Osborne to announce £12bn in welfare cuts

Now it costs the treasury £34billion per year, the drastic decrease could mean the UK’s top earners see their tax allowance cut by three quarters from £40,000 to £10,000 per year.

Leader of the Welsh Liberal Democrats Kirsty Williams warned the budget would be balanced on the backs of the poorest in society.

Osborne is also hoping to find £5bn through a programme of closing tax loopholes exploited by big business and the rich.

Conservative lawmaker Mark Garnier said his party had been clear about the scale of welfare cuts at the election, though he hoped they would be phased in gradually.

George Osborne will unveil the first Tory-only budget for 18 years.

Mr Osborne also indicated that he was looking to transfer the £650m-a-year bill for providing free television licences for the over 75s from the Exchequer to the BBC as he delivered a stinging side-swipe at the broadcaster’s “imperial” ambitions.

The Conservatives pledged before the election not to raise VAT, national insurance or income tax, and Osborne’s unlikely to reverse recent cuts in corporation tax – but that doesn’t mean he couldn’t introduce new ones.

George Osborne is expected to outline plans to cut the welfare budget and make tax cuts for the rich and middle-class.

Mr Osborne is also likely to say the Tories will protect people who want to downsize but are anxious their families will miss out on the benefits of the new tax break.

As well as tackling the budget deficit, Osborne is expected to address Britain’s weak productivity record which could undermine the economic recovery in the coming years.

David Cameron said at the time that the party was responding to the “most basic, human and natural instinct there is” for parents to be able to pass on something to their children. “But the greatest mistake this country could make would be to think all our problems are solved”.

He added: “It’s not fair for example that people out of work can earn more than people in work”.

In his report, Mr Willetts played down fears that the funding system is not sustainable in the long run but said the £9,000 maximum fees – which universities want to see raised – could not be frozen indefinitely.

He is expected to wield the axe on tax credits and housing benefit, reduce the overall benefits cap and announce that student grants are being scrapped.

He proposed that the £21,000 earnings threshold for loan repayments is frozen for the five-year parliament.

“For the South West in particular businesses rely on transport networks to move people and goods, digital and wireless connectivity for selling and buying online and energy infrastructure to keep production lines and technology running”, he said.

The Welsh Government’s budget stands at £15.3bn for 2015/16 but Ms Hutt says when inflation is taken into account, the total available has effectively been shrunk by £1.4bn since 201/11.