George Osborne – UK working-age benefits to be frozen for two years
Chancellor outlines £25bn of spending cuts and rules out out tax rises in bid to tackle UKs dangerously high national debt.
Working-age benefits would be frozen for two years by a future Conservative government, delivering more than £3bn in savings, George Osborne has announced as he set out some of the £25bn of spending cuts planned for the next parliament to tackle Britains dangerously high national debt.
As he lambasted the opposition Labour party for being stuck in a past world of high taxes, the chancellor ruled out any further increases for the final stages of his deficit-reduction plan, which would see a further £13bn in departmental Whitehall spending cuts.
Osborne echoed Jim Callaghan’s famous declaration to the Labour conference in 1976, at the height of the IMF spending crisis – that Britain could no longer spend its way out of recession – when he told the Conservatives’ annual conference: “The latest Treasury estimate is that, to eliminate the deficit, requires a further £25bn of permanent public expenditure savings or new taxes. And I tell you in all candour that the option of taxing your way out of the deficit no longer exists if it ever did.”
The chancellor also showed a more contemporary touch when he turned to the Danny Boyle film Trainspotting film as he spoke of the choice facing voters at the next election between a Labour past and a Tory future. Echoing the words of one of the main characters, Mark Renton, he said: “Choose jobs. Choose enterprise. Choose security. Choose prosperity. Choose investment. Choose fairness. Choose freedom. Choose David Cameron. Choose the Conservatives. Choose the future.”
Osborne’s speech was designed to frame the Tories’ two key pre-election messages on the economy. These are that the party has taken tough decisions to stabilise the economy in the current parliament to begin the process of eliminating the structural budget deficit. The second message is that only the Conservatives – which he sought to characterise as the party of a low tax future – can eliminate the deficit and build on the economic recovery.
As the key political strategist in the Tory leadership, Osborne also framed the party’s attack on Labour as he said that Ed Miliband’s memory lapse in his conference speech, in which the Labour leader forgot to mention the deficit, showed that he was unsuitable for office.
The chancellor said: “Did you hear that speech last week? Ed Miliband made a pitch for office that was so forgettable he forgot it himself. Well, I have to tell you in all seriousness that forgetting to talk about the deficit is not just some hapless mistake of an accident-prone politician, it is completely and totally a disqualification for the high office he seeks.”
The chancellor said the budget deficit was nearly approaching half the level inherited by the coalition after the 2010 general election. But he added that the only sure way to lower Britain’s “dangerously high” national debt was by running an overall surplus, in contrast to Labour, which would allow an extra £28bn in spending by running a surplus just on the current budget.
He then outlined some of the measures to achieve the extra £25bn in permanent spending cuts to achieve the surplus. These included:
• freezing working-age benefits for two years, saving more than £3bn. He said: “We can’t afford to spend £100bn on welfare payments for people of working age when we have such debts. Even with the reforming decisions Iain Duncan Smith and I have taken benefits have risen by more than earnings since Labour’s great recession. That is not sustainable for any nation and it is not fair either.
“Working-age benefits in Britain will have to be frozen for two years. This is the choice Britain needs to take to protect our economic stability and to secure a better future. The fairest way to reduce welfare bills is to make sure that benefits are not rising faster than the wages of the taxpayers who are paying for them.”
The chancellor made clear that pensioner benefits and disability benefits would be excluded.
• Reducing Whitehall departmental spending by at least the same rate for the first two years of the next parliament, saving £13bn.
• Maintaining restraint on public sector pay.
But Osborne did indicate that he would be looking to raise tax revenues as he served notice on the internet giants that Her Majesty’s Revenue and Customs would ensure they pay their fair share.
He said: “It is this pro-business Conservative chancellor who says to some of the biggest technology companies in the world this today – you are welcome here in Britain with open arms, you have the advantages of our skilled population to work for you, broadband connections to deliver your services and our NHS to keep your employees healthy – advantages that have to be paid for.
“So while we offer some of the lowest business taxes in the world we expect those taxes to be paid not avoided. Some technology companies got to extraordinary length to pay little or no tax here. If you abuse our tax system you abuse the trust of the British people and my message to these companies is clear. We will put a stop to it – low taxes but low taxes that are paid, part of our effort to reduce the deficit.”
The chancellor, who confirmed he would abolish the 55% tax imposed on pension pots passed down generations, said Britain had been the “lantern in the storm” while Europe had been engulfed in economic crisis. He ended the speech with his core political message – that Britain faced a choice at the next election between a past of high taxes and weak leadership – or a future of sound economic management and decisive leadership.
He said: “Britain has been the lantern in the storm. Now we seek a new mandate as the party of jobs and security and a strong prime minister against the party offering higher taxes, more debt and Ed Miliband. We are going to offer political resolve and economic competence.”
- The Guardian,