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Conservative conference: Cameron in benefit cuts warning

media captionDavid Cameron: "We've capped welfare but we need to go further"

Further cuts to welfare, including curbs on housing benefit, may be needed to help fight the deficit, David Cameron has warned.

Speaking on first day of the Conservative Party conference, the prime minister said housing benefit may be reviewed for under-25s.

He promised "further action" to ensure the rich "pay their fair share".

But senior Tories have ruled out a tax on expensive properties or a one-off "wealth tax" backed by the Lib Dems.

In other developments as Conservative activists gathered in Birmingham for the four-day event:

  • David Cameron backs a review of EU free movement laws to curb migration and says he would be prepared to veto a new EU budget to prevent "massive" increases
  • Extension of the council tax freeze for the third year in succession
  • A cap of inflation plus 1% on rises in regulated rail fares
  • Foreign Secretary William Hague criticises Ed Miliband's claim that Labour are now the one nation party telling him
  • Dozens of phone-hacking victims write to Mr Cameron urging him to keep an "open mind" on recommendations the Leveson inquiry might make
  • Defence Secretary Philip Hammond warns Lib Dems seeking a cheaper alternatives to replacing Trident nuclear missiles that the Conservatives will not compromise
  • Chancellor George Osborne says he will back the introduction of same-sex marriage when MPs are given a free vote on the issue

The government has said it needs to find an extra £16bn in savings in the final year of the Parliament, 2015-6, on top of the billions in spending cuts and tax rises already earmarked.

Mr Cameron said cuts to the multi-billion pound benefits bill was one area that would be considered - something that will be resisted by his Lib Dem coalition partners unless it is accompanied by a tax rise on the wealthy.

"We have to find these spending reductions and if we want to avoid cuts in things like hospitals and schools - services that we all rely on - we have to look at things like the welfare budget," he told the Andrew Marr show.

For example, the prime minister suggested it was unfair that an unemployed school leaver can claim housing benefit whereas one who finds work or who goes on to university is unable to claim housing benefit.

Government sources say restricting housing benefit for the under-25s is being looked at but pointed out the measure would only save "hundreds of millions" and there had been no agreement with the Lib Dems.

In the BBC interview, Mr Cameron vowed "further action to ensure rich people pay their fair share" and confirmed new measures would be unveiled before the next election.

But asked about an annual tax on property, the so-called "mansion tax" long championed by the Lib Dems, he said "that is not going to happen".

If people worked hard and saved to buy a property, Mr Cameron added, he didn't want the UK to "be a country that comes after you every year with a massive great tax".

And Chancellor George Osborne also ruled out an annual levy on wealth, another idea floated by the Lib Dems, telling Sky News it was not a "sensible" way of getting the better-off to contribute more.

The prime minister again promised to honour his pledge not to cut universal benefits for pensioners - such as free bus passes and winter fuel payments - effectively ringfencing this part of the welfare budget.

Cost of living

Amid concerns that the government is not doing enough to help hard-pressed families, the Conservatives announced a package of measures aimed at helping people struggling with rising living costs.

Council tax bills will be frozen in England for a third year in a row and there is to be a cap on how much regulated train fares can go up by.

Ticket prices will not rise by more than 1% above the rate of retail-price inflation (RPI), lower than the 3% plus inflation limit in place at the moment.

Party chairman Grant Shapps suggested the Conservatives had been too "shy" about trumpeting what they had done to support low and middle-income earners in tough times.

The public were worried about the cost of "paying their bills and filling up their car" and the party had to make clear they were on "the side of every working family".

"People need to know 'they do get it'. But they are not mind readers. We need to go out there and tell them."

A further £5m will be spent on helping injured British troops by improving facilities at Headley Court, Defence Secretary Philip Hammond said.

He added that there would be a "significant reduction" in British troops serving in Afghanistan in 2013 but the UK would not "cut and run".

More on this story

  • David Cameron 'would veto' EU budget