Osborne Defends Austerity Despite Having 'Higher Income Than Many, Many People'

The Chancellor has defended his austerity measures, saying they are necessary to avoid another economic crash which would make the lives of poorer families worse. George Osborne, who has announced plans for a further £3.2 billion squeeze on welfare bill which will hit 10 million of the unemployed and working poor, warned they would be among the ones who would "suffer the most" if there was another crisis.

The benefit freeze announced by Mr Osborne at the Conservative Party conference in Birmingham yesterday will affect working-age handouts such as child benefit, housing benefit and tax credits, but pensioner, disability and maternity payments will be exempt. More than half of the 10 million households expected to lose out as a result will include someone who is in work.

At a fringe event Mr Osborne was asked if his privileged background meant he was "out of touch" and whether he understood what life was like for people on the breadline. The Chancellor said: "Of course I have a higher income than many, many people in the country. I am acutely aware of that.

"What I do when I go out around the country visiting people is I come across people whose lives were ruined six or seven years ago, who were put out of work." He added: "I'm acutely conscious that these decisions we take, that the economic policy of the country has a direct impact on people on low incomes, people who don't have very much money. Of course I'm aware of that.

"But I also passionately believe that if I just tell people what they want to hear, if I go for all the easy options, then the lives of those people will be made worse because the economy will fail and Britain will go back to crisis. This is not an abstract argument: look across the Channel at the European continent."

In Europe, some nations had "backed off" austerity and "here we are in 2014 with a number of those countries facing economic crisis again". Mr Osborne said: "That is the challenge and the United Kingdom has a real choice now in this general election, because our opponents have made absolutely no attempt to say 'there are difficult choices, we are going to have to take tough decisions'.

"We can either go back into failure, back into crisis, and the people you are asking about would suffer the most, or we can go on and build a much more prosperous and secure economy." He rejected the suggestion that not enough had been done to target the wealthy, highlighting the decision to remove child benefit from high-earning households, raise the level of capital gains tax and increase stamp duty on the most expensive homes.

But he acknowledged: "I would much rather have been a chancellor of the exchequer during a period where you just went round the country handing out money." Setting out the reason for further austerity in order to eliminate the deficit, Mr Osborne said: "I don't know when the next crisis is going to afflict our world. We have got the Eurozone in stagnation, which is a polite term for it. We have got the borders of Russia aflame, we've got all the horrific events in the Middle East.

"Look on your television screens at what's happening in Hong Kong. "There's a huge amount out there in the world going on. If you can tell me Britain is completely set fair and nothing is going to disturb our calm waters again, then fine. I just don't think that's true and I therefore want to make sure this country is well prepared, and the only way you can get that debt down consistently is by running a surplus."

The Chancellor plans £13 billion of cuts in Whitehall spending and a £12 billion reduction in the welfare bill - including the freeze announced at the conference - to help ensure that deficit is eliminated by the end of the next parliament in 2020. Mr Osborne acknowledged that finding savings in Government "gets more challenging" but said technology could be used to cut the cost.

He said: "Of course it gets more challenging, but equally the world doesn't stand still. Some of the things that technology enables us to do - if you think of some of the service you get from government and the state, compared to the service you get online now from retailers, it is quite old fashioned.

"There are many ways you could use technology to also save money, so I wouldn't say it's an entirely static situation. Some things we can do now that were just not feasible four or five years ago. So I wouldn't say there's this argument 'you have taken all the low-hanging fruit', I don't accept that."

He said his Labour opposite number Ed Balls would be a "disaster for Britain" because he refused to accept the need for austerity and said Ed Miliband's party was not ready for government. Mr Osborne said: "I have seen it when an opposition is about to come in to government. They are the people who have got the ideas, the ambition, the exciting plans, they have got the people who look like they are ready to take the big jobs.

"I saw it in 2010, frankly - and I was working in Downing Street at the time - I saw it in 1996-97. That is not what you see in the Labour Party today. That is not a party that believes even in its own leadership, let alone believes the country believes in its leadership."

Mr Osborne told activists at another fringe event that the party will have to "fight the campaign of our lives on the ground" to win next year's election. But he said the Tories had the advantage on the economy and on leadership, where Mr Cameron "knocks the socks off Ed Miliband".

"By a massive margin he is seen as the person to lead our country, the person who looks the part, who has got what it takes to be our Prime Minister and to continue being our Prime Minister. Of course there is a lamentable Labour leader who fails in every regard to fill those shoes that you need to fill if people see you as someone who could occupy 10 Downing Street."

Mr Cameron and Tony Blair had looked like prime ministers-in-waiting, before entering No 10 but "that is not what the country sees today with Ed Miliband and that is a massive advantage for us at this election". While the Tories had ideas for the future, Labour was "a backward-looking party that is still settling scores from the past".

Bur he added: "What we also need to do is fight the best campaign of our lives on the ground." Mr Osborne said the party was "running what must be one of the most well-funded, most targeted campaigns that any political party in Britain has ever fought".

He said: "We know much better than we have ever done before the seats we need to win, the seats we need to hold." Mr Osborne highlighted the work of "brilliant" campaign manager Lynton Crosby and US guru Jim Messina, who ran Barack Obama's re-election effort.

The Liberal Democrats were "extremely vulnerable at this election", Mr Osborne said and "that is a real opportunity to us". The Chancellor said: "We are running this tight campaign, we are polling in individual seats, we know the issues, we know what our strengths are, we also know the weaknesses we need to address."

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