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Conservative conference: George Osborne to pursue £10 billion welfare cuts

8 October 2012

George Osborne is due to speak to the Conservative party conference just before lunch today. What he tells the Symphony Hall at the International Convention Centre may well put his Liberal Democrat coalition partners off their food, as his speech will make clear the Chancellor’s determination to cut a further £10 billion from the welfare budget.

The Lib Dems appear to have adapted their position somewhat over the summer. In July, I reported senior sources saying that the £10 billion cut was ‘just not going to happen’. A little later, the party started making the connection between this new package of cuts and the wealth tax which Nick Clegg flew as a kite, arguing that the books must be balanced on the backs of the richest in society. But yesterday, after Osborne shot down both the wealth tax and the mansion tax, the party still seemed resigned to welfare spending being slashed. As I blogged yesterday, senior sources were telling me that the priority was to get a package which ensured that the rich pay more. If they secured that from the Chancellor, they could still sign up to the welfare cuts.

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Iain Duncan Smith, who also vetoed the idea of more welfare cuts earlier this year, seems to be making a similar journey. Last night James reported that the Work and Pensions Secretary accepted to a fringe event that given the country’s fiscal position, ‘we will have to take more money out of the welfare system’. IDS has fought tough battles with the Treasury on the existing cuts, and chances are that he’s in for round two. But in today’s Daily Mail, he signs a joint article with Osborne, writing:

‘For example, as the Treasury illustrated at the time of the last Budget, if the rate of reductions in departmental budgets in the next spending review period is to be kept the same as the current rate, then the welfare budget would have to be reduced by more than £10billion by 2016-17. We are both satisfied that this is possible and we will work together to find savings of this scale. All of this will require some tough choices, but those choices will be guided by clear principles and a vision of what the welfare system should be. It should be a support for those who need our help but also a system that always requires those who are out of work to make the same kind of choices as those in work.’

Osborne will say in his speech that the rich will pay more while repeating his rejection of the taxation measures favoured by the Lib Dems. He is likely to point to limiting housing benefit for under 25s and cuts to child tax credits. His joint piece with IDS frames both ideas within an argument about entitlement, asking whether it’s ‘right’ for certain benefits to be paid, while insisting that universal pensioner benefits will be safe. Expect a furious row over the coming months about who is entitled to receive certain benefits, and who isn’t.

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Show comments
  • R O Jarrow

    How much more could be spent on welfare,NHS,pensionsand tax cuts,if all paid correct tax..Accountants should be recruited to close legal “tax dodgers” copouts.Also answer this question without the flannel.

  • Alexander Clackson

    I think the cuts may not be such a bad idea. While obviously something needs to be done with regards to the rich avoiding tax etc, there are still far too many people who use benefits as a life choice.

  • dalai guevara

    Welfare needs to adjust in line with productivity.

    When economic output shrinks by 30% (please include devaluation and you will get to my figure), do you suggest we reduce welfare by 30%, just to keep ‘all things equal’?

    Either you are an extremely selfish representative of me me me Britain, or you have incredibly reduced levels of compassion and causal thinking.

    • james102

      The Germans have an interesting variant, their productivity
      is up and wages (in real terms) down.

      • dalai guevara

        Yes, but there is no cap on dole after 6 months, it’s not £60 per week, and when you have a kid, you can have a combined 14 months off (on near full pay). it’s a different world. In fact, it’s a different planet.

  • Wimbledonski

    Robbing From The Disabled.

  • JamesdelaMare

    By far the most worrying aspect of all this, which is consistently ignored by politicians and voters alike, is that the entire nation and its people are nearly all in debt and living off somebody else’s money, while at the same time our industries and trade are nowhere near sufficient to either give us the standard of living we think we deserve because others have it, or to clear the debts we’ve saddled government, companies and families with. This government ought, in a well-organised society free from the need to bribe voters with promises that generally afflict any democratic system, to have put in place a minimal living standard, with self sufficiency and a real effort to re-build our industries and trade to be capable of competing successfully with China and the third world. It should have been as if we are in a war situation.

    But of course the government tried to avoid the uncomfortable truth and uncomfortable measures that are necessary, as always, and have allowed both the rich to get richer and the social security payments to continue almost unabated, hoping that all its half-baked “promises” will be sufficient to persuade the public the government is making enough “hard decisions” to be re-elected before the next stage of our collapse.

    It is also concerned about criticism that it’s not “helped” the so-called “middle class” voters on £40-60k pa. – while state pensioners are supposed to be able to enjoy a civilised standard of living on £5k pa. – and then are forced to sell their homes if they can’t afford council tax or care costs. There isn’t the smallest indication in all this that Cameron and his colleagues have any grasp of what to do, how to get us out of the mess the country is in, or of the need the reduce income differentials dramatically. Unless they do that, the tax system will never, never work well or properly.

    • james102

      This is really about intergenerational transfers, something
      the young will soon wake up to.

      What is lacking in the welfare debate, as well as many
      others, is the recognition of human nature.

      Fabulously rich people such as the Blairs will not give up
      their lifestyle and are already grooming a Blair princling for a safe seat as
      is Straw. Welfare recipients who can earn more staying at home viewing daytime TV,
      including the old repeats which seem popular with one poster today, will not
      swop that for getting up before dawn to clean offices on the minimum wage.
      Therefore the burden will fall on the section earning enough to contribute,
      about £27k ,and those who earn enough to employ good accountants.

      • dalai guevara

        ‘Fabulously rich Bliar’, ffs – come off it.
        Everything else you state above makes some sense, don’t taint it with your nonsensical analysis of who holds the cash in Britain.

    • telemachus

      Mattereth not if you stoke growth
      George has not heard this

  • gael bage

    oh – so that is supposed to make us feel better is it, while you are still handing them our hard earned money in lots of other directions like research grants for the wealthy pharma industry? you ae also spending money abroad while impoverishing your own citizens ! You are so out of touch – and no longer represent democracy instead you party with the bankers and the wealthy 1%. The voting system leaves us no choice as the smaller parties don’t stand a chance. The lib dems should never have got into bed with you, you use them while making no concessions that might improve their popularity.
    If voting liberal means getting all conservative policies why should we vote for them or you ever again?

    • telemachus

      may well put his Liberal Democrat coalition partners off their food
      Does anything put the Libdem parasites off their food?
      Gael-not sure if you are a LibDem apologist or one of us?

      • gael bage

        definitely and untiringly on the side of the 99%, at one time lib dem policies were something one could support but it appears they no longer represent those ideals. It seems the next cuts will affack vulnerable children by removing benefits from large families perhaps MP’s should try to feed a large family for a week on the amount they deem they can manage on.- its not the childrens fault and they should not be penalised. In fact no party lives up to its promised policies, they bury their heads in the sand and pontificate about growth forgetting we live on a finite planet, ignoring major ecological and post peak oil problems and democracy has disapeared down the drain.leaving us no choice but sustainable self reliiance and to try to build a better way of life than these autocratic fat cats preside over so pompously.

    • james102

      With regard to smaller parties you are not asked to pick a
      winner :just express your preference.

  • james102

    Half of homes are a burden on the state: Benefit payments and services now outweigh taxes in 53% of properties (Daily Mail 8th October 2012)

  • don logan

    My boss who’s a top rate tax payer gets to work for free with his pensioner’s free tube pass, saves him a couple of grand a year; yet a colleague who earns about a third of what he does will lose his child benefit; still I’m sure George knows what he’s doing.

    • Chris lancashire

      Your top rate paying boss probably feels he’s getting a tiny smidgeon of the huge amount of tax he pays back. What is wrong is that he is able to get that – Brown’s universal benefits (bus passes, winter fuel benefit) successfully bribed a lot of taxpayers with their own money. It’s about time these were removed from those that don’t need them. As for your mate who earns around £50,000 p.a. if what you say is correct – he, too, shouldn’t be receiving child benefit. Yet another universal benefit long overdue for reform.

      • don logan

        I agree with you, and actually my top rate paying boss things its nuts he gets these benefits; and my colleague doesn’t particularly feel he should be getting child benefit on what he earns. It’s just that the whole system is utterly arbitary as to who gains and who loses.

  • Vanessa Deagan

    Once again, lots of rhetoric during public speeches and conferences, very little action other than the application of austerity on those least fortunate and most vulnerable in society.

    I’m not suggesting we attack the rich just because they’re rich – I’m saying make them pay, as a percentage, a fairer amount of tax. For someone who “earns” (I use that term lightly here) tens of millions every year – let them fall into the 40% tax bracket, the same as someone who is on £60K a year.

    The wealthy are getting wealthier, and it’s destroying the world economy because they’re hoarding their wealth, and money (the lifeblood of any economy) isn’t circulating.

    As for Nick Clegg – he’s causing the LibDems irreparable damage. Replace him with Vince Cable (a man with a Ph.D in Economics!!) as soon as possible.

    So much rhetoric, so many broken promises, very little action. This coalition government is no different to a Conservative majority, or a Labour government for that matter. All the main party policies are so similar, and it’s always the little people who end up footing the bill for the wealthiest. There wasn’t this much talk when the banks just “had” to be bailed out (using money from the little people).

    We need a true change.

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