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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  • Comment number 1369.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    -2

    Comment number 1368.

    What John Osbourne cannot see is that his own belief in high property prices causes private/council rent to follow suit, which means a system of benefits is required to make it work, and then getting a job doesn't pay

  • rate this
    +2

    Comment number 1367.

    Rubbish! Giving up your employment rights for a few shares in a Company that by definition is badly managed if it wants to treat its workers like that. No doubt Share Save schemes will qualify for this appalling idea, thus ruining another employee benefit. I hope they are going to get rid of the 'Investors in People' badge - what a joke! Mr Osborne - please do one!

  • rate this
    -3

    Comment number 1366.

    Give all benefits claimants the equivelent of 40 hours at minimum wage instead of the obscene amounts they get now. Let them live like the majority of people have to!!

  • rate this
    +3

    Comment number 1365.

    £50k in volatile shares for my workers rights? C'mon George, do you think we're stupid?

  • rate this
    +2

    Comment number 1364.

    Labour created the nanny state, an environment where there was no incentive to work. It is recognised that there are people who genuinely need help, however, a large number of people who will not help themselves relying on the state to bail them out. Those who fail to get off benefits, stop to future payments. Salaries frozen, for 2 years, benefits continue to rise, where is the incentive.

  • rate this
    -5

    Comment number 1363.

    #1328: "The reason the 50p tax rate didn't make any money was the rich pushed their tax receipts back a year"

    True for a relatively small number of the "super rich" maybe, but the problem with the 50p tax rate (and its 45p successor) is that it affects far more people than that. Of course, of you think that an annual income of £150K makes someone "rich" you'll disagree.

  • rate this
    +1

    Comment number 1362.

    1342.
    Mr Loser

    Perhaps you had better tell the Chinese they are not following your advice. Stupid left wingers aren't they.

  • rate this
    -7

    Comment number 1361.

    I love the socialists/communists (Labour supporters) on here! It's all me, me, me, me, ..... spend, spend, spend, spend!

    Wonder what they would do if it was their own money ... hold on ... that's right .... tha't why they NEVER have any!

  • rate this
    +3

    Comment number 1360.

    They'll say anything about anything. Like all the big bosses, why do politicians need to care ?

    With big bosses,if you pay them more than £1m/year, they don't have to care about the effects on their companies. It is just an ego-game.

    Politicians can fiddle about spouting and pontificating for a few years and then retire on their gold-plated pensions. Some do even better. Have a look at Blair !

  • rate this
    +2

    Comment number 1359.

    Well what does one say...I'm on benefits, and I'm entitled.. I paid insurance premiums for over 30 years ..then got injured... Now we are all being lumped as scroungers... yet if Osborne or IDS had their property damaged bet they would claim on their insurance. HANDS OFF THE BENEFITS, most of us earned them. Get the corporation tax paid and get 12% NI of the tax avoiders.

  • rate this
    +5

    Comment number 1358.

    When Labour came to power they clearly stated that they would be a friend to the rich, and they were. Under Labour the wealth of the rich increased far above the levels seen under Thatcher and Major, the rate of increase also jumped substantially. What happened to investment, almost all of the jobs created under Labour were in the public sector, while the rich just took their extra cash elsewhere.

  • rate this
    +4

    Comment number 1357.

    Simply doing away with the higher rate tax relief on pension contributions would save £7 billion per year. They don't even have to collect it, just not hand it out. After all where is the justice in higher earners getting double the tax relief on their pension contributions.

    Is it fair that those on average and low incomes are subsidising the pensions of the better off

  • rate this
    +1

    Comment number 1356.

    Oh come on, we're talking about tories here. They'd cut the state to the bone if there was a recession or not. This is so not surprising.

  • rate this
    0

    Comment number 1355.

    dred the money is owed to who ever bought UK bonds.
    they individuals,banks,pension funds, other countries companies any on who want to invest with promised return.

  • rate this
    0

    Comment number 1354.

    All this Country needs is a down tools a complete stop for 1 week or more!
    And if they want it moving again then those that own and run the country should be the first to start it going lets see them work for once in our lifetime.

  • rate this
    +1

    Comment number 1353.

    The problem with the term 'benefits' is encompasses everyone needing assistance many of whom (such as age /disability) will always need help.

    The real issue is those claimants that have made a 'lifestyle' choice not to work or are benefit migrants.

    This is where the savings ought to be concentrated.

  • rate this
    +4

    Comment number 1352.

    This is madness, bashing benefit claimants over and over again, screwing the workers to save money. Yet they waste 40 million on the West Coast Rail debacle, HS2 will be the same and the MOD have lost millions in procurement projects gone wrong. If these fools did their jobs right in the first place we would not be in this mess. Its about time someone formed a new party an honest one.

  • rate this
    0

    Comment number 1351.

    @1222. Colin Smith

    More posts saying just take the money from the "rich" and give to someone else. Unless you earn over ~£30K per year the "rich" are already subsidising you.
    ---
    But they aren't. The cut of the wealth I generate that they take is bigger than what they give back through those 'subsidies'.

    If it were the other way then their wealth wouldn't have skyrocketed in the past 30 years

  • rate this
    +1

    Comment number 1350.

    What I don't like about this article is the lack of analysis. Current spending on benefits = £209,200,000,000.00: total people employed = 26,562,000. The equivalent of the employed paying a £7875.91 share of each of their taxes to pay for social security benefits & tax credits! A crude parallel because obviously the 'top' 50% that pay 90% of all tax & therefore share a greater proportion! Scary!

 

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