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 1409.

    oooh, what's new? hit the poorest to appease the masses, can't this government think of anything else to recover economy...

  • rate this
    +6

    Comment number 1408.

    Isn`t it completely illogical to create mass unemployment through economic policy and then to claim the economy cannot afford unemployment benefits.
    I appreciate George Osborne isn`t best placed to understand economics given that his only qualification to become Chancellor was folding paper towells at a West London Department store for two weeks but really, that part isn`t rocket science is it.

  • rate this
    +5

    Comment number 1407.

    @1363. Tanglewood
    Of course, of you think that an annual income of £150K makes someone "rich" you'll disagree.
    ---
    quite clearly does, yeah. Me and my partner earn just under half that between us, and I see ourselves as pretty well-off - we aren't lacking anything in life. On 150k you should be able to have a ball.

  • rate this
    -2

    Comment number 1406.

    A step in the right direction. Current entitlement culture makes me sick. I work full time, earning £800pm net, I cannot afford to move out parents home (25), I cannot currently afford to have kids. Unemployed for 6 months but lived off savings rather than claim. Morally repugnant I pay taxes towards 17 year old £1000pm HB, so they can get "independence" after a "fallout" with their mum!.

  • rate this
    +5

    Comment number 1405.

    The Nasty Party are back.

  • rate this
    +4

    Comment number 1404.

    George Osborne is clearly an expert in tax avoidance, as he saved £55,000 in capital gains tax by flipping his second home in 2009. Do you really think that he would pursue his cronies to recover taxes which have been similarly avoided? It's much easier to bear down on people without wealth or power. Also, it's clear the Tories are desperate to lose the next election as it's easier in opposition.

  • rate this
    0

    Comment number 1403.

    Mr O, you work for ohn Lewis or just plagerising the idea!!!!

  • rate this
    +3

    Comment number 1402.

    Give up your workers rights for a handful of shares and then management can do what they like and if you dont like it its down the road for you and youve given up your rights,and as for those scroungers on benefits,they will be cut, the next move is the introduction of enterprise factories for the unemployed,in other words the workhouse.Those with money not included.

  • rate this
    +3

    Comment number 1401.

    I thought this Government was there to reduce the deficit?! Not shed people's rights and help to the needy! They could make so many efficiencies for example, make prisons a PRISON! Basic food, confined cells, no TVs, no luxuries etc! They might think again with crime! Tax dodgers should pay the tax AND then get fined! Banks should pay more and lend more and FINED more if done wrong! Shocking!

  • rate this
    +3

    Comment number 1400.

    The only part of this I would support is making those who want big families fund them. Otherwise it's just typical nasty party kicking of disabled people and those in areas where there haven't been jobs since Thatcher. Eventually they'll abolish employment rights for us all and we'll still be too sucked into X-Factor and Biggest Loser to protest like the Greeks. When is enough enough?

  • rate this
    +9

    Comment number 1399.

    The Conservative Party really is the nasty party, what is it that makes them so obsessed with money and care so little for people. Very few people admit to being Conservatives, you can see why!

  • rate this
    +3

    Comment number 1398.

    The problem is that the tory party is tarring every non right wing zealot with the 'they are all workshy scroungers who are thick and can't look after themselves'. Problem is that people fall for this hype. Give people some credit for having common sense and decent values. The days of spending what we haven't got are long gone, but don't dump on those in need now. Create growth!

  • rate this
    +4

    Comment number 1397.

    If there were jobs for all in the economy, the benefits bill would be less. Mr Tory Boy, wouldn't it be a good idea to start investing for growth in the economy - so that more people are paying tax into the system? - oh no I forgot it's better to cut peoples' jobs so that they have to claim benefit!

  • rate this
    -1

    Comment number 1396.

    Re #45. DisgustedTW:

    Surely "criminal" tax avoidance would be tax evasion? If you listened to Osborne's speech clamping down on tax loopholes is exactly how he proposes to get the rich to pay what is right. No BBC headline for that though. And it is this government that has been taking such action, while nothing was done during 13 years of labour. You and 130+ others are so blinkered.

  • rate this
    0

    Comment number 1395.

    Surely the right direction to lower income tax rates in exchange for reducing benefit payments. This will save admin costs and increases the work incentive

    Similarly means testing for universal benefits should only be brought in if the savings outweigh the additional admin costs. Also need to take account that (poor) pensioners may miss out by not correctly applying for cold weather payments etc.

  • rate this
    +1

    Comment number 1394.

    Why are we giving billions abroad ( and about to raise it even higher) even though certain countries ( India) have told Cameron and co. they don't want or need our money ? Is it because our poor , receiving charity at the food banks , don't matter to the Tories , because they are all Plebs for the tories anyway?

  • rate this
    +1

    Comment number 1393.

    @1361emikey.
    So if you vote for Labour you don't have any money eh? Sorry to disavow you of your delusion but my Bank manger is more than pleased with my custom. I suppose by extension your theory is that anyone with money voted for the Nasty Party

  • rate this
    -2

    Comment number 1392.

    Of course most of the cuts the tories have implemented on this country have not come into force yet,when they do there will be the biggest recession in history, but while we are waiting lets make the rich richer and the poor poorer can u not get the rich boys out GO & DC have not got a clue about the economy

  • rate this
    +1

    Comment number 1391.

    I guess with half a million seriously mentally ill being found fit for work we'll have a interesting situation soon? It'll save the money one way but in another may cost even more dear as many will be on the streets and destitute unable to follow the rules given by the benefits system?

  • rate this
    0

    Comment number 1390.

    I love the video of GO: read the pedestal he's standing on, it says "Britain can deliver". Considering that the gov is not delivering at all, I find this very funny in a sad kind of way...

 

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