UK can win concessions from EU, says Osborne

British chancellor of the exchequer George Osborne has rejected calls from senior Conservatives to declare that the UK would quit the European Union if it does not get a better membership deal.

Instead, Mr Osborne, speaking at the Conservative Party’s conference in Birmingham, insisted that a Conservative government can win major concessions before putting the issue to a referendum in 2017.

Faced with the increasing threat from the UK Independence Party, some Conservatives argue that prime minister David Cameron and Mr Osborne need to toughen their language.

David Davis, who was defeated by Mr Cameron for the leadership nine years ago, said: "If you're buying a house, you don't say, 'I have to have the house, what price is it?'"

The Conservatives are emphasising that only they can guarantee an EU referendum, confident that that message will eventually seep through to voters who could drift to Ukip.

However, Conservative Eurosceptics have made considerable play of Mr Cameron’s remarks on Sunday that he would recommend an EU exit if he believed it was in the UK’s interests.

“He’s never said that before, so it is hugely significant,” Mr Davis told a fringe-meeting, though, in truth, the Tory leader has used near-identical phraseology before.

A full list of the Conservative demands that other EU countries will face would help to reassure voters doubtful about Mr Cameron’s intentions, Mr Davis argued.

However, Mr Osborne insisted he still believes the UK should be in the EU. "If we didn't think it was in Britain's interest to be in the EU, we wouldn't argue for it," he said. "But we think it's in Britain's interest to change our relationship with Europe, improve the European economy, and argue for that reform."

Extra powers

If re-elected, the Conservatives have promised a 2017 EU referendum; while Labour and the Liberal Democrats have said that they would do so only if extra powers were being pooled in Brussels. "In the end, the only choice you're going to get," he said, "is between [Labour leader] Ed Miliband, an economic plan that isn't working, no referendum on Europe, and David Cameron, a working economic plan and a referendum," said Mr Osborne.

Former Northern Ireland Secretary Owen Paterson said Mr Cameron had been "very canny, so far" in not laying out detailed demands to other EU states, but he needs to offer voters a stronger vision. Saying that he did not want to tie the prime minister's hands, the strongly Eurosceptic Paterson said voters considering supporting Ukip must be given "a very clear, optimistic, destination".

Illustrating some of the ground the Conservatives will occupy in next year’s election, Mr Osborne said the 55 per cent inheritance tax imposed on pensions bequeathed to children will be abolished.

Meanwhile, welfare benefits – bar those paid to pensioners – will not be increased until 2017, if the Conservatives win next May, which will save £3 billion.

The cut, which will cost some working families £800-a-year – part of a further £25 billion that must be taken from spending – was difficult, but necessary, he said.

Spending ‘too much’

Rejecting in advance criticisms that he is targeting the poor, Mr Osborne said: “The problem for a modern country like Britain is not that it taxes too little – it is that it spends too much.”

Despite criticism of his economic policies, he pointed to the creation of two million jobs, which has led to the fastest fall in unemployment on record.

Mr Miliband’s failure to mention the deficit and immigration in his conference speech amounted to “a disqualification for the high office he seeks”.

Meanwhile, he trumpeted measures that have been taken to help small businesses.

By contrast, he said, Labour under Mr Miliband is now " positively anti-business" for the first time in 30 years: "Their business to be against business," he said, to delegates' applause.

However, he once again issued a warning to technology firms not to abuse the UK’s tax laws, some of whom have used Irish headquarters to lower their payments.

“Some technology companies go to extraordinary lengths to pay little or no tax here. If you abuse our tax system, you abuse the trust of the British people. “My message to those companies is clear: We will put a stop to it,” he said, adding that the Conservatives are prepared to offer businesses low taxes, but “low taxes that are paid”.