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Osborne gambles with cuts plans Osborne gambles with cuts plans
(10 minutes later)
A public sector pay freeze and rise in the state pension age are among the measures needed to sort out the UK's finances, George Osborne has said.A public sector pay freeze and rise in the state pension age are among the measures needed to sort out the UK's finances, George Osborne has said.
The shadow chancellor also outlined plans to target Whitehall costs and axe child trust funds for the better off.The shadow chancellor also outlined plans to target Whitehall costs and axe child trust funds for the better off.
He told the Tory conference "we're all in this together" and said that the measures would save £7bn a year.He told the Tory conference "we're all in this together" and said that the measures would save £7bn a year.
The BBC's Nick Robinson called it a "calculated gamble" that they would be rewarded for honesty about pain ahead.The BBC's Nick Robinson called it a "calculated gamble" that they would be rewarded for honesty about pain ahead.
But, said Robinson, they know that when the then shadow chancellor John Smith tried the same tactic in 1992 he was applauded for his honesty - but ultimately blamed for his party's election defeat.But, said Robinson, they know that when the then shadow chancellor John Smith tried the same tactic in 1992 he was applauded for his honesty - but ultimately blamed for his party's election defeat.
Pension capPension cap
Mr Osborne said he wanted to be straight with voters about the scale of cuts needed and repeatedly said that the better-off must take their share of the pain.Mr Osborne said he wanted to be straight with voters about the scale of cuts needed and repeatedly said that the better-off must take their share of the pain.
OSBORNE'S PROPOSALS Public sector pay freeze in 2011 - except frontline military or people on less than £18,000Keep 50p top tax rate for nowEnd Child Trust Funds for all but the poorest familiesNo tax credits for families earning over £50,000Threat of tax on bank bonusesCrackdown on Whitehall salaries - anyone wanting to pay more than the PM needs Treasury approvalRestore pensions and earnings link Analysis: Osborne's big gamble Send us your commentsOSBORNE'S PROPOSALS Public sector pay freeze in 2011 - except frontline military or people on less than £18,000Keep 50p top tax rate for nowEnd Child Trust Funds for all but the poorest familiesNo tax credits for families earning over £50,000Threat of tax on bank bonusesCrackdown on Whitehall salaries - anyone wanting to pay more than the PM needs Treasury approvalRestore pensions and earnings link Analysis: Osborne's big gamble Send us your comments
"I don't believe in balancing the budget on the backs of the poorest," he told the party faithful in Manchester."I don't believe in balancing the budget on the backs of the poorest," he told the party faithful in Manchester.
His proposed public sector pay freeze - which exempts the frontline military and anyone earning less than £18,000 a year - goes further than the one announced by Labour on Monday, which will be restricted to GPs, judges and other high earners.His proposed public sector pay freeze - which exempts the frontline military and anyone earning less than £18,000 a year - goes further than the one announced by Labour on Monday, which will be restricted to GPs, judges and other high earners.
Mr Osborne said the measures contained in his speech would, by the end of the next Parliament, be saving £7bn a year in government spending.Mr Osborne said the measures contained in his speech would, by the end of the next Parliament, be saving £7bn a year in government spending.
He said he could not think of abolishing Labour's new 50% tax rate on the rich "while at the same time I am asking many of our public sector workers to accept a pay freeze to protect their jobs".He said he could not think of abolishing Labour's new 50% tax rate on the rich "while at the same time I am asking many of our public sector workers to accept a pay freeze to protect their jobs".
In a series of measures likely to form the backbone of the Conservative election manifesto, Mr Osborne proposed a freeze on the pay of government ministers and curbs on "excessive salaries at the top of Whitehall".In a series of measures likely to form the backbone of the Conservative election manifesto, Mr Osborne proposed a freeze on the pay of government ministers and curbs on "excessive salaries at the top of Whitehall".
Any new public employee with a salary greater than the level of the prime minister would need special permission from the Treasury.Any new public employee with a salary greater than the level of the prime minister would need special permission from the Treasury.
And he said the time had come to "find ways to impose a £50,000 annual cap on the size of public sector pension payouts".And he said the time had come to "find ways to impose a £50,000 annual cap on the size of public sector pension payouts".
TORY CONFERENCE TWEETS TORY CONFERENCE TWEETS
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Eric Pickles, party chairman, met union leaders in Manchester this afternoon, a Conservative source tells me -wonder how that went? #cpc09 23 minutes ago PCS union tell me they would strike over Osborne's planned pay freeze #cpc09 About 1 hour ago just seen Clarke and the rest of Tory business team laughing and smiling backstage after their session finished-they look pleased #cpc09 About 2 hours ago audience now all awake and give Ken Clarke an ovation-#cpc09 About 2 hours ago some party members having a snooze in the audience during ken clarke's speech #cpc09 About 2 hours ago What is this? Read your stories Eric Pickles, party chairman, met union leaders in Manchester this afternoon, a Conservative source tells me -wonder how that went? #cpc09 33 minutes ago PCS union tell me they would strike over Osborne's planned pay freeze #cpc09 About 1 hour ago just seen Clarke and the rest of Tory business team laughing and smiling backstage after their session finished-they look pleased #cpc09 About 2 hours ago audience now all awake and give Ken Clarke an ovation-#cpc09 About 2 hours ago some party members having a snooze in the audience during ken clarke's speech #cpc09 About 2 hours ago What is this? Read your stories
He also vowed to cut the cost of Whitehall - proposing to slash departmental budgets by a third during the lifetime of Parliament, a move he said would save £3bn.He also vowed to cut the cost of Whitehall - proposing to slash departmental budgets by a third during the lifetime of Parliament, a move he said would save £3bn.
Tax credits for families earning more than £50,000 a year would be ended and the Child Trust Fund would be limited to the poorest third in society.Tax credits for families earning more than £50,000 a year would be ended and the Child Trust Fund would be limited to the poorest third in society.
But child benefit will be preserved as a universal benefit and the party would not axe the winter fuel payment or free TV licences for pensioners, he said.But child benefit will be preserved as a universal benefit and the party would not axe the winter fuel payment or free TV licences for pensioners, he said.
Mr Osborne also confirmed plans revealed on Monday to bring forward a rise in the age at which people can claim a state pension.Mr Osborne also confirmed plans revealed on Monday to bring forward a rise in the age at which people can claim a state pension.
He also said that in the longer term he would also seek to reverse the "pensions tax raid" imposed by Gordon Brown as Chancellor when Labour first came to power.He also said that in the longer term he would also seek to reverse the "pensions tax raid" imposed by Gordon Brown as Chancellor when Labour first came to power.
Explaining the need for the tough package of measures, Mr Osborne said: "These are the honest choices in the world in which we live and we have made them today.Explaining the need for the tough package of measures, Mr Osborne said: "These are the honest choices in the world in which we live and we have made them today.
"Anyone who tells you these choices can be avoided in not telling you the truth. We are all in this together.""Anyone who tells you these choices can be avoided in not telling you the truth. We are all in this together."
The government has come under fire from public sector unions for its plans to freeze the pay of senior civil servants such as judges and GPs.The government has come under fire from public sector unions for its plans to freeze the pay of senior civil servants such as judges and GPs.
Chancellor Alistair Darling has written to salary review bodies calling on them to freeze the pay of 40,000 senior public servants in 2010/11.Chancellor Alistair Darling has written to salary review bodies calling on them to freeze the pay of 40,000 senior public servants in 2010/11.
Byrne attackByrne attack
He also recommended that about 700,000 middle-ranking public servants, including doctors, dentists and prison officers, get a rise of between 0 and 1%.He also recommended that about 700,000 middle-ranking public servants, including doctors, dentists and prison officers, get a rise of between 0 and 1%.
Mr Osborne attacked Mr Darling for "sneaking out" the announcement during the Tory conference saying "he didn't have the guts to announce it to the Labour Party conference".Mr Osborne attacked Mr Darling for "sneaking out" the announcement during the Tory conference saying "he didn't have the guts to announce it to the Labour Party conference".
But Liam Byrne, chief secretary to the Treasury, said: "George Osborne appears intent on talking Britain down. We were told his speech would tell us 'everything' we needed to know about how the Tories would get the deficit down. But he lost his nerve.But Liam Byrne, chief secretary to the Treasury, said: "George Osborne appears intent on talking Britain down. We were told his speech would tell us 'everything' we needed to know about how the Tories would get the deficit down. But he lost his nerve.
"How can George Osborne say 'we're in this together' and then recommit his party to a tax giveaway to the wealthiest 3,000 estates?""How can George Osborne say 'we're in this together' and then recommit his party to a tax giveaway to the wealthiest 3,000 estates?"
Liberal Democrat treasury spokesman Vince Cable said called the proposals "Lib Dem Lite".Liberal Democrat treasury spokesman Vince Cable said called the proposals "Lib Dem Lite".
"The sum total amounts to nothing more than a drop in the ocean and will not deal with the structural deficit. What is more, Osborne has in effect guaranteed that these policies will merely pave the way for a return to traditional Tory politics - hitting the public sector now to pay for tax cuts for millionaires later," he said."The sum total amounts to nothing more than a drop in the ocean and will not deal with the structural deficit. What is more, Osborne has in effect guaranteed that these policies will merely pave the way for a return to traditional Tory politics - hitting the public sector now to pay for tax cuts for millionaires later," he said.