HIGHLIGHTS - Osborne at Conservative conference

MANCHESTER, England (Reuters) - George Osborne, shadow Chancellor, addressed the Conservative Party annual conference on Tuesday, their last meeting ahead of an election due by next June.

Following are some key quotations from the speech:

ON PUBLIC SECTOR PAY

"If anyone needed proof that we now control the argument on the economy then it came last night. As we have argued for months, pay restraint is necessary if we are going to address the debt crisis.

"But for the chancellor of the exchequer to sneak out a public sector pay policy in the middle of the Conservative party conference when he didn't have the guts to announce it to the Labour party conference tells you that these Labour politicians are better at writing books about courage than displaying it."

ON PAY FREEZE

"At a time of crisis, there is an inevitable and difficult trade off between securing jobs and restraining pay ... but today I tell you in all candour that if you look at the nation's finances what the government announced yesterday will not be enough. It covers less than a fifth of the public sector workforce."

"Whoever wins the election is going to have to ask from 2011 each part of the public sector to accept a one year pay freeze ... a pay freeze of the scale I'm talking about is the equivalent to saving 100,000 public sector jobs."

ON 50 PCT TAX RATE

"We should not accept Labour's new 50 percent tax rate on the highest earners as a permanent feature of the tax system. But we could not even think of abolishing the 50p rate on the rich while at the same time I am asking many of our public sector workers to accept a pay freeze to protect their jobs."

ON BANK BONUSES

"I have a tough message to bankers too. The support from the taxpayer when you needed it most was there to prop up your banks not your bank accounts. Don't forget that.

"I hope the new international rules work, it is the best solution. But if we find the money that should be going into stronger bank balance sheets is being unreasonably diverted into bigger pay and bonuses we reserve the right to take further action and that includes using the tax system."

ON PENSION AGE

"In the next parliament we resolve to restoring the earnings link for the basic state pension ... all parties accept that to afford that with an ageing population, the state pension will have to rise."

"The women's pension age is already set to start rising over the next decade to 65. And by 2026 the pension age for men and women will reach 66 ... but most experts now think that is too far off."

"Our aim is to bring forward the date when the pension age rises. This already is happening in Germany, in Holland and in Australia. We will ensure that no increase will happen until the second half of the next decade."

"For men this means the pension age will not start to rise to 66 until at least 2016. For women this means the pension age will not start to rise from 65 to 66 until at least 2020."

(Reporting by Kylie MacLellan)