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
    +6

    Comment number 589.

    Billions of pounds in contracts being awarded to ATOS and other companies to hound disabled off benefits.
    Questioned has to be asked - who in government has financial interests in these companies?

  • rate this
    +4

    Comment number 588.

    Subsidising the birthrate is daft. We have a rapidly expanding population so why do it? Such is the legacy of Blair and Brown. Next year we have half of Bulgaria and Romania arriving for jobs and benefits and even if there was 100% of the population against this madness, we as a country could do absolutely nothing not stop it. Such is the legacy of Blair and Brown.

  • rate this
    +7

    Comment number 587.

    I heard him say they were recovering money from tax evasion.This ruthless programme has been so low key I doubt anyone has noticed and the evaders have certainly not been shamed. He then claimed that we were better educated than ever before saying that Gove was doing the right thing and investing in the education of the children by changing the system yet again-The phonic method is NOT successful.

  • rate this
    +4

    Comment number 586.

    £10 from each of 25m unemployed would be 25m, so I'm still trying to work out where he gets his figures from? We have 2.5 million unemployed, if you took about £10 from every one of those people (which would cause serious problems!) you would still only have SAVED £25 million. So where is Osborne finding £10 billion from? The figures don't make sense!

  • rate this
    +3

    Comment number 585.

    It will be interesting to learn whether Osborne will oblige an employer to disclose standard due diligence information, give actionable warranties and make binding undertakings about future management at the request of each new "investor" as they come on board. A "HIP" for every employer, just like when buying a house? Or is this a no questions asked scheme, even when exchanging valuable rights?

  • rate this
    +3

    Comment number 584.

    @556 Bungee Bill. To take dividends out of a company you have to be a shareholder and to be a shareholder you need to have made an investment. If you cant get a return on your investment, why would anyone invest??

  • rate this
    -2

    Comment number 583.

    Too little too late, drastic action is needed to redress Labour's benefit culture..

  • rate this
    +2

    Comment number 582.

    The government is determined to cut a further £10bn from the benefits budget!!
    rather than that lets cut the defence budget!!
    *we dont need nukes, we all die if there was a need for them!!
    *we dont need an army in Afganistan
    there we go I just saved alot more than £10 Billion a year, alot less people are not struggling.
    EASY!!

  • rate this
    0

    Comment number 581.

    There is no question that a proportion of those on Benefits take the Mickey. One of the tricks is to have kids to generate more in benefits so he is right.
    However the rich tax avoiders/evaders need to be brought into line as well.
    Middle classes are fed up paying full tax and taking tax rises on the chin.

  • rate this
    +4

    Comment number 580.

    The Economics of the £10bn cuts. Yes we have a huge deficit which needs to be paid for. The money to pay for it can come from cuts but the best way to cut down a deficit is to pursue economic growth policies alongside cuts.Cuts mean more people out of work, out of work means less money to spend in the economy,less money coming from income tax further depressing the economy & worsening the deficit

  • rate this
    +4

    Comment number 579.

    These ecconomic policies which have been announced since they came in to power are bog standard Tory policies, not ones in answer to the ecconomic problems and would be carried out even if we were in a boom if they were in power and that is the problem...........There is no answer to the ecconomic mess we are in from the Tories!

  • rate this
    +3

    Comment number 578.

    Just get this coalition out! It is just as simple as that...so out of touch they might as well be in a different universe....

    Scared for my children I really am...

  • rate this
    +3

    Comment number 577.

    557.C_D_N
    From reading the forum, most people are not asking for an increase in the high tax rate, only that the rich who are using the loopholes to avoid paying tax pay the current rate.
    That 29% you quote does not include them.

  • rate this
    +1

    Comment number 576.

    Great to see so many comments "I agree with Gideon..." Nice to see the Tory brain washing machine is already in full flow - wait 'til the Daily Fail and Torygraph get their teeth into it! Just what the Tories love doing - create another division in Society: mock the Welfare dependents, while they order another chillaxing Red - the Crimson Tide is coming!

  • rate this
    +10

    Comment number 575.

    What they (Cameron and Osborne) need to remember is they we're not and never have been voted into power and as such don't hold popular mandate. They have merely assumed the mantel of power.
    What has history and James Bond ever taught us about people who assume power?..., Et tu, Brute!

  • rate this
    +1

    Comment number 574.

    524.thelostdot
    Just now
    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.
    ======
    Add Rent being paid, Council Tax paid, etc...

  • rate this
    +7

    Comment number 573.

    'Damage worse than we feared'? You mean the Coalition didn't know the damage that their buddies in the banking sector had done? That just about sums up the incompetence - although we've had plenty of evidence of this government's inadequacies - they've caused a shambles in everything they've touched. And they continue to hurt the vulnerable while protecting their chums. Go now!!

  • rate this
    +5

    Comment number 572.

    Typical Tory idology hit the poor, stroke the rich, how much would be saved by ridding this country of the illigals!! but then again we wont have a police force soon so thats out!

  • rate this
    +7

    Comment number 571.

    @522
    Interesting points. You are a private investigator of course. its obvious. Satellite dishes in a housing estate? how could you possibly know these people are unemployed? how could you possibly know they lost their job after they had subscription? mobile phones are an essential job searching tool these days like an axe for the caveman. You are referring to a government fed fallacy.

  • rate this
    +15

    Comment number 570.

    "522.Chris

    475. Ex Tory Voter

    Goon, walk down any estate, they all have a sky dish, its a luxury. Not for people on benefits"

    I lived on a sink estate, you clearly have not. Most of those dishes are not in use - they get the free installation and then get cut off when they don't pay the bill. The working ones, mostly, belong to working people (they are allowed live on estates too you know).

 

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