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George Osborne ordered the nation to tighten its belt for an age of austerity today if the Tories take power.
He vowed to freeze the pay of millions of public sector workers, slash gold-plated civil service pensions and hack back benefits paid to the middle classes.
Britain was “sinking in a sea of debt”, he declared before rattling out cuts that he claimed would save £23 billion from spending over the next parliament. Unions reacted with fury, accusing the Tories and Labour of holding a “dutch auction” over who could be toughest on public sector pay. The pension cuts could breach contracts, they said. One of Britain's leading analysts, Robert Chote, said the cuts amounted to merely a “dent” in the debt crisis.
Mr Osborne's bitter medicine included:
* All public sector workers earning above £18,000 will get a zero pay rise in 2011, lopping £3.2 billion a year from the public payroll. According to Mr Osborne, this will enable 100,000 jobs to be protected from cuts.
* Top civil servants face a cap of £50,000 a year on their pension payouts, saving hundreds of millions of pounds a year over a decade.
* Middle class families with household incomes of over £50,000 would be stripped of tax credit handouts, costing £10 a week and saving the taxpayer £400 million a year.
* “Baby bonds” of £250 brought in by Gordon Brown would be axed for all but the poorest households and for disabled children.
* Whitehall bureaucrats and quangos would be ordered to slash a third from their budgets, cutting overall spending by £3 billion a year by the end of the parliament.
* The 50p top rate of tax of high earners, introduced by Labour from next April, will stay for “at least as long as the public sector pay freeze” lasts, as a symbol of making the rich pay a fair share.
* Banks were threatened with unspecified tax rises to punish them if the new rules curbing bonuses are ignored.
There was one significant giveaway to reflect public concern for the troops in Afghanistan — doubling the allowance for personnel on operational tours overseas to an average of £4,800.
In addition, Mr Osborne confirmed plans trailed before his speech, including that the retirement age for men may be raised to 66 by 2016 and that incapacity benefit would be cut by £25 a week for claimants deemed by a doctor to be capable of some form of paid work. But Mr Chote, director of the Institute for Fiscal Studies, said the £7 billion a year identified by Mr Osborne equated to just a sixth of the fiscal tightening that the next government will have to make.
Mr Osborne made a virtue of delivering bad news with honesty. “We need to show political leadership and take the difficult decisions,” he told the Conservative conference in Manchester. He said Labour had misled the public by over-borrowing and denying the need to curb the £175 billion deficit. “Britain cannot go on like this.”
While his blunt language earned a standing ovation in the hall, Tories were anxiously hoping the public will reject Labour's counter-argument that cutbacks could prolong the recession and cost the country more.
Mr Osborne directed some of his remarks “directly to the people at home” saying: “Conservatives have been straight with you today. These are the honest choices in the world in which we live. Anyone who tells you these choices can be avoided is not telling you the truth.”
Mr Osborne's public sector pay freeze on anyone over £18,000 went much further than a proposal issued by Chancellor Alistair Darling last night. Under the Tory plan, virtually all teachers, nurses and most civil servants would be affected. The minimum starting salary for a registered nurse is £19,683 while newly qualified teachers earn a minimum of £21,102, rising to £26,000 in inner London.
Unite's joint general secretary Derek Simpson said: “George Osborne has made it clear that the Tories are going to hit hard working public sector workers on low pay while preparing to line the pockets of the wealthy.”
Mr Osborne repeatedly emphasised that he would seek to protect the poorest from cutbacks, promising to seek “a strong, tolerant, generous society”. He said: “Everyone must pay their share.” But tax credits and baby bonds for the middle classes were “a luxury we can no longer afford”.
He was cheered for warning the bailed-out bankers to heed public anger about bonuses, saying: “We reserve the right to take further action and that includes using the tax system. I believe in a free market not a free ride.”
In reality, any practical savings are likely to be pinched by Mr Darling for his pre-Budget report in November.
However, Mr Osborne argues that today's package shows his determination and where the party's instincts lie.
Reader views (47)
in the UK people are only interested by money, look at our hospitals, the worst in Europe, France and Germany have modern clean hospitals what about the UK ?
- Laura, heathrow,uk
This from a man that claims over 22k a year over and above his salary for mortgage interest!!!! do as i say, not as i do.
- Steve, England
No hope or leadership in this "budget" sadly. I had thought of returning to the UK in the event the Labor lot were booted out but quite frankly I cannot really see much difference. The brutal reality is that older men are shunned in the workplace so asking people to work longer is a cruel joke! Try getting a job when you are 50 or over?
- James Macleod Ritchie, Oyster Bay Cove
No champers then Dave they just ain't listen lmao what a shower.
- Steve, England
Oh dear, here we go again!
When will people learn? Basic principles of every Tory government since the last war:
1. Cut public services that support the needs of the majority, eg health and education (they have their own private healthcare and schools, eg Eton Dave)
2. Put forward headline grabbing policies, that either have little in substance or are designed to disguise the true impact. E.G. £8K paid in advance by pensioners to offset future care costs. Means, as most pensioners are asset rich and cash poor, will only benefit those with large savings as well as a house they own. ie the established Tory middle class pensioners, not your Mum and Dad
3. Penalise the public sector, as they're not traditional Tory voters. Pay freeze for all teachers, qualfied nurses, firefighters, refuse collectors, social workers, etc who works in London. I thought we were trying to attract people into these careers!
Q. How many millionaires in the Tory shadow cabinet?
A. 16
Coincidence?
Don't suppose many of them will be worrying about this raft of policies. They are immune and insulated from the effects of their own actions.
This is not the politics of envy, they're wealthy and good luck to them. But I resent them speaking as if they know what it's like to live in the real world. They don't and never have.
They believe in survival of the fiscal fittest and the sacrifice of those least able to fight back.
Don't say you weren't warned
- Metman, Hertfordshire, England
Anglo - "My sympathy for the Public Sector "workers" (what an oxymoron) is -minus 1000%".
Check out who provides care in many private and residential homes, who empties bins and cleans streets, who provides adaptations for people with disabilities, who endeavours to ensure that the place you have your meal out in is fit for purpose, who provides your children's education, who helps vulnerable homeless people (it can happen to any of us), who supervises the care of vulnerable children (forget the rare headline cases) and so on. You'll find that those against whom you have this hatred are a very small minority, as compared to the vast majority who provide essential and not generously paid services.
- Brian Capaloff, Falkirk, Scotland
Tough , public service workers are leaches drawing the very life blood from our country, its time the got there come-uppance.
I for one dont care about health , education , police all the rest of these blood suckers , sack em all and there greey unions.
Its time for a change lets go back to the future with the tories and good old Maggie, hit the so called workers where it hurts, chuck em on the dole that will save us millions ,
- Brian, Wiltshire
Val Daniels, part time Briton: Gormless McClown's multi-billion pound tax grab on pensions funds precipitated the destruction of the best funded system of pension provision on the planet, resulting in a higher cost to the taxpayer.
Britain-hating NuLiebour have been in power for 12 years and have only just started talking about restoring the link in an attempt to outmanoeuvre the Tories, they have failed.
We don't need any lectures on pensions, or any other financial issue, from NuLiebour McBrown-nosers like you.
Your glorious leader and his colleagues have brought this country to its knees, it would be complete madness to believe any more of Soviet labour's lies and trust them to fix the mess that they have (deliberately) created.
- Keith Lonsdale, Doncaster
So nurses, teachers and firemen pay for the eventual tax cuts for the rich? I think the tories have just lost the next election.
- Carl, London
George Osborne is to be congratulated for being the first politician to spell out clearly the size of the financial hole Gordon Brown has created. There are no alternatives to spending cuts and/or tax increases if we are to reduce the national debt, which is likely to stand at £800 billion by the end of the current fiscal year (recent estimates of £750 billion are being blown away by rapidly increasing Government borrowing). New Labour has shown itself wholly incompetent and careless with taxpayers' money. Osborne is showing the way forward and, for those who harp on about the rich, you could bleed them dry and the debt will still not be repaid. All of us need to get a grip and give Osborne the credit and support he deserves. We ask for honesty from our politicians and now we are getting it, but only from the Conservatives. The Lib Dems and Labour are still prevaricating.
- James Elliott, Eastborne UK
Most public sector workers don't actually deserve all the abuse they get from the press and some of the comments on here. Without the back office 'pen pushers' like me, the NHS would grind to a halt. Would you prefer that your doctor spent his time on admin or treating patients? We don't all earn ridiculous salaries despite having stressful and demanding jobs.
Admin staff lower down the food chain will be the ones who suffer whilst the useless overpaid staff at DH, SHA and PCT level will continue to prosper.
Want to save money? Us 'pen pushers' might be able to point you in the right direction if anyone bothered to ask us where we think the money is wasted.
- Fiona, Kingston-upon-Thames
Thatcher tried the con trick of getting people to leave company pension schemes and take their pension pots to Private Schemes and the people found that the pension schemes were useless and had to buy back into the Company Schemes and lose money. Commercial Fund Managers are the people who attend shareholders meetings and let Directors award themselves monstrous salary rises and bonuses which cheat people out of a decent pension sum.
- C Morgan, Kensington England
"WOW,we can all look forward to utopia under the Conservatives. !!!!!!"
Why not, did'nt millions look forward to it after voting Labour?
- G S Randall, hatfield, HERTFORDSHIRE
Not as harsh as it needs to be. As events unfold it will get worse and worse and more cuts will come. My sympathy for the Public Sector "workers" (what an oxymoron) is -minus 1000%. There are 750,00 extra of them just to get the 'employment' numbers right. We need, firemen, soldiers ambulance men, street cleaners and bin-men but we do n't need 75% of the rest. George Osborne is too soft with them.
Blair 'n Brown have created such an appalling mess that it will take a decade to recover and, some of the damage is permanent.
I would burn them at the stake if I could.
- Anglo, Sussex UK
STOP televising the conference NOW,I have been watching all day,how many million votes for my party have been lost thus far is anybodys guess.
- Malcolm George Mannly, London
WOW,we can all look forward to utopia under the Conservatives. !!!!!!
- Erica Thorpe, West London
We as a country are in debt! This is not a simple problem.
Cuts have to be made, we may not like them but they ARE NEEDED. Next round, who moans about where they are made?
Go on tell me! It will go on more than every Politician/ pundit/Journalist, you could club together for a sandwich.
Yeah! we know it will be half baked.
- Macdangler, Wimbledon SW19
So we are all in this together,cuts and pay freezes in the Publc Sector,and tax cuts to the rich,my,my,George how thick do you think the British electorate are?
- Melvin T Courtman, Ascot Berks
Local Councillors never used to be paid.
They could draw basic expenses if they wished to do so.
Services have worsened since semi-professional and untrained people have come forward to be paid considerable salaries.
Save money abolish these payments to councillors. Payments that we can not now afford to pay.
The Hard pressed council tax payer can no longer afford to do so.
- Bernard Parke, GUILDFORD
NEVER forget who got us into this mess.
Labour always leave office with the country's finances in a mess
- Irene, Kent, UK
Raising the age of retirement is a sensible move, as is aligning the age of retirement for men and women. Besides, this must surely be a welcome move for feminists and the equality movement, LOL!
The flat contribution of £8k towards care for the elderly is also more egalitarian than the robbery perpetrated by NuLiebour against those who've had the wit to make something of themselves.
Robert C- Cutting taxes for the rich? For a start Osborne has stated that the 50% rate will remain for the foreseeable future and the arguments in favour of inheritance tax expose only the worse in envy politics.
It is an inescapable fact that low tax economies, with small government, encourage business and growth. It is commendable that the Tories aspire to this.
If only they would give us a say on the EU, they may just become electable (although, rather them than Britain-hating NuLiebour!).
- Keith Lonsdale, Doncaster
As a Banker I agree with George,we are all in this together,although we well off will get our promised tax cuts,it is only correct that Public Sector workers,the disabled,and the low paid,should tighten their belts.
- Michael Scott Southard, Ascot Berkshire
Gary london where and when did you see or hear that the tories are going to do that? immigration???????
- Steve, England
And the deluded numpty's will still vote Tory. The members of the Bullingdon club will be even more rich, and the rest of you will pay for it.
- Kerry, Purley
#Sam
Where have you been? This Labour government has already pledged to restore the earnings element to pensions next year. Alistair Darling announced it in his budget in April. I presume you know it was Mrs Thatcher who removed the link in 1989 and it has taken the Tories 20 years to offer to replace it. I just wonder why George Osborne is using so many Labour policies that have already been announced. Did the Treasury mandarin who defected to the Tories 2 weeks ago take the Labour party policies with him?
- Val Daniels, Mijas Costa, Spain
Gordon Brown has spent the last 12 years getting as much tax out of us as he could and he has spent the lot. He has spent it and borrowed a load more. We are completely on our backsides and now someone has to sort it out and it seems that will be the Tories, not because they are everyone's favorite, but because they are the only option. Brown has severely damaged the Labour party. They might not survive.
- Alex C, London
Just think if a man has to work another year before retireing then his job will not become available for another year! This will mean that a younger man with a wife and kids to support will have to be paid benefits for another year!!
It wold make for sense to reduce retirement age and make jobs available for the unemployed!!
I am surprised at how good Boy George was at keeping a straight face when he went on about how bad things were but still announced tax cuts for the rich!!!
As for his talk of No public servents earning more than the Prime Minister that will mean bodies like TFL will not be able to get the likes of Tim O'Toole as you have to pay the world market rate to get world class people to run public organisations.
Finally my father died just 3 days after his 65th birthday and after working all his life, fighting for his country in the war ended up with nothing. But had he lived he would have been a pensioner of the generation where Thatcher stole the value of their pensions by removing the earnings link, somethang that a Tory on BBC today still thinks was the RIGHT thing to do!!
I bet Gordon Brown will be smiling given the way the Tories are making themselves un-electable..Well who wants to HAVE TO WORK another year for an enetitlement you have paid in for all your life.
- Melvyn Windebank, Canvey Island, Essex
Typical Tories, just kick pensioners and make them pay for the bankers mistakes.
- Paulb, London
Gary,London.Its not Gordon's immigration policy,its the EU policy,and the Tories will find ,as they well know,that they will be bound by the same EU immigration rules,unless of course they pull out the EU,and they wont do that.To pretend other wise is a lie.
- Kev, London-UK
Thousands of immigrants arriving under Labour are taking away jobs from Britsfrom IT to admin work thanks to Gordo's immigration policy. The Tories will stop these thousands coming."
But the vast majority are EU member countries' emigrants who are perfectly entitled to be here and work here under EU regulations. There is nothing the Tories would and could do to interfere with this. Pretending they can is a fraud and gives comfort to the many racists within their own membership.
- Keith Price, Luton England
"Just scrap the State pension, reduce NI accordingly and let everyone pay into their own private pensions"
...which Gordon Brown, the City spivs or the Goodwins of this world, for that matter, will plunder for their own advantage. Very bright idea Bob!
I only wish I had stashed my cash under the mattress like my granny!
- John Smith, Londonistan, EUSSR
Here it comes. It's now starting to become clearer and clearer just how spectacularly bad life's going to get under the Tories (just in case those with short memories have forgotten the last time round). Oh dear.
- Nolan, Londonist
Keith Price. What about Labour bancrupting the inheritors of a house owned by an old lady after her death by demanding over £20,000 of the expenses. That is Labour Policy. No one wants Gordo and his deluded lot if that is what you are expecting. Thousands of immigrants arriving under Labour are taking away jobs from Britsfrom IT to admin work thanks to Gordo's immigration policy. The Tories will stop these thousands coming. That is what is going to win them. The Laboutr's points-based system is a joke. Keep on dreaming.
- Gary, London
Bringing forward when the pension age will rise is a good move and I would welcome the proposal to link the basic state pension to the average wage. It was a shame that labour never did this during the good economic times.
I am also pleased to learn that 45000 pensioners will no longer be forced to sell their homes to finance their care. Hopefully they will then be able to support themselves to remain in their homes rather than the distress of being forced to move to institutional accommodation.
Our pensioners made this country great and we should support them in their later years.
- Sam, London,UK
Remember that it was the Tories under John Major who raised the rate of VAT before they were kicked out of office last time so they would do well to remember that before inflicting more Thatcherism upon the ripped off British people.
T H lEEDS
- Thomas Hayes, Leeds UK
Force the long term unemployed into work, flipping burgers, digging roads, helping the local community or remove their benefits & send them to Afghanistan. There are 5.9million unemployed in the UK, that's bigger than the population of Denmark(5.4m) and stop giving free hand outs and council housing to teenage pregnant girls.
Send the drug addicts to Afghanistan and reclaim the bank bailout money with added interest. Do all these things and you will have a landslide victory.
- Frank, Copenhagen, Denmark
You cut your spending and cut staff,cut salaries"Jk,London" equals higher unemployment, equals less money being spent, equals recession,but then logic escapes politicians at show case attention seeking conference time,especially when your desperate to keep your divisions over Europe out of the head lines.
- Kev, London-UK
What about the hundreds of thousands of illegal immigrants who receive free NHS treatment costing the hard pressed British taxpayer millions. Also, all recent legal immigrants should be made to pay for at least the first five years. We can't afford to carry on being a soft touch now that the incompetent Brown and Darling have allowed their parasitic friends in the City to debauch our economy.
- John, Dartford
As James indicates, there is an astonishing unwillingness in Britain to admit to the lack of employment for over 50s.
Everybody thinks this age group should work - warm fuzzy caring etc - 'but not here'. Dynamic young image commercial interest you see blah.
Unless employment can be made available not largely restricted to prime age workers of 20-35 we are never going to resolve the leaden drag on the economy of the not working army.
Government must start by setting an example. It seems to be even worse than the private sector.
- Mike Newland, London, England
Kicking the poor, the old and the sick while cutting taxes for the wealthiest, particularly those who inherit their money.
Glad to see they are sticking to traditional Conservative values!
- Robert C, London UK
Forcing men to retire a year later than we planned to, and forcing women to retire between three and six years later than expected, will go down like a giant lead balloon across the country, and quite right too. I imagine the first opinion polls after the Tory Conference will reflect the horror that these crazy proposlas will engender especially among the middle-aged voters and those close to retirement. Ally this to the £8,000 we must pay for basic care in an OAP home, and Tory chances of winning the General Election have been completely blown out of the water. I await a retraction of both plans before the end of this disastrous conference week.
- Keith Price, Luton England
They are trying to do a sensible thing and actually decrease how much the Government is spending. Its simple - if your salary is reduced, you cut your spending in areas that you can. Unlike the Labour Government whose moto is to borrow more and spend more on their ridiculous policies.
I would say take a look at all the public sector workers while they are at it - probably a hell of a lot of savings. They seem to have 5 people performing a job, that private sectors would employ one person to do.
- Jk, London
I agree with Bob from Cheam, harsh as it sounds.
Difficult times call for difficult measures.
Also, get the bankers to pay back the bonuses as the taxpayer bailed them out and thus saved their job in the first place.
Second, bring back the troops, since they haven't get proper equipment as we all know.
- Mario Kempe, london
This is a Breach of Promise to the tax payer to just move the goal posts as you like !!!
And hasn't it all worked out so very well for old Fred the Shred ???
I WILL NOT BE VOYING TORY !!!
- A Tax Slave, London
Just scrap the State pension, reduce NI accordingly and let everyone pay into their own private pensions. It'll free up loads of civil servants, saving the government millions, it'll also have the added advantage of stopping those who've never worked a day in their lives claiming money for nothing.
- Bob, Cheam
Now you will pay for the mess the Bankers created,and remember you have already given millions,but your gonna have to pay even more now.Well Mr Osborne you have certainly alienated me,I'm not gonna vote for a party that will make me work another year before i can retire,and I'm not gonna vote for a party that targets the poor in favour of the well of,no way,it would be morally wrong for me to do so.
- Kev, London-UK
Not too sure that increasing the pension age will keep the redundant 50-60 year olds on side, they need to tread carefully on this one; especially so if they have had problems with incomes derived from savings, certainly there is no work available for this age group – when did you last see a 55 year old behind the counter at McDonalds
One thought if the pension age is 66 and the legislative age where a firm can compulsory dismiss you for being too old to work is 65, what happens to the missing year; will this be a new social security benefit ??? This issue will need to be raised and sorted today as part of this package !
- James, City of London
