TORY CONFERENCE: Osborne’s benefits freeze set to save £3.2bn
- Credit: PA
Political editor Annabelle Dickson reports from the Conservative Party conference in Birmingham
Chancellor George Osborne has spelt out plans to slash £3.2 billion off the welfare bill by freezing a raft of working-age benefits for two years if Conservatives win the general election next May.
The freeze will hit an estimated 10 million households to the tune of an average £320 a year, as inflation erodes the value of welfare payments including jobseeker's allowance, child benefit, income support and tax credits. Half of those affected are in work.
The announcement came in a speech to the Conservative conference in Birmingham at which Mr Osborne also promised to raise hundreds of millions of pounds with a clampdown on a tax avoidance ruse known as the 'double Irish' arrangement.
The move was instantly nicknamed the 'Google tax' because the arrangement – involving payments between different entities within a company to shift profits from higher-tax countries to those with lower taxes – is widely used by technology firms.
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Also on the stage at the conference yesterday was South West Norfolk MP Liz Truss, who made her first party conference speech as a cabinet minister, West Suffolk MP Matthew Hancock and Mid Norfolk MP George Freeman, who also address delegates in the main hall.
Later in the day work and pensions secretary Iain Duncan Smith pledged to introduce pre-paid benefit cards to stop claimants spending their money on alcohol, drugs or gambling habits.
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Tories urged voters to 'choose the future not the past' at next year's election and Mr Osborne said that the benefits freeze would make a 'serious contribution' to eliminating Britain's national deficit over the next Parliament, as part of a package of cuts totalling £25 billion. Some £13 billion of these cuts are to be found by Whitehall spending departments, leaving a further £9 billion from so-far unspecified welfare reductions.
But charities said the welfare freeze – which comes hot on the heels of the announcement of plans to remove housing benefit from under-21s and cap benefits at £23,000 a year – would force families into poverty.
Mr Osborne said it was unfair and unsustainable that increases in state support had outstripped pay rises since the start of the recession. The two-year 0% uprating would bring welfare increases in line with pay rises over the decade 2007-17, said aides.
Pensioner and disability benefits will be excluded from the freeze, as will maternity and paternity pay.
'This is the choice that Britain needs to take to protect our economic stability and to secure a better future,' said the chancellor.
'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 Treasury said a one-earner couple with two children and a household income of £25,000 would lose £25 a year in child benefit and £420 in tax credits because benefits will not be upgraded in line with inflation, while a two-earner couple with one child and both adults earning £13,000 would lose £44 in child benefit and £310 in tax credits.
But Mr Osborne's aides said the financial loss for most families would be more than outweighed by the increases in personal tax allowances introduced over recent years.
The chief executive of one-parent charity Gingerbread, Fiona Weir, said the changes meant 'some of the poorest in society bear the brunt of cuts', while Alison Garnham, chief executive of Child Poverty Action Group, said it was 'bad news for working parents struggling on low wages, already coping with rising living costs and previous benefit cuts'.
TUC general secretary Frances O'Grady said: 'In today's low-pay Britain, in-work benefits are a lifeline for millions of families.
'Working families have already been hit by three-quarters of the total cuts the government has made to welfare and now the plan is to put them in the front line again.'
While Labour's treasury spokesman Chris Leslie said: 'Having failed to balance the books in this Parliament, George Osborne has made his choice.
'He is choosing to give the richest 1% a £3 billion-a-year tax cut and opposing a mansion tax while cutting tax credits which make work pay for millions of striving families.'
In his final conference speech before the country chooses a new government, Mr Osborne framed the May 2015 election as a choice between 'the party of jobs and security and a strong prime minister, against the party offering higher taxes, more debt and Ed Miliband'.
What do you think of the chancellor's plans?
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SKETCH: Was Liz's fruity speech one to remember?
Liz Truss was enveloped in Tory blue as she made her debut speech on the conference stage as a cabinet minister.
The soulless Birmingham venue is a difficult gig with carefully thought through sound bites easily disappearing into the ether – luckily it was an easy audience.
The Norfolk MP – who has been tipped for the top – looked to a Conservative idol for an easy cheer.
'It was a Conservative who pointed out that CFCs were damaging the ozone layer. It was a Conservative who championed international efforts to ban them.
'It was a Conservative who signed the Treaty phasing out their use. And the name of that Conservative was Margaret Thatcher,' she bellowed.
And they obliged.
And with her Norfolk fan club in evidence she got a cheer for her love of the countryside and Norfolk.
But in the history books the Liz Truss conference speech of 2014 will be remembered as the one with the British apple.
Tummies rumbled around the hall as she set out her vision of an Eden where we all gorge on British food.
British children should grow up knowing the taste of Melton Mowbray pork pies, Norfolk turkeys and black pudding, she said.
'As well as exporting our fantastic food abroad, I want to see us eating more British food here in Britain,' she demanded.
To applause, she told delegates: 'We are producing more varieties of cheese than the French. And we are selling tea to China – Yorkshire tea.
'When it comes to British food and drink, we have had never had it so good.'
A woman on a mission, a stateswoman in waiting, she told the Tory massive she would be off to Paris to 'big up' British produce.
With this patriotic message on the menu, there was little time for flood defences.
A cursory three line mention to assure delegates that they need not fear.
'Our defences against flooding are being upgraded to make them more robust. We are spending £3.2 billion – half a billion more than the last government – better protecting 165,000 houses and 580,000 acres of farmland. We are constantly vigilant,' she said
And in a warm up for the grand finale she returned to say: 'I am determined that our flood defences will be always be strong enough to protect us against the ravages of a changing climate.'
But it was the pay-off line which will stick in the memory.
'I will not rest until the British apple is at the very top of the tree,' she concluded.
The big question is, will the party faithful remember this fruity speech in years to come when they are looking for a leader?
The applause suggested she impressed.