Britain’s transport, environment, local government and finance departments will have their day-to-day budgets, excluding capital expenditure, cut by an average of 8 percent a year over the next four years, Osborne will announce, according to advance extracts of the speech.
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The transport, local government and environment departments, plus the Treasury, have all agreed deals ahead of the spending review on 25 November.
A Treasury source told BBC News the agreements were “really good progress”.
The chancellor has requested government departments to come up with savings as high as 40% by the conclusion of the present parliament.
“Let me put it another way: if our country doesn’t bring the deficit down, the deficit could bring our country down”, he is expected to say.
“No-one knows what the next economic crisis to hit our world will be or when it will come”, he will say in speech at Imperial College London.
In a jibe at former Labour Prime Minister Gordon Brown, Mr Osborne will say “we haven’t abolished boom and bust” and that “we must prepare for whatever the world throws at us”. He needs the money to help fund measures to reduce the impact of the tax credit cuts that were rejected by the House of Lords.
Their comments appear to be squarely aimed at ministers like Work and Pensions Secretary Iain Duncan Smith who is reportedly locked in a bitter battle over cuts to the welfare budget.
Universal Credit is a new type of benefit created to support people who are on a low income or out of work. It is replacing six existing benefits – income-based jobseeker’s allowance, income-related employment and support allowance, income support, child tax credit, working tax credit, and housing benefit.
The Treasury has proposed hiking this “taper rate” to around 75p to raise an extra £2bn – a punitive level Duncan Smith’s officials say would be a disincentive to work.
A spokesman for Mr Duncan Smith said: “No decisions have yet been made about savings”.
Asked on BBC1’s The Andrew Marr Show if he was expecting Mr Duncan Smith to resign, Mr Hammond replied: “I don’t think so”.
Cameron, who will address the Confederation of British Industry annual conference on Monday, said cuts agreed in the Spending Review will allow the government to focus on its priorities – “working families, schools, the National Health Service and national security”.
Painting a grim picture of the United Kingdom if the Government does not keep cutting spending, the Chancellor will declare: “If our country doesn’t bring the deficit down, the deficit could bring our country down”.
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“By finishing the job of repairing our finances, we are able to provide economic security for working families at every stage of their lives, we are able to protect our national security and we are able to extend opportunity to all”.
