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Live blog: Cameron 'enormous' spending cuts

By Channel 4 News

Updated on 07 June 2010

David Cameron warns in a speech today that government's debt problem is "even worse than we thought", as plans to reduce the record deficit are expected to affect Britain's "whole way of life". Channel 4 News live blog brings you the latest.

In a major speech on the economy the prime minister will say that the impact of the government spending cuts due to the debt problem will be "enormous" and could be felt for decades.

In a stark warning about the scale of Britain's debt Cameron will say that the proposed plans will "take the whole country with us" as the government begins to tackle the £156bn deficit. No one will escape the effects of the coalition's strategy to address the deficit, Cameron will say in a bid to persuade people of the need for "difficult decisions".

"The decisions we make will affect every single person in our country and the effects of those decisions will stay with us for years, perhaps decades to come," he is expected to say at an event in Milton Keynes.

"It is precisely because these decisions are so momentous, because they will have such enormous implications, and because we cannot afford either to duck them or to get them wrong that I want to make sure we go about the urgent task of cutting our deficit in a way that is open, responsible and fair.

"I have said before that as we deal with the debt crisis we must take the whole country with us - and I mean it."

His comments come as ministers prepare for an emergency budget due to be delivered by Chancellor George Osborne on 22 June.

Osborne and Danny Alexander, the new Chief Secretary to the Treasury, will on Tuesday publish the principles meant to underpin both the Budget and the spending review which will come later in the year.

Nick Clegg, the Liberal Democrat deputy prime minister, has insisted that the plans would not mark a return to Thatcherism.

The prime minister himself will set out why the government needs to take "painful" measures, saying the debt problem facing the government is "even worse than we thought" and the implications could be "more critical than we feared".

The government's new Office of Budgetary Responsibility is expected to downgrade Labour's forecast of 3 per cent growth next year. 

In an interview with The Sunday Times, Cameron suggested that high welfare and public sector pay bills were high on the government's list for cuts. Child tax credits for better-off families are expected to be curbed.

Capital gains tax is likely to rise, although there is speculation that there could be generous exemptions for certain groups of people, including entrepreneurs and pensioners, after opposition from Tory right-wingers.

Ministers have steadfastly refused to rule out a rise in VAT, from its current level of 17.5 per cent. However, the government wants the bulk of its savings to be made by reducing current expenditure rather than raising taxes.

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