GEORGE Osborne's Autumn Statement and Spending Review will deliver "economic and national security", which, among other things, will set out how he plans to spend £4 trillion of taxpayers' money over the next five years.

It will detail some of the deepest cuts to public spending in recent memory, achieving the Conservative goal of a much smaller state by the time of the next General Election.

The Chancellor will set out how he intends to slice £20 billion from spending and £12bn from welfare - as well as raising £5bn in a crackdown on tax avoidance - to meet his commitment to balance the nation's books in five years' time.

With borrowing remaining higher than expected, Mr Osborne could be forced to admit he is set to miss his deficit target of £69.5bn for the current financial year and the Office for Budget Responsibility could scale down its forecast of a £10bn surplus by the end of the parliament in 2020.

 

Mr Osborne's task is made all the more difficult by last month's House of Lords defeat over plans to save £4.4bn from tax credits.

He has agreed to tweak the proposals to soften their impact on claimants; many of whom are low-paid workers.

He rowed with Work and Pensions Secretary Iain Duncan Smith over suggestions he could achieve savings by making Universal Credit less generous instead, while there has also been speculation he could plug some of the gap by targeting housing benefit or putting a squeeze on tax reliefs.

A centre-piece of his economic statement - the fourth in 12 months - will be housebuilding in England. He will pledge to "turn generation rent into generation buy" with plans for 400,000 new homes south of the border in the largest affordable house-building programme in more than 30 years.

In Scotland, house-building is on the rise. For the year to end March 2015 it was up by nine per cent on the 2013/14 figure at 16,281 but this was still 37 per cent below the 2007/08 peak.

In a message released on Twitter shortly before setting off to the Commons, Mr Osborne said: "Today's Spending Review will deliver economic and national security - the foundations for everything we do."

But Labour leader Jeremy Corbyn called on the Chancellor to "listen" to concerns about his plans, saying he was hoping for a "U-turn on drastic cuts to police, tax credits and public services".

Writing in the Huffington Post, Liberal Democrat leader Tim Farron said that more than half of the cuts planned by Mr Osborne were "not necessary to get spending under control", but were instead "motivated by an ideological drive to shrink the state".

With budgets for the NHS, defence, schools and international aid protected, Mr Duncan Smith's Department for Work and Pensions is among a group of Whitehall ministries facing the brunt of cutbacks, alongside the Home Office, Foreign Office, Justice, Business, Environment, Local Government, Transport, Energy and Culture.

The Chancellor announced at the weekend that he had reached settlements with all of the non-protected departments, which had been asked to provide plans to deliver savings of 25%-40% towards the £20 billion cuts pencilled in by 2020.

Exactly how those reductions are shared out will be at the heart of the Spending Review and will determine the shape of Britain's public sector in the years to come.

There have been warnings of redundancies - including as many as 20,000 police - closure of government offices, cuts to arts funding and green energy subsidies and the abolition of a number of quangos.

In the protected departments, it is a different story. The weeks leading up to the Autumn Statement and Spending Review have been peppered with announcements of largesse for priority areas.

Prominent among them have been:

  • A £3.8bn cash injection for frontline NHS services in England for 2016/17, by which time the Government will have delivered £6bn of the £10bn real-terms increase promised by 2020;
  • A £12bn hike in funding for military equipment, bringing the total to £178bn over the next decade;
  • Spending on counter-terrorism to hit £15.1bn over the next five years - a 30 per cent increase on what was spent in the previous five;
  • The SAS and other special forces units to get an additional £2bn to improve their equipment. An additional 1900 intelligence staff to be recruited;
  • The basic state pension to rise 2.9 per cent to £119.30 a week from April, an increase of £174.20 a year;
  • A new national funding formula for schools in England, to be introduced from 2017/18 to close "arbitrary and unfair" gaps between areas;
  • Funding for the pupil premium to be held at its current rate of £2.5bn a year;
  • £150 million to create a new Dementia Research Institute;
  • Funding to fight cyber crime doubled to £1.9bn a year by 2020;
  • Doubling of spending on aviation security to more than £100m.