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 749.

    It's hard to choose anymore. Labour MPs send their children to private schools. Well, any MP can afford private education for their children as ALL their bloody bills are paid for by the tax-payer, plus a £66K minimum salary on top, plus fully paid and numerous Parliamentary breaks. Plus, MEP/SNP/MSP/WAM et al are feeding.

    We are fighting each other when we shouldn't, considering the pigs listed

  • rate this

    Comment number 748.

    Believe me this country is hanging by a hair thread from burning cities and mob law, and the tories still want to prod the Angry Mob!!

    Stupid, very Stupid!!"

    Kind of agree there. I think the Gov was extremely lucky we didn't have a long hot summer, and if they aren't praying for rain next summer then they are mad. They certainly pushed me from indifference to anger..

  • rate this

    Comment number 747.

    So many people resentful of the "rich". Generally speaking if you do not give a substancial incentive to people to be entreprenurial, take risks with their security, to put their savings on the line & to work long stressful hours building a business - then they won't or if they do, they will go to another country. Taxing the wealthy too much kills incentive. You end up with fewer jobs & less tax!

  • rate this

    Comment number 746.

    Listen - Whatever is your political persuasion, and however hard you work or however much you scrimp and save for that rainy day, when you get to a certain age, be absolutely certain that one of those "Wealth creators" that we are encouraged to idolise will make you redundant with no mercy. You will NEVER work again. THAT is when you might start to appreciate welfare. This means YOU.

  • rate this

    Comment number 745.

    I'm well educated with lots of work experience, but unfortunately I'm now on benefits because of health problems. I've been to the job centre and agencies and they can find absolutely nothing that I am physcially fit to do. Nevertheless, I fully expect to lose much of what receive and end up struggling in dire poverty. This is becoming an inhumane society and there will be a price to pay for that.

  • rate this

    Comment number 744.

    "the tory ideas are based on two massively incorrect suppositions: 1) people on benefits are lazy 2) jobs are available if you want them" EXACTLY THIS.

  • rate this

    Comment number 743.

    We cannot keep squeezing the poor without the rich taking their share.

    We all receive tax allowances, tax codes etc which we take as a right. These all mean we pay less tax than we might otherwise. What is the difference between that and people claiming benefits they are entitled to?

  • rate this

    Comment number 742.

    I could use the the same expletives as Cole the so called fooballer,but I will not drag myself to that level.The real Tory face is unmaked.Bye bye Gideon and Davyboy!

  • rate this

    Comment number 741.

    @667 CN
    "Why do people want to punish success? I want to be successful but when I do, I'll lose 50% of my reward, which is unfair."

    Good news for you CN - with current tax avoidance / evasion industry you'll have been badly advised if you pay more than 5% tax.

    Tax ALL income, above say £12,000, at a flat rate of x%

    No loopholes, no dodging. Now that's fair........

  • rate this

    Comment number 740.

    Actually to those who say Osborne is not dictating how many children you can have only how many will be supported by the state, you need to think a little deeper.
    In theory it seems a perfectly reasonable policy but what if you are working and want more children above what the state would support?
    When you can lose your job tomorrow people are going to have to make a hard choice - working people.

  • rate this

    Comment number 739.

    With policies like these, legitimate work simply doesn't pay anymore.

  • rate this

    Comment number 738.

    how much would 'our' deficit be if we had not bailed out all the banks etc.
    why arent they paying it back and then some as a goodwill gesture to the population they feed off and that saved them from ruin?
    i bet it would help out.
    oh for a fair society.

  • rate this

    Comment number 737.

    Every civilized society must have a welfare system to support those members of society that need it.Unfortunately there is a growing minority who make living on benefits a lifestyle choice and it seems our politicians have no idea why or how to change this.

    Tories, Lib Dems and Labour are all as bad as each other and are unfit for power by virtue of the fact they are desparate to have it.

  • rate this

    Comment number 736.

    Victorian era here we come again!

  • rate this

    Comment number 735.

    691 You are having a laugh. I work with people who have never had a job. The vast majority of these people have no interest in getting a job. Believe me the one person in a thousand that responds to training and coaching makes my job worthwhile. Burt don't kid yourself the welfare culture is alive,kicking and growing. Well done Osborne for being man enouigh to tackle it.

  • rate this

    Comment number 734.

    It is only in the UK that people seem to think that Rich = bad. Just look at most of your contributors comments.
    You need to get over yourselves. Some of us who do live in very poor countries look to most of you in the UK as being extremely rich but we don't share your envy because of it.

  • rate this

    Comment number 733.

    More than 2 kids - no tax money for those extra kids beyond 2. That is pretty fair. However, how on Earth would you implement it? Are we going to sit there and watch the kids go hungry becasue there isn't enough food to go around? Fine the parents? Even less money to go around. We'd end up supporting the kids anyway. All we could do is say "That was very irresponsible! Naughty you!"

  • rate this

    Comment number 732.

    The 5.2% RPI cost of living rise benefit claimants got meant that someone on JSA received a £3.58p increase in their weekly allowance.
    A pensioner got a £5,20p rise.
    Good to see Gideon's acting to ensure such largesse does not happen again.

  • rate this

    Comment number 731.

    Build barracks style accomadations and limit payments to 1st child. I have 3 so Im doing myself out cash. Point being is I can afford them because I work long hours. All the money saved should be put in a safety net fund for people who loose their job or limbs or get old. Every other scounger should live in the barracks mentioned earlier. Ps im not paying anymore tax as it just gets wasted. FACT

  • rate this

    Comment number 730.

    thats ENGLISH taliban if you please.
    scotland never supported the tories and the last welsh tory was run out of the country last year :-)


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