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Osborne announces that no family on benefits will be better off than the average family that works

Highlights from George Osborne's "Tough But Fair" speech to the Tory Conference, not verbatim.

Screen shot 2010-10-04 at 12.14.54 Labour's legacy: George Osborne's speech began with a reprisal of his favourite economic lines. Labour didn't fix the roof when the sun was shining, he said. Like every Labour government in the past, Brown and Blair left the economy in heavy debt. At the next election Britain must not give the financial keys back to the people who crashed the economic car.

Tough early action has brought dividends: Because of the action taken by the Coalition the world has confidence in Britain. Unlike in other major economies there is no daily fear of panic in the financial markets. Or victory is the very absence of war, he said. Now we must win the peace.

The choice is between the national interest and the vested interest: The national interest is to cut the debt or we'll be paying interest on interest on interest for years. Interest to foreign governments so that they can build schools that we can't afford. From the IMF to the CBI the Coalition's deficit reduction programme is supported. Only the unions who installed Ed Miliband as leader support his economic approach.

NHS and defence: With the ageing population and rising cost of medicine we cannot afford to cut NHS spending. We will give the troops in Afghanistan the tools to finish the job.

A cap on benefits: Welfare takes up a third of all government spending. Much of it is justifiable including the state pension. Let us take pride in the Coalition's decision to restore the pensions-earnings link. But much welfare spending is out of control. We now spend more on housing benefit than on the police. Working with Iain Duncan Smith we will build a welfare system where work is all rewarded. Unless a family has a disability an average family on benefits will never get more than an average family on work.

The wealthy must bear the lion's share of deficit reduction: We've stuck with the 50p tax rate, raised Capital Gains Tax and imposed a bank on taxes so that those most able to pay can shoulder the lion's share of the burden of deficit reduction. Tax evasion is morally indefensible. Confirming the new limit on child benefit, he said it is very difficult to justify taxing people on low incomes to pay for people on high incomes to receive child benefit.

Britain must be an ideas factory for the future: There can be no quick fix road to prosperity. Lasting, sustainable growth comes from rewarding aspiration, hard work and ingenuity.

4.30pm: Video highlights

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