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More cuts on the horizon as Britain face a year of "hard truths"

Chancellor George Osborne is to give a speech in the Midlands today, which will set out the Government’s priorities for 2014. According to Osborne, Britain still has a "long way to go" with economic recovery and that this will be a year of "hard truths".

He said that the Government needs to "find a further £25bn after the next election”, which is only 16 months away.

“As a result of the painful cuts we’ve made, the deficit is down by a third and we’re borrowing nearly £3,000 less for every one of you and for every family in the country. That’s the good news. The bad news is: there’s still a long way to go,” he commented.

“We’re borrowing around £100 billion a year- and paying half that money a year in interest just to service our debts. We’ve got to make more cuts.”

Housing benefits for the more financially secure and under-25s are likely to be cut and free bus passes and television licenses for the elderly could also face the chop.

Osborne told BBC Radio 4’s Today programme: “If you were going to be looking for savings in welfare, pensioner benefits is not the first place I would turn to. I would look at housing benefit for the under-25s when there are many people listening to this programme who can’t afford to move out of their home but if you’re on benefits you can get housing benefit under the age of 25. There are people, for example, on incomes of £60,000 or £70,000 living in council homes- I’d look at that.

“I think we do have to have a look at the welfare budget because I think it would be an odd choice as a country to say, look we’ve got a high deficit and we’re going to deal with that by just cutting the schools budget or science budget or something like that...and to leave untouched this enormous welfare budget. That ultimately is where you can find substantial savings.”

According to BBC political editor Nick Robinson, the announcement is about politics as much as economics.

He believes that Osborne “wants to set the political baseline for the economic argument in the run up to the next election and if Labour refuse to back his plans he will accuse them of planning to run a higher deficit or to raise taxes in ways which they have so failed to spell out”.