Chancellor George Osborne targets the under-25s and parents in a new blitz on welfare claimants announced at the Conservative conference.
George Osborne told delegates the coalition government had to “finish the job we have started” in eliminating Britain’s deficit.
He added: “Where is the fairness, we ask, for the shift worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits?
“We speak for that worker. We speak for all those who want to work hard and get on. This is the mission of the modern Conservative Party.”
Faisal Islam on Economics: It was a downbeat speech where George Osborne recast himself as the sensible middle man between Labour profligacy and the fiscal headcases arguing for much faster spending cuts.
Read more: Downbeat speech from a resolute chancellor
Mr Osborne also announced a scheme in which workers agree to give up their employment rights in return for shares in their companies worth between £2,000 and £50,000.
Employees would waive their rights to protection against unfair dismissal and redundancy, but would be able to sell their shares free of capital gains tax.
The extra £10bn of cuts are in addition to the £18bn worth of measures that are already being implemented.
Speaking in Birmingham, the chancellor said that while the wealthy should contribute the most to the cost of reducing the deficit, it was not possible to balance the books “on the wallets of the rich” alone.
Ruling out Liberal Democrat proposals for a “mansion tax” on expensive homes, he said the cost of cutting the deficit following the financial crash was “taking longer than we hoped, because the damage was greater than we feared”.
Where is the fairness for the shift worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits? Chancellor George Osborne
But he added: “The economy is healing… let the message from this conference be clear: we will finish the job we have started.”
Those affected by the latest cuts include the under-25s, who could lose the right to claim housing benefit in a move saving the Treasury up to £1.8bn.
Currently, 380,000 under-25s receive an average of £90 a week and the government argues they should be living with their parents if they cannot fund a home of their own.
Mr Osborne said: “How can we justify giving flats to young people who have never worked, when working people twice their age are still living with their parents because they can’t afford their first home?”
The chancellor said parents on benefits should make a financial decision about whether to have more children. “How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don’t?”
Mr Osborne did not say what the government was likely to do, leading to speculation that it could be planning to target child benefit, income support or tax credits.
But Deputy Prime Minister Nick Clegg told the BBC: “Nothing has been agreed within government on the detail of further savings. These are the kind of things we will thrash out within government in the months ahead.”
The prospect of a further £10bn of cuts by 2016-17 is thought to have been resisted initially by Work and Pensions Secretary Iain Duncan Smith, but the two ministers have now reached agreement.
The Conservatives are also relying on support from the Liberal Democrats, whose leader, Nick Clegg, told his party’s annual conference last month that he would not allow “wild suggestions” of a £10bn cut in welfare.
His colleague, Chief Secretary to the Treasury, Danny Alexander, told delegates: “We simply will not allow the books to be balanced in a way that hits the poorest hardest.”
But Mr Osborne said that a further £16bn of savings had to be found in 2015-16 to meet his target of balancing the books within five years.
He added: “Just as we should never balance the budget on the backs of the poor, so it’s an economic delusion to think you can balance it only on the wallets of the rich.
“Yes, we inherited a tax system where some in the City were paying lower tax rates than their cleaners. That was wrong and we were right to change it. But in the same way, it is wrong that it’s possible for someone to be better off on benefits than they would be in work.”
Mr Osborne said that despite the government’s decision to cut the 50p rate of tax to 45p, the rich would pay a greater share of tax revenue in every year of this parliament than they did in any of the 13 years Labour were in power.