08/10/2012 10:56 BST | Updated 08/10/2012 11:03 BST

Liberal Democrats Signal Fight With Osborne Over Benefits

George Osborne pledged to cut a further £10bn from the welfare budget in his keynote speech to Conservative party conference on Monday - as Nick Clegg cast doubts on his claims about what exactly had been agreed.

Speaking just minutes before the Chancellor's address, the deputy prime minister, who told his party's conference last month that he would not allow "wild suggestions" of a £10bn cut in welfare, said nothing "in detail" had been agreed.

"The Conservatives are, of course, perfectly entitled to set out their stall about what we do as a country as we have to tighten our belts further, as we indeed were at our party conference," he told the BBC.

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Nick Clegg says the Liberal Democrats would be 'thrashing out' where cuts fall in the months ahead

"You need to have a combination of, as the Chancellor’s quite rightly said, a combination of asking the people at the top to make a greater contribution, and also a contribution from public spending cuts, but where they fall and exactly where you strike the balance between the two is exactly the kind of thing that the Conservatives and Liberal Democrats will be thrashing out in government in the months ahead.”

Two weeks ago, Clegg simply said "loud and clear" an extra £10bn in welfare cuts were "not going to happen."

“That’s not going to happen; that was a theoretical illustration if you like, which George Osborne set out in the Autumn Statement, which is if you did nothing else, you’d have to take £10bn…if you did nothing else and you wanted to keep the savings on the same rate for other departments as they are, you’d have to take £10bn out of welfare.

"What we’re saying loud and clear, what I’m saying as leader of the Liberal Democrats in this conference, there are other options, and one of those options as I say, is asking people at the very top – not middle-Britain as the Daily Mail somewhat hysterically declares, but the people at the very top," he told the BBC's World At One during Liberal Democrat conference.

But Osborne told his party's conference extra £10bn of welfare savings would be made by the first full year of the next parliament, hinting this would come partially from cutting housing benefits for the under 25s. "How can we justify the incomes of those out of work rising faster than the incomes of those in work?", he asked.

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Liberal Democrat former MP and vice-chair of the Liberal Democrats federal policy committee Dr Evan Harris told The Huffington Post UK there was a "big argument" going on in government about where cuts should fall.

"There's already a big argument going on in government and in conferences and in the media about what the ratio should be about the wealthy paying more and cuts in government spending," Harris said.

"Both parties agree to deficit reduction. The Conservatives have ruled out every single tax that's been proposed on the wealthy. The implication is they want working families to bear the brunt," he added.

"It's unlikely the Liberal Democrats will agree to any significant cuts in welfare without significant contributions from the wealthy… it's a little premature to say what the nature of that will be but Nick Clegg has been very clear that there will not be cuts in the less well off unless the rich pay their fair share."

Leftist Liberal Democrats have already voiced displeasure at the policy, with director of the Social Liberal Forum Dr Prateek Buch writing in a blog for The Huffington Post UK the Conservatives wanted to cut "regardless of need."

"Overnight it appears as though Osborne's determination to cut welfare spending has hardened, and the Prime Minister is sticking to his guns on bus passes and winter fuel allowance for the elderly regardless of need, preferring instead to take aim at under-25s in receipt of housing benefit - again, regardless of need. Cutting the welfare budget in this way defies intergenerational justice," he wrote.

"If Osborne refuses to tackle concentrations of wealth, then the gloves are off. Nick Clegg and the Liberal Democrats should not hesitate to affirm ourselves as the party of fairer taxes and ask, if not through taxes on property and assets, how the Chancellor plans to stick to his own promise of making the rich pay their share."