Britain's $20b cut to welfare spend

British Chancellor of the Exchequer George Osborne addresses the Conservative Conference at Birmingham's International Convention Centre. Photo / AP
British Chancellor of the Exchequer George Osborne addresses the Conservative Conference at Birmingham's International Convention Centre. Photo / AP

Britain's government will slash the welfare bill by a further £10 billion (NZ$19.5b) as it seeks to tame a massive deficit, finance minister George Osborne has announced.

Chancellor of the Exchequer Osborne also unveiled plans to allow British workers to give up their employment rights in exchange for shares in the company they work for.

He told his Conservative party's annual conference that the world's seventh largest economy was "healing" but that Britain needed to stick to the course of tough austerity measures.

"The great bulk of savings must come from cutting government spending, not raising taxes," Osborne said to applause from delegates in the central English city of Birmingham.

"We have to find greater savings in the welfare bill, £10 billion of welfare savings by the first full year of the next parliament" in 2016/17, he said.

The reductions are in addition to the £18 billion in welfare cuts that are already planned by 2015 by Conservative Prime Minister David Cameron's coalition with the smaller Liberal Democrats, which came to power in 2010.

Osborne insisted the rich would bear the burden of taxation, but indicated that young unemployed people were likely to see reduced housing benefit and that there could be a limit to the number of children covered by benefits.

"How can we justify that people in work have to weigh up the costs of having another child when those out of work don't?" added Osborne, speaking against a backdrop of Britain's red white and blue Union flag.

He also ruled out a so-called "mansion tax" on high-value houses, a move that is likely to anger the centrist Liberal Democrats who favour squeezing the wealthy.

The chancellor then sprang a surprise with his plan to swap shares for rights.

Workers could buy up to £50,000 in shares of the company they work for with all profits being tax free. In exchange employees would abandon their rights on unfair dismissal, redundancy and flexible working.

British unions immediately opposed the plan, which is due to come into effect in April 2013.

"We deplore any attack on maternity provision or protection against unfair dismissal," Trades Union Congress general secretary Brendan Barber said.

Osborne's speech will please his centre-right party but risks cementing a reputation that the left-leaning Independent newspaper summed up in its headline: "Welcome to the Nasty Party conference."

Angry protests erupted in late 2010 in Britain over plans to raise university tuition fees, cut benefits and slash costs in the public sector.

The chancellor however defended the coalition's record in a combative speech, saying it had taken a risk that "few political parties anywhere in the world are prepared to take before an election".

"The economy is healing. That healing is taking longer than we hoped, because the damage was greater than we feared," he said.

"But let the message from this conference be clear: we will finish the job we have started," he said.

The coalition promised to cut Britain's record deficit when it was elected in May 2010 but it has struggled with a double-dip recession. The next elections are due in 2015.

A mixture of economic worries and a series of government failures dubbed the "Omnishambles" by political commentators in Britain has seen the Conservatives' poll ratings plummet.

A YouGov poll in the Sunday Times put the Conservatives on 31 per cent, the Labour opposition on 45 per cent, with the Liberal Democrats on eight per cent and other parties on 15 per cent combined.

The conference is being billed as make-or-break for struggling Cameron, with potential replacements waiting in the wings.

London Mayor Boris Johnson was due to address a side meeting at the conference on Monday night, a day after a poll showed him as the most popular Tory politician to replace Cameron if he goes.

- AFP

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