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 1429.

    Maybe if we stopped police officers retiring on 2/3 finally salary pensions before they are even 50 this might save a few bob. Ditto some of the other offensively generous public sector pensions which should be capped so as to deal with those screwing the taxpayer but not hurt those in the public sector who have received more modest salaries and therefore more modest pensions

  • rate this

    Comment number 1428.

    1364. Fed Up
    However old are you, the nanny state began long before New Labour, 3 million unemployed in the 80s never really went back to proper liveable employment; the Tories spent years massaging the figures, pushing people into disability benefits, dodgy training schemes, etc. The failure of Labour is that they did nothing about it, too busy following failed Tory dogma

  • rate this

    Comment number 1427.

    Now we have circa 53% taking out more from the State in benefits than the taxes being paid. This is unsustainable and has to be cut back.

    The reason there are so few jobs to get benefit claiments off benefits and into work, is because Eastern Europeans are taking these jobs for wages our benefit claiments won't even get out of bed for.

    Cut benefits so they have to.

  • rate this

    Comment number 1426.

    @1379.Ex Tory Voter

    "Someone earning in one year what it will take most to earn in 13 years makes them rich by anyone's standards (except those on £150k, who have no idea how fortunate they are)."

    The national average wage is around £30,000 P/A, so it would take an average worker 5 years to earn £150,000 not 13. That also does not take into account the 50% tax you would pay on the £150k p/a.

  • rate this

    Comment number 1425.

    Stand back! Stand back! Nick Clegg is coming and he ain't too happy!

    What was that Nick? Oh, you'd like two sppons of sugar. OK.

  • rate this

    Comment number 1424.

    Same old Tory,all talk and Daily Mail souhdbites.

  • rate this

    Comment number 1423.

    My parents' generation saved up to get married and stand on their own two feet.Then they saved some more if they wanted to have children. This is great news.I am sick of subsidising chavs and their brats.

  • rate this

    Comment number 1422.

    Conservatives STILL dont get it.

    No one sensible is saying the well to do should pay more in tax from thier earned income. It would be unfair and imoral.

    All we want is an end to tax evaision and a reasonable contributory amount from the tax that we really ARE all in it together.
    That way we are fair and moral.

    Because under tory ideology we most certainly are NOT.

  • rate this

    Comment number 1421.

    Osbourne would not feel the need to attack the poorest if any spare cash had been spent on projects that automatically increase employment. eg building projects, the sort he cancelled after the election. Such activities feed through to the rest of the economy thus increasing government revenue. Instead government borrowing is increasing.

    What an uncaring, dogmatically right-wing dullard he is.

  • rate this

    Comment number 1420.

    Osbourne said the budget could not be balanced "on the wallets of the rich". Why not? The deficit way created on the back of their wallets. There must be a lot of people sitting there thinking "How is this allowed to happen?" and "Why hasn`t the country taken to the streets in protest?" The fact is once the deficit has been paid the country will be destitute and eating from food banks.

  • rate this

    Comment number 1419.

    1369 Exactly.

    When pay/wealth differentials get large enough in society, the revolution starts.

    We've been lucky in the past as some governments have actually done something to resolve the problem. Revolutions have been relatively mild.

    But it's getting to the stage where so little positive is actually being done (all parties just waste our money to get votes) that revolution seems inevitable.

  • rate this

    Comment number 1418.

    Why should anyone be able to call me a "bum" or a "parasite", while I am trying my best to get a job? My income is already ridiculously small as it is. If housing benefit is cut completely for under 25's; I will be homeless. Cheers David. And a big thanks to all you self righteous, heartless people who support hurting the poor to help the wealthy.

  • rate this

    Comment number 1417.

    Eggs all in one basket.
    the company you work for goes down the pan, you lose your job and all the money you have got invested in the shares. Another U- turn in the offing.

  • rate this

    Comment number 1416.

    Re 1396.PhilKs
    “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.”

    At least we are not as gullible as you, never trust a Tory

  • rate this

    Comment number 1415.

    Is this speech intentionally inciting hatred or is he really so stupid as to further destabalise the economic system that makes him think he's so superior to the ordinary working human?

    "Just as we should never balance the budget on the backs of the poor..." No George, you're not balancing it there, you're just throwing it on their backs willy nilly.

  • rate this

    Comment number 1414.

    Osborne bleets on if we tax the rich they will leave. Good, then talent can take over..............

  • rate this

    Comment number 1413.

    @1364.Fed Up
    Labour created the nanny state, an environment where there was no incentive to work

    total expenditure on welfare was 11.6 per cent of GDP in 1996/97; under Labour it averaged 10.7 per cent up to the crash.
    it increased after that as it always does in recession & even more so when austerity is imposed due to automatic stabilisers ( increase in low or no income casuing more to qualify)

  • rate this

    Comment number 1412.

    I have worked since 13, am 50 next month, I would love to work but I am a full time carer and I mean full time - err average is over 100 hrs a week+ care to a severely disabled child. I am not rich and my son needs are more than the typical child.
    limiting support for children will increase child poverty breaking the united nations agreement; a lot on benfits couldnt wouldnt stop having children

  • rate this

    Comment number 1411.

    Does anyone else get the impression Osborne thinks we're all a bunch of pesants stood round with pitchforks? We're in an information age pal! You can't get away with this kind of tripe anymore!

    And as for cutting the benefits, it's easy to pick on the weak. If they went for the rich they'd lose friends...

    But, I'm very much looking forward to selling all my rights for £2000... Idiots!

  • rate this

    Comment number 1410.

    The richs get richer and the poor poorer, that is the society we are in.

    Why are we waiting fews years before we can tax the richer and the welfare cuts happen immediately?
    When will be the time for the people of UK to stand up and say Enough to this people who had all when the were growing up and went to universities for free! I think it is time to stop this ASAP.


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