Economy 8 October 2012 George Osborne's speech to the Conservative conference: full text "In the face of the great economic challenges of our age we here resolve: we will press on and we shall overcome." Sign UpGet the New Statesman's Morning Call email. Sign-up In 1972, when a Conservative Prime Minister, two years into office, was faced with economic problems and over-powerful unions, we buckled and we gave up. The result was higher inflation, more strikes and the Three Day week. A decade later in 1981, when another Conservative Prime Minister and Conservative Chancellor two years into office were faced with economic problems and powerful unions, we did not give up, but pressed on and overcame. Today, in the face of the great economic challenges of our age we here resolve: we will press on and we shall overcome. We made a promise to the British people that we would repair our badly broken economy. That promise is being fulfilled. The deficit is down by a quarter. There are one million more private sector jobs. The economy is healing. That healing is taking longer than we hoped, because the damage was greater than we feared. But let the message from this Conference be clear: we will finish the job we have started. And there's another promise we made. On the eve of the election, I told this Conference: we're all in this together. It was more than a slogan. It spoke of our values and of our intent: That there would be sacrifices, and cuts that would be tough to make; That everyone was going to have to play their part. And that in return, we would build an economy that works for all. We took the risk few political parties anywhere in the world are prepared to take before an election. Quite simply, we told people the truth about the hard road ahead. Some say we paid a price for that. But of this I am sure: Our country would have been all-but ungovernable if we had not been straight with the public before asking them to cast their vote. Three years later, my message remains the same: We're not going to get through this as a country if we set one group against another, if we divide, denounce and demonise. We need an effort from each and every one. One nation working hard together. We are still all in this together. We know what the British people mean by fair. That those who put something in should get something out. That we support those who aspire, so we can help those most in need That the cost of paying our debts cannot possibly be borne by one section of society alone. Let's be clear. Those with the most should contribute the most. Each one of my Budgets has increased taxes overall on the very richest. In every single year of this Parliament the rich will pay a greater share of our nation's tax revenues than in any one of the thirteen years that Labour were in office. And we've achieved that while getting rid of a cripplingly uncompetitive 50p rate that raised no money and cost jobs. It is a completely phoney conception of fairness that you stick with a tax rate you know raises no money... ... that you know drives away jobs and investment ... ... that you know weakens the economy ... ... just to say you've kicked the rich. The people who pay the price for that are not the rich but the poor looking for work. There's nothing fair about that. But just as we should never balance the budget on the backs of the poor; So it's an economic delusion to think you can balance it only on the wallets of the rich. Yes, we inherited a tax system where some in the City were paying lower tax rates than their cleaners. That was wrong and we were right to change it. But in the same way, it is wrong that it's possible for someone to be better off on benefits than they would be in work. We're right to change that too. That's why I insisted on a cap on benefits, so no family can earn more out of work than the average family earns in work. And can you believe it? Labour voted against that. All that talk about 'something for something', and they have learnt nothing about anything. Where is the fairness, we ask, for the shift-worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits? When we say we're all in this together, we speak for that worker. We speak for all those who want to work hard and get on. This is the mission of the modern Conservative Party. We represent not the factional interest of organised labour; nor do we indulge in the lazy politics of envy. We leave it to other parties to mark people by their background, to divide, to try to re-order and pre-distribute society by the rules of their favourite sociology textbook. We modern Conservatives represent all those who aspire, all who work, save and hope, all who feel a responsibility to put in, not just take out. Whether it's the owner of the corner shop staying open until midnight to support their family. Or the teacher prepared to defy her union and stay late to take the after-school club. Or the commuter who leaves home before the children are up, and comes back long after they have gone to bed, because they want a better life for them. Or the pensioner, who has saved all their life, and doesn't want to spend it all as they want to pass something on to their children. Or the entrepreneur who doesn't cash out and pack up, but devotes their flair and energy to building the next success story. They are all part of one nation - one nation working together to get on. That is the nation we represent. These are the people I serve as Chancellor. And by the way, that's what being a Party of one nation is all about. It's about a whole programme for Government. It is risible to believe you can become a party of One Nation simply by repeating the words "one nation" over and over again. Of course we all know why he did it. The Labour leader wants to pretend he is moving to the centre, when we can all see he is moving to the left. But as it is revealed as an empty gesture, people will be more let down by the reality than they were attracted by the pretence. You can imagine Benjamin Disraeli's disappointment. Moments after the joy of being told that there really is reincarnation he discovers he's come back as Ed Miliband. To the people of Britain I say this. Whoever you are, wherever you come from, if you're working for a better future - we are on your side. Ladies and Gentlemen, I see this Conservative Prime Minister - David Cameron - close up. He is an outstanding Prime Minister of judgement and integrity. But more than that, he is leading a government of change; of profound, long-lasting change. Beneath the sound and fury of the daily debate a silent revolution is taking place. Some of the biggest issues in British politics, so big people thought them too controversial to fix, we have been prepared to tackle. A state that had become too expensive to pay for. Public sector pensions we couldn't afford. People earning low incomes but still paying income tax. Business fleeing Britain because our taxes were too high. In welfare, policing, and education, services that were crying out for reform Government that had become too centralised The constant drip, drip, drip of powers to Europe. When you are tackling all these, of course the mid-term politics are difficult. But I tell you this. I'd rather have these difficulties because we're tackling these big challenges, than wake up like Tony Blair did, after a decade in power and discover he didn't achieve anything. Let us all here be proud that we are contributing to the most radical and reforming period of government this country has seen for a generation. Yes, we've done it all in coalition. But we could have done none of it without a coalition. Here's a fact about our constitution we all know; what you, David, might call a "Magna Facta": you can't win the votes you need in Parliament for each and every one of these changes without a majority. And the Conservative Party at its best has always known its responsibility: We would rather confront the choices and dilemmas of government than bask in the blissful irrelevance of opposition. Now, we face more hard choices this autumn. The truth is that the damage done by the debts and the banking crisis was worse than we feared. The rise in world oil prices has been larger than anyone forecast. And sadly the predictions that you made, that I made, that almost everyone here made about the euro turned out to be all too true. This makes the job more difficult. But it doesn't make it any less urgent. Yes we've cut the budget deficit by a quarter. But it tells you something about just how big it was that the deficit is still higher today than when a British government went begging to the IMF in the 1970s. This Wednesday I'm also going to a meeting of the IMF. Don't worry. Because of the resolve of the British people, I go representing a country that is seen as part of the solution, not part of the problem. That is only because of the credibility our plans have earned. Now I know our plans have been criticized, but the critics don't seem to agree. Some say we are going too fast. We should be spending and borrowing even more. Their curious suggestion is that by borrowing more we would borrow less. In fact, in good times and bad, in boom and bust, their answer is always to spend and borrow more. They think there is such a thing as a free lunch. They think that extra borrowing could pay for spending, or indeed tax cuts, in an attempt to put money in the pockets of consumers. But the extra borrowing would come at the cost of higher interest rates and everyone would know there would be higher taxes to pay for it, coming down the track. The higher interest rates would pick the very pockets of the working people you are trying to help and the fear of extra taxes would undermine their confidence. In other words, our critics would gamble everything: our credibility, our financial stability, our low interest rates, the cost of our debt they would risk everything on the dubious idea that a few billion more of spending would dramatically improve the fortunes of the trillion-and-a-half pound British economy. I will not take that risk with the British economy. In that 70 minute speech last week to the Labour Conference, do you know how many times Ed Miliband mentioned the deficit? Not once. Not once. No mention of perhaps the most acute problem facing the country. People marvelled at Ed Miliband's feat of memory. So did I. He spoke for over an hour about the problems of Britain, and forgot to mention that we had a Labour government running the country for over a decade. He told us about his life story but forgot to mention that he spent a third of his life working for Gordon Brown. Maybe someone hit him on the head with a mobile phone. And what was the biggest memory lapse of all: he forgot to say the three things that the British people want to hear from the Labour Party. "We're sorry." "We spent too much." "We won't do it again." He may be trying to forget. We're never going to let him. Labour must never be trusted to run the country's finances ever again. Now, as well as those critics saying we're cutting too fast, there are those who say we're cutting too slow. And because some of those who say this are our friends on the debt issue, I want to address the point very carefully. I'm the first to say we should have lower taxes and smaller government. And I'm the Chancellor who is cutting the size of Government faster than anyone in modern times. We're reducing the size of government, from almost 50% of our national income to 40%, in just five years. I just don't think it's realistic to cut a great deal faster than that. And as we reduce employment in the public sector, we have to do it at a pace that allows the private sector to fill the gap. We promised the British people we would protect decent public services as we dealt with the deficit, and so we will. We have never argued that you stop what economists call the automatic stabilisers operating - the lower tax receipts and extra government payments that follow if, for example, the global economy turns down. Our public spending plans were designed to give us flexibility and credibility. The flexibility to respond to the economic conditions in the world around us. The credibility that each day earns us record low interest rates in the world's bond markets. Our detailed tax and spending plans have brought us stability, but they only cover the next two years. We must now take some very serious decisions about what we do after that. Let me tell you about my approach to those decisions. Our published plans already require us to find £16 billion of further savings. As I have said, the broadest shoulders will continue to bear the greatest burden. But I am not prepared to contemplate things that make no economic sense and destroy jobs. So we won't have some kind of temporary wealth tax Even Dennis Healey thought that was a bad idea. Our future lies as a country where wealth creation is not something to be penalised- but encouraged. Nor am I going to introduce a new tax on people's homes. It would be sold as a Mansion Tax. But once the tax inspector had his foot in the door you'd soon find most homes in the country labelled a "mansion". Homes people have worked hard to afford and already paid taxes on. It's not a Mansion Tax it's a Homes Tax and this Party of home ownership will have no truck with it. When it comes to the richest, the first place I will look is to those who are still not paying the taxes we expect them to pay today. We will continue our ruthless pursuit of tax evasion. We will make aggressive tax avoidance more and more uncomfortable. This is not idle rhetoric. Thanks to our action, we are already collecting £4bn more a year from those who avoid or evade tax. And we will take new measures to collect even more. Conservatives are the party of low taxes for the many - not the party of 'no taxes' for the few. If there are other ways to increase revenue from the very top without damaging the enterprise economy, we will look for them. But our country's problem is not that working people pay too little tax; It's that the government spends too much of their money. I'm determined that once again, the great bulk of savings must come from cutting government spending - not increasing taxes. I've said before that eighty per cent of our total effort to cut the deficit must come from reduced spending, and that should remain the case. And as we've shown these last two years, it is possible to do that while improving our public services. Crime has fallen. Hospital waiting lists are down. School standards are higher. In government this Party is achieving something invaluable. We are destroying the left-wing myth that the success of a public service is measured only by how many pounds we spend on it not by whether it heals our sick or educates our children or makes our streets safe. This is because we are doing it carefully and doing it right. And if we want to go on doing that, and limit the cuts to departments, then we will have to find greater savings in the welfare bill. £10 billion of welfare savings by the first full year of the next Parliament. Iain Duncan Smith and I are committed to finding these savings while delivering the most radical reform of our welfare system for generations with a Universal Credit so work always pays. Because it's not just about the money - it comes back to fairness and enterprise. For how can we justify the incomes of those out of work rising faster than the incomes of those in work? How can we justify giving flats to young people who have never worked, when working people twice their age are still living with their parents because they can't afford their first home? How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don't? And here's the broader point. How could a country that wants to compete in the world economy possibly explain that it's cutting budgets on things like schools and science because it couldn't summon the political will to control welfare? For in this country we face something even greater than recovery from recession and the problems of the past. We face the shock of the future. Something my great friend William Hague talked to us about yesterday. And what a brilliant Foreign Secretary he is. The economic crisis has accelerated a change that was already happening in our world. Prosperity and the power it brings is shifting to new corners of the globe, to Asia and the Americas and even now Africa. I'm proud of our commitment to international development but the truth is that free enterprise is lifting hundreds of millions of people out of poverty more quickly than all the government aid programmes of the world put together. That's good news for them, and good news for us too, as it creates vast new markets for British exports. But only if we rise to the challenge. Western democracies like ours are being out-worked, out-competed and out-smarted by these new economies. The question for countries like Britain is this: are we going to sink or swim? And the truth is some western countries won't keep up, they won't make the changes needed to welfare and education and tax, they'll fall further and further behind ... ... they'll become poorer and poorer. I am determined that will not be the Britain I leave to my children, or you leave to yours. And it need not be if we go on making the fundamental, deep-rooted changes needed so our country can grow and compete and prosper. Delivering the further cuts to business tax we have promised. Supporting Michael Fallon's deregulation plans. Seeing through Michael Gove's school reforms. And by the way, those school reforms are the single most important long term economic investment we can make. Our entire economic strategy is an enterprise strategy. We will be the government for people who aspire. Like the people who start a new business, and who work in that business and want to own shares in it. So today we set out proposals for a radical change to employment law. I want to thank Adrian Beecroft for the work he has done in this area. This idea is particularly suited to new businesses starting up; and small and medium sized firms. It's a voluntary three way deal. You the company: give your employees shares in the business. You the employee: replace your old rights of unfair dismissal and redundancy with new rights of ownership. And what will the Government do? We'll charge no capital gains tax at all on the profit you make on your shares. Zero percent capital gains tax for these new employee-owners. Get shares and become owners of the company you work for. Owners, workers, and the taxman, all in it together. Workers of the world unite. I'm a low tax, small government Conservative. But I've never thought the state is without a role to play in the economy. We're Conservatives not Anarchists. We've never allowed uncontrolled capitalism free-rein. It was these Labour politicians, not Conservatives, who let the banks run rampage because they didn't understand that to work for everyone, markets need rules. I'm the Chancellor in a government that has done more to reform finance and banking than any before it ... ... commissioning and then implementing the Vickers Report... ... ring-fencing the high street banks when Labour wouldn't ... ... putting the Bank of England back in charge and working with them to fund new lending ... now creating a British Business Bank. And when we fine those bankers involved in scandals like LIBOR, we're not going to give money back to the banks as Labour did. We're giving the money instead to those who represent the very best values in our country: our veterans and injured soldiers. We're reforming banking, so it serves our economy and supports families and businesses. That is part of our enterprise strategy. People ask how we're going to earn our way in the world. This is how: With an enterprise strategy that safeguards low interest rates. With an enterprise strategy that reduces taxes on entrepreneurs and the low paid. With an enterprise strategy that creates confidence that this country has a government that can pay its bills. We'll pay our way in the world through the skills and talents of the British people ensuring our scientists, engineers, and apprentices are the best in the world. We'll be relentless activists, building infrastructure, roads, power plants, and broadband. We'll be activists for high speed rail and airport capacity, for new scientific research, for cutting through delays and red tape and where was there more red tape than in our planning laws? An enterprise strategy means investing in renewable energy, and opening up the newly discovered shale gas reserves beneath our land. We are today consulting on a generous new tax regime for shale so that Britain is not left behind as gas prices tumble on the other side of the Atlantic. Our enterprise strategy is accepting Britain faces competition from all over the world, and backing what we're good at. When I hear about Britain's global lead in aerospace, I want to extend it. When I see Britain's genius in animation, media, and computing, I want to promote it. When I read of the new frontiers in synthetic biology, advanced materials and regenerative medicine, I want us to pioneer it. Today with some of our leading businesses and universities we announce £1 billion of new science investment in the areas where we lead the world. That's a modern industrial policy, and I am its champion. Let's get on with it. And throughout, let's hold in mind who we do it for. That corner shop owner, that teacher, that commuter, that pensioner and that entrepreneur. They strive for a better life. We strive to help them. Ladies and gentlemen. I have shared with you today the challenges and decisions I have to confront in the coming months. I ask for your support, your trust and your resolve, as we go through these challenges together. We knew two years ago that the task we were taking on was a great one. It isn't too much to say ... ... that the future prosperity of our country... ... the future of a free enterprise system under law ... ... even the stability of Europe ... ... is in question, in a way it has not been in my lifetime. I cannot pledge to you simple answers or a quick solution. This year has shown we are a country confronted on all sides by great difficulties. But this year has also shown we live in a country of courage and creativity. A country that can do incredible things and succeed when we pull together. We never forget that to be the Government of such a country is an honour and when we make the hard decisions we do not make them alone. Because we have the British people at our side and together we can deliver. › Osborne's speech: long on politics, short on growth Chancellor George Osborne delivers his speech during the second day of the annual Conservative conference in Birmingham. Photograph: Getty Images. Subscribe To stay on top of global affairs and enjoy even more international coverage subscribe for just £1 per month!