Cameron: 'Difficult decisions' on pay and benefits

Prime Minister David Cameron has warned of "difficult decisions" on pay, pensions and benefits as he set out the case for "painful" cuts ahead.

Dealing with the deficit would affect "our whole way of life" but not in a way that hits the vulnerable or "divides the country", he said.

The Treasury will say on Tuesday how it will consult the public on its plans.

Shadow chancellor Alistair Darling said Mr Cameron was talking "nonsense" and did not understand the need for growth.

Spending 'splurge'

The Conservative-Lib Dem coalition government has already outlined plans for £6.2bn cuts this financial year - and is preparing for a Budget on 22 June.

Mr Cameron started his speech by saying problems were "even worse than we thought" and blamed the last Labour government for the "debt crisis".

He accused them of a "public sector splurge" at a time when the private sector was shrinking.

Economic growth had been based on "things that could never go on forever" - "unsustainable" booms in financial services, immigration and government spending, he said.

And he said figures which the Labour government had refused to publish showed the UK would be paying £70bn in debt interest within five years - more than it spent on schools in England, tackling climate change and transport.

"What a terrible, terrible waste of money... this is the legacy our generation threatens to leave the next," he said.

He argued that, without tackling the deficit, increasingly taxes would be used to pay interest on the national debt, rather than being spent on public services.

But he said: "I want this government to carry out Britain's unavoidable deficit reduction plan in a way that strengthens and unites the country."

He added: "Because the legacy we have been left is so bad, the measures to deal with it will be unavoidably tough, but people's lives will be worse unless we do something now."

Taking questions after the speech he acknowledged it would "mean difficult departmental decisions and yes it will inevitably mean some difficult decisions over big areas of spending like pay and pensions and benefits - and we need to explain those to people".

But he insisted he would protect NHS spending and international aid.

'Nonsense'

He did not spell out where cuts would be made, saying there was a "proper process" for doing so - in the Budget on 22 June - followed by a "proper debate" involving as many people as possible about detailed three-year spending plans later this year.

The BBC's political editor Nick Robinson said the Treasury would announce plans on Tuesday to consult the public on the future shape of public services and whether councils and voluntary organisations could provide some services more cheaply.

Modelled on Canada's deficit-cutting approach in the 1990s, our correspondent said this would provide the framework for a debate involving government officials and ministers behind the scenes and consultations with, among others, business groups, trade unions and think tanks leading up to the unveiling of detailed spending cuts in the autumn.

But shadow chancellor Alistair Darling told BBC Radio 4's World At One programme it was "nonsense" for Mr Cameron to suggest he was publishing new figures, as the debt forecasts were in the Budget in March.

"The only thing that has changed is we are borrowing about £11bn less than we forecast at that time," he said.

He said it was a "classic case of a new government blaming the last government" and said if Labour had not used public spending to support the economy "then not only would we have had a recession, there was a serious risk it would go into depression".

Mr Darling argued Britain had a "comparatively small structural deficit" going into the recession and until 2008 the Tories had supported their spending plans.

And he said, thanks to Labour's actions, the coalition government had inherited a growing economy.

"Yes we have got to get our deficit down... but we have also got to make sure that we get growth in place, not just in here but in Europe, because if you don't get growth you will not get your borrowing, you will not get your debt down, and there is absolutely no sign that this government grasps that."

'Slash and burn'

SNP spokesman, Stewart Hosie urged the government to make "targeted efficiencies" and bring forward capital investment to help Scotland's economic recovery. He said the difficulties facing the UK finances were "undeniable" but added: "In tackling them we must steer clear of the savage Tory spending cuts which caused so much harm in Scotland in the 1980s."

And for Plaid Cymru, Elfyn Llwyd said Mr Cameron was "preparing the ground for a slash and burn Budget that will impact massively upon our public services".

He added: "We're left in no doubt now that the prime minister is gearing up for one of the most brutal Budget days in memory."

Hugh Lanning, deputy general secretary of the Public and Commercial Services Union, told the BBC Mr Cameron's speech was "trying to paint the public sector as a problem".

"But the debt wasn't caused by the public sector - it was caused by the banks and the financial crisis and we would like to see them share some of the pain, not just us."

And Unison general secretary Dave Prentis said the speech was a "chilling attack on the public sector, public sector workers, the poor, to the sick and the vulnerable and a warning that their way of life will change".