George Osborne claims One Nation crown

• Chancellor to tell Conservative Party conference that further £10bn cuts to welfare will be made, totalling £28m

• Osborne says balancing books on “wallets of the rich” alone not possible

• Under-25s set to lose housing benefit under proposals

• Iain Duncan Smith had argued against universal benefits for the elderly, but policy looks likely to remain

In his keynote conference speech in Birmingham, Mr Osborne pleaded with Conservative Party members and the country to “remain resolute” in seeing through austerity measures, promising that the economy was healing.

But he warned that while the coalition had kept the UK safe so far, western countries faced a “sink or swim” choice as wealth and influence shifted to Asia, the Americas and Africa.

On the day he confirmed he would take a further £10 billion out of the welfare budget by 2017, the Chancellor vowed to hit the rich hardest and hinted at possible new taxes, despite having rejected ideas for mansion and wealth taxes.

The main thrust of Mr Osborne’s speech aimed at restating his credentials to take the UK out of recession and his party’s position as a One Nation party of fairness, after Ed Miliband tried to claim the centre-ground label for Labour last week.

Insisting that the country had to stick with the plan A he has outlined, Mr Osborne contrasted the fortunes of Ted Heath’s government in 1972, which “buckled” in the face of “overpowerful unions” and the Thatcher government in the 1980s, when “we did not give up, but pressed on and overcame”.

He added: “Today, in the face of the great economic challenges of our age, we resolve: we will press on and we shall overcome.”

And he claimed that despite the country being locked in a double dip recession his austerity medicine was working.

He said: “The deficit is down by a quarter. There are one million more private sector jobs. The economy is healing.”

He mocked Mr Miliband for not mentioning the deficit in his speech in Manchester last week despite it being “the most acute problem facing the country”.

He added: “It is risible to believe you can become a party of One Nation simply by repeating the words ‘one nation’ over and over again.”

Instead, he offered his own version of a One Nation party, based around those working to help their communities and the country. He said: “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.

“They are all part of one nation – one nation working together to get on. That is the nation we represent.”

The Chancellor tried to claim that view as one supporting aspiration and those who were willing to work hard.

To underpin this, he unveiled a new employee ownership scheme, in which employees can receive £2,000 to £50,000 worth of shares in exchange for giving up on their “gold plated” employment rights. Any profits made on the shares would be exempt from capital gains tax.

“Workers of the world unite,” he joked to delegates.

The scheme is the result of the controversial review on employment rights by Adrian Beecroft, which called for changes to make it easier for companies to hire and fire staff.

The CBI described the proposal as “niche” and Mr Osborne’s aides admitted it would only help fast-growing small and medium-sized companies.

The Chancellor also said his party represented fairness, arguing that he had increased taxes for the rich in each of budgets, but telling delegates that another £10 billion of savings need to be found in the welfare budget.

He ruled out a short-term wealth tax proposed by the Lib Dems and said their plan for a mansion tax would turn into a tax on ordinary people’s homes.

He said: “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’.

“It’s not a mansion tax it’s a homes tax and this party of home ownership will have no truck with it.”

He promised to continue to pursue tax evasion, which he said has already brought in an extra £4bn of taxes.

Mr Osborne also began to hint at what measures would be brought in to reduce the welfare bill, including not increasing payments for families on benefits when they have another child or automatically giving a young person on benefits a house if they want to leave the family home.

Labour last night claimed Mr Osborne was in “complete denial about the failure of his plan”.

Shadow chief Treasury secretary Rachel Reeves said: “George Osborne’s speech didn’t once mention that his policies have seen a double dip recession, one million young people out of work and the deficit going up by 22 per cent so far this year.”

George Osborne claims One Nation crown – with more austerity