tax as well, so I am taxed twice on my sales.

  • rate this
    -3

    Comment number 524.

    I don't get the sheer size of the figures here. We have about 2.5 million unemployed, each getting about £71/week, so 71 times 2.5 million=1.7 billion. So if they entirely cut their benefit it would save that much! If you took a more realistic £10 from each really low incomed recipient it would only be £25m, which is enormously short of 10 billion, so where exactly is all this moneybeing spent?

  • rate this
    0

    Comment number 523.

    I can't believe how egotistical this guy is. He stopped after every sentence, seeking appluase and like seals, the audience gave it. I nearly threw up when he pretended he cared about the low paid, because if he did the first thing he'd do is making working worthwhile and fiscally rewarding by increasing the min wage and clamping down on tax avoidance, but both those things hurt Tory voters!

  • rate this
    -3

    Comment number 522.

    475. Ex Tory Voter

    Goon, walk down any estate, they all have a sky dish, its a luxury. Not for people on benefits. Food, Fuel, Clothing are what benefits are for. If you can afford Sky and a Mobile phone why do you need benefits? You have a rose tinted view of the world! I'm afraid people in this country are bleeding it dry. I have never needed benefits. I work and do what i can afford.

  • rate this
    +1

    Comment number 521.

    No mansion tax but cutting more benefits...

    Limiting the number of children in a family that should be supported on benefits might sound a good idea but sadly it would not be the fault of the additional children who have been penalised into poverty.

    There have to be better solutions than both of these.

  • rate this
    +1

    Comment number 520.

    How on earth can you justify giving the Rich universal benefits while cutting yet again on the poorest.

    Are we a nation with any morals or civilized decency any more?

    If those who have, love America and what it does why dont they just move there and let Britain return to fairness, decency and compassion.

    The soul of the nation is rotting under this model of capitalism.

  • rate this
    +5

    Comment number 519.

    This shows just how out of touch Osborne and the rest of the Conservatives are if they think 'most homes in the country would incur the mansion tax', as stated in the article. Maybe they all have £2m getaways in the country or central London but if they got down off their high horses they'd see that the majority of the people in the UK could only dream about having that kind of money!

  • rate this
    +2

    Comment number 518.

    Its all well and good for you to say that people are living off the dole and you are sick of paying for them, but its not that simple. For capitalism to work, unemployment is needed. If there is full unemployment there is no competition. So we need unemployment. Also WHAT WOULD YOU DO with the people on benefits? Make them work? what if they won't? Imprison them (costs more) or what?

  • rate this
    +8

    Comment number 517.

    So the poor are to blame for the current deficit? – I’d have far more sympathy if the government pursued unpaid taxes from the likes of Vodafone and Boots with equal relish.

  • rate this
    +2

    Comment number 516.

    Only 47% of uk adults are net contributors of tax thanks to Brown. This is not sustainable and those who think it is are financial alchemists
    Gov has no choice but to tackle it

  • rate this
    +8

    Comment number 515.

    The issue is of government making, and I mean the current administration. Due to the cuts they have made many hard working people have now been made unemployed pushing up the benefits bill. So instead of people in work paying taxes now the government have now been forced to pay out.
    It is a fine line and I think the cuts are going too far and will halt any chance of growth in the economy!

  • rate this
    +3

    Comment number 514.

    I agree with benefit cuts but also cut the overseas aid and close all the loopholes the rich use to fiddle their tax's also freeze MP's salaries and expenses then I might believe DC that we are all in it together. The trouble is that DC is a mark 2 Blair all talk and no action, when are we going to get a Prime Minister for all the people in the UK.

  • rate this
    +8

    Comment number 513.

    How about making the banks, people and financial institutions that got us into this mess pay for it!?? What's that Gideon?? They're all pals chums of yours and yourself and "call me Dave" are meeting them at the club for jiggers and tiggers later did you say? Ah... I see... I suppose the plebs will have to pay for it then.... Tally ho old boy...

  • rate this
    +2

    Comment number 512.

    453.parrranger
    4 Minutes ago
    Go back before Blair an Co...M Tatcher introduced liberal banking and cut NHS Education only for us to pay double to get some kind of system going again.
    Who needs children everyone stop having them! then we can go down the road of oblivion economics only works with a population that creats wealth not the rich.

  • rate this
    +7

    Comment number 511.

    The sick, the poor, the unemployed; the disadvantaged and the vulnerable are the natural prey of the Tory elite.

    Perhaps Gideon and his fellow tax- avoiding fox-hunters could hunt them instead and help reduce the welfare bill

  • rate this
    +11

    Comment number 510.

    Scary how Osborne&the rest of the Tories still manage to convince some that economic woes are due to benefits&workers rights. Strangely enough some other European countries have higher taxes,stricter employment rights yet their economy is growing&people actually care about each other. But that's obviously not the kind of society the Tories want...

 

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