George Osborne was accused yesterday of targeting the poor and vulnerable and sparing the rich as he outlined 25 billion ($50 billion) of spending cuts, with half of them coming from the welfare budget.
Britain's Chancellor kicked off the political year with a bleak warning that clearing the deficit is "not even half done". But his suggestion of 12 billion of welfare cuts in the two years after the 2015 election provoked an angry backlash from the Liberal Democrats and pressure groups.
Nick Clegg, the Deputy Prime Minister, accused Osborne of launching an "unrealistic, unfair" attack on the poor while demanding no sacrifices from the wealthy.
He told his monthly press conference: "You've got a Conservative Party now who are driven, it seems to me, by two very clear ideological impulses. One is to remorselessly pare back the state - for ideological reasons. Secondly - and I think they are making a monumental mistake in doing so - they say the only section in society which will bear the burden of further fiscal consolidation are the working-age poor."
Clegg added: "You've got an agenda on the right which appears to believe in cuts for cuts' sake, and an agenda on the left which believes in spending for spending's sake."
His hostile reaction suggested that it might prove difficult for the Conservatives and Lib Dems to reach agreement on a second coalition if the 2015 election results in another hung Parliament. Both Labour and the Lib Dems called yesterday for the deficit to be cut in a "fair way".
Osborne has set his face against any tax rises to balance the books, while the Lib Dems and Labour both support a mansion tax on homes worth more than 2 million. Clegg made clear he would support further tax increases on the rich, to fill 20 or 25 per cent of the gap, with the rest found through cuts.
The Chancellor's tough message, in a speech in Birmingham and media interviews, was designed to put Labour on the spot in the run-up to the election.
If Labour refuses to back big welfare cuts, the Tories will argue that it lacks economic credibility and would raise taxes. Osborne believes further welfare savings will prove popular with many swing voters.
Osborne said government, and the welfare system, were "going to have to be permanently smaller". But he appeared to rule out cuts to the health budget or pensioners' benefits such as winter fuel allowances, free bus passes and TV licences.
Paul Johnson, director of the Institute for Fiscal Studies, said: "Wherever you look, you are taking money either from people who are poor, from people who are sick and disabled or people with children, none of which looks terribly easy to achieve, but these are difficult times."
Ed Balls, the shadow Chancellor, said: "Labour will have to make cuts and in 2015-16 there will be no more borrowing for day-to-day spending ... But we will get the deficit down in a fair way, not give tax cuts to millionaires. And we know that the way to mitigate the scale of the cuts needed is to earn and grow our way to higher living standards for all."
A Conservative spokesman replied: "Ed Balls has confirmed that Labour's choice is for more of the same - more borrowing, more spending on welfare and more taxes."