John Lewis without the rights: Osborne unveils new employee deal

George Osborne has used his conference speech to unveil a new voluntary approach to employee rights, prompting a divided response from commentators.

The chancellor said workers would be able to take up shares in start-up firms in exchange for signing away some of their rights, along the lines of the Adrian Beecroft review.

"Workers of the world unite," Osborne joked to Tory delegates in Birmingham.

"Our entire economic policy is an enterprise policy"

"We knew two years ago the task we were taking on was a great one. But when we make the hard decisions we do not do so alone because we have the British people at our side."

The voluntary scheme would be encouraged by a government pledge to charge no capital gains tax on the shares in the mutually-owned start-up firms.

Osborne also announced a "generous new tax regime" for shale gas.

Elsewhere in the speech, the chancellor announced even more cuts to the benefits system and ruled out the mansions tax proposal put forward at the Liberal Democrat conference.

"It would be sold as a mansion tax but you'd soon find most of the homes in the country labelled a mansion," he said.

"It's not a mansion tax it's a home tax and this party of home ownership will have no truck with it."

The comments won strong support in the hall, but will alienate many senior Liberal Democrats, who went out of their way to convince members they could implement the tax.

Osborne used the speech to announce plans to strip a further £10 billion from the welfare budget by 2016, probably through scrapping housing benefit for unemployed under-25s and reductions to child tax credits.

Liberal Democrat president Tim Farron tweeted: "The Tory £10bn welfare cuts have not been agreed to by the Lib Dems. We can’t allow them to balance the books on the backs of the poor."

The chancellor needs to find extra savings of £16 billion in 2015/16 to meet his own fiscal targets, but prominent economists have already warned him any further raids could spook the markets.

All but one of 18 economists surveyed by Bloomberg news last week warned the government against further cuts.

"There are no easy options for the government here," Melanie Baker, chief UK economist at Morgan Stanley, said.

"The least worst option, we think, would be to stick to the existing austerity plans and make no attempt to repair the fiscal slippage."

Even welfare secretary Iain Duncan Smith is understood to be jittery about any new cuts to the benefits budget, although he and Osborne tried to dispel rumours of a falling out this morning with a joint-written article in the Daily Mail.

The chancellor promised the rich would pay their fair share of tax but there was no details of how, beyond a pledge to crack down on more tax evasion.

Benefits cuts are easily the most popular area of the government's spending programme, with regular polls showing widespread support.