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 569.

    A message to David Cameron and George Osbourne - If you a so certain of the wealthy paying their fair share income tax then why will you not publicly list everyone that is using a tax avoiding scheme?

    You picked on Jimmy Carr but have not mentioned all others, particularly those that pay into the Tory Party coffers. WHY???

  • rate this

    Comment number 568.

    The answer is remarkable quick and simple. Have a single flat rate per adult benefit at a fixed level (no exceptions, no extras, no nothing). Pay that to ALL legally resident adults in the UK. Scrap ALL the rest. Then you can get rid of hundreds of thousands of paper shufflers in the DSS and the tax office (you can do away with tax allowances and go flat rate tax). It is all so simple.

  • rate this

    Comment number 567.

    Bit ironic the conference of fatcat millionaire tax avoiders telling the poor to work harder...........

  • rate this

    Comment number 566.

    Genuine doubt. If there are no jobs available what are these bunch of illegal immigrants who cannot claim benefits doing in this country?Oh, yes they do the jobs the people on British jobless pool don't want to do. If they can survive without any handouts from government, anyone can survive.

  • rate this

    Comment number 565.

    >53 Minutes ago

    >George, you sound simply Victorian. Have you heard of social >mobility? Would you redistribute at all?

    Socialist intellectuals destroyed social mobility when they abolished the grammar schools. They of course could afford to give their children an advantage by sending them to private schools.

  • rate this

    Comment number 564.

    The real reason behind the shares idea is to benefit the wealthy. Low paid workers would receive a very small amount in shares but the high paid would get a huge amount. Then there are all the tricks the rich can get up to such as receiving shares for giving up fictitious perks as a way of increasing pay or instead of salary to give tax-free earnings.
    Osborne knows this. It is for his chums.

  • rate this

    Comment number 563.

    Why not just create industry?

  • rate this

    Comment number 562.

    The markets should have at least got a student loan and then there would be no black hole.

  • rate this

    Comment number 561.

    Benefits should be a safety net not a lifestyle choice

    Benefits should be strictly time limit benefits to 1 year then taper off.

    Housing benefit should be capped and time limited.

    Child related benefits should be restricted to 2 or 3 children maximum

    Incapacity should be based up real physical disability, not too drunk or stressed to work

  • rate this

    Comment number 560.

    Having been working in a supermarket in recent recession years, I suddenly understand how those big bosses got rich. We work hard; they gave us compliments by words. They don't offer workers any money or promotions, but rewards managers for manipulations others to work hard. Poor people will always be poor, because of their inheritance worker status.

  • rate this

    Comment number 559.

    Ooh, not a vow! How forceful these politicians are when it comes to ruining the lives of others. Let us not forget, that we still have not resolved, to taxpayer's satisfaction, the matter of ongoing politicians and senior civil servants' expenses claims. They can still claim just about everything. What annoys me more, however, is the reluctance of the British People to defend the weak.

  • rate this

    Comment number 558.

    So some people don't mind cuts in benefits. That simple statement will be taken by this Government as a sign of victory. I have worked since I was 15 I am now 59 In that time I was out of work 4 weeks. I do not favour cutting money as proposed by this administration it leads to an unfair system of penalising people who need help. THEY ARE NOT ALL SCROUNGERS as this Government say.

  • rate this

    Comment number 557.

    Don't bash the rich too hard - they're the ones paying for those on benefits. The top 1% of earners already pay 29% of all income tax. The Government knows that if it increases the top tax too much, then these top earners eventually leave the country, which results in less tax income. Also top entrepreneurs are needed to create jobs for the rest of us and they won't if you drive them away.

  • rate this

    Comment number 556.

    @ 525 Yeah but if you don't take a salary but take dividends out of the firm you pay 20% rather than the 40+% salaried folk will pay over £43K.
    Not saying that's necessarily wrong but it's an example where there are mechanisms in place for the well off to avoid paying the standard tax rates.

  • rate this

    Comment number 555.

    Charity begins at home. Why cut benefits? Stop giving money to other countries, stop immigration and stop spending on the forces. What have we to defend only huge debt and millions of unemployed. Idiots.

  • rate this

    Comment number 554.

    So, as a working parent of four children (husband works too) can I get a discount on how much I pay in, if /when I need to claim all my children aren't going to be taken into consideration? The point of the welfare state is that its there when you need it. Stop assuming this will only effect the 'workshy' will effect everyone who needs to claim whenever. I cant hand back a child if i lose job

  • rate this

    Comment number 553.

    Maggie used the welfare state to sell off the UK's assest's by transfering those workers into a life of dependence on the state and dismantling their industries.
    You can only use that trick once Gideon my boy, what you now seek to achieve is moving the same said people into the abyss as there are no jobs of worth and industries to make good your claims..

  • rate this

    Comment number 552.

    Can we all remember that whilst feckless parents shoudl not have children that they cant afford the simple fact is that they do and also some parents have them whilst they can afford them and then get made redundant. Have we turned into such a nation of child haters that we are prepared to see children starve? Is it better to take food out of a childs mouth than ask they rich to pay their share?

  • rate this

    Comment number 551.

    this is classic tory. in one sentence openly protect your rich chums from paying any more tax on their mansions while in the next sentence screw over the less well off who simply want to live in a house in the first place.

  • rate this

    Comment number 550.

    So Mr Osbourne,expects us to give up our hard fought and won working rights,for something,that quite frankly is not worth the paper it is written on.As Eric Morcambe said,"This boys a fool".


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