The Conservatives would freeze working age benefits for the next two years if the party secures the public vote next year, chancellor George Osborne has said.
Speaking today at the Conservative Party Conference in Birmingham, he warned of a growing “culture of welfare dependency” among young people, which the state could no longer fund.
Osborne said: “There will have to be less welfare spending, which currently makes up a third of the entire government budget. We cant afford to pay £100bn pounds for people of working age.”
Plans were also revealed to limit benefits at £23,000 per family - down from the current £26,000 - in order to free up money to help young people into work.
“People out of work should not get more than the average family in work,” he said. “And the savings would be used to fund three million more apprenticeships so we can help our young people get jobs.”
As well as capping benefits, he said he would scrap the “death tax”- a tax on inherited pension savings – if they are voted in at the next general election. The 55 per cent tax currently levied on pension pots of savers when they die has been axed with immediate effect.
“People who have worked and saved all their lives will be able to pass on their hard-earned pensions to their families tax free,” Osborne said. “The children and grandchildren and others who benefit will get the same tax treatment on this income as on any other, but only when they choose to draw it down.”
The 55 per cent tax applies whenever someone aged 75 or over dies, and currently the only people exempt from paying it are spouses and financially dependent children under the age of 23 – they pay their marginal income tax rate which is normally 20 per cent.
From now on, all beneficiaries will have to pay only their marginal income tax rate and will have access to the pensions funds from any age.