Complete coverage and analysis of the British government's spending review

George Osborne spent just over an hour outlining how the coalition intend to cut to national deficit.

The Chancellor set out plans to cut government spending by a massive £81 billion over the next four years, in a settlement he described as ''tough but fair''.

• Council bracing for job cuts
• Schools hoping for slice of rebuilding cash
• Fire chiefs draw up list of savings
• Hampshire MP slams government cuts
• Cuts will 'bring UK back from the brink'
• Police 'will protect frontline'
• City protest against cuts
• Union slams police cuts
• Spending Review FAQ - HM Treasury
• Watch the speech live on parliament.tv

Announcing details of the Comprehensive Spending Review in the House of Commons, he said that the measures had been necessary to pull the country back from the ''brink of bankruptcy''.

He was accused by Labour of taking a ''reckless gamble'' with the economic recovery with a cuts package which would see the poorest in society shouldering a greater burden than the richest.

However his measures tonight won the backing of the Fitch ratings agency, which said that it should help the UK retain its prized triple A credit rating.

In other key announcements, Mr Osborne said that he was bringing forward the date at which the state pension age would rise to 66 for both men and women, saving £5 billion a year.

He confirmed that 490,000 public sector jobs were expected to be lost over the next four years as most Whitehall departments were forced to cut their budgets by around a fifth in real terms.

The police, prisons, universities and local councils, will all be hit hard as the cuts bite.

But the centrepiece of his plan was a series of benefit cuts totalling more than £7 billion on top of the £11 billion already announced in the emergency Budget in June - representing a hefty increase on the £4 billion previously predicted.

Under the changes, the employment and support allowance - brought in to replace incapacity benefit - will be time-limited to a year for those claimants judged able to work in future.

Young people under 35 will only be able to claim housing benefit for a room in a shared house rather than their own flat, and the mobility allowance will be cut for care home residents.

The rules on the working tax credit will also be tightened so that couples with children will have to work at least 24 hours a week between them in order to claim it.

The changes suggest that Work and Pensions Secretary Iain Duncan Smith has had to pay a high price for his single ''universal credit'' - replacing all working age benefits - to be phased over two parliaments with £2 billion of Treasury funding.

Mr Osborne also confirmed that he would go ahead with plans to axe child benefit for higher rate taxpayers.

He said that move was now estimated to save £2.5 billion, rather than the £1 billion previously thought, so that he did not need to cut the benefit for children over 16.

To cheers from Tory MPs, Mr Osborne taunted Labour saying his welfare cuts meant average spending by Whitehall departments would now be reduced by 19%, rather than the 20% implied by the former government's plans - a claim denied by Labour.

Administrative cuts across Whitehall were now expected to save £6 billion a year - double the £3 billion previously forecast - while HM Revenue and Customs was being given £900 million to tackle tax evasion and fraud, which was expected bring in a further £7 billion.

Among the big losers are the Home Office which will lose 24% over four years - with spending on policing falling by 16% - while the Ministry of Justice is to axe 3,000 prison places as its budget is cut by 23%.

The Foreign Office faces a similar 24% cut, with a sharp reduction in London-based diplomatic staff.

Business Secretary Vince Cable succeeded in protecting the science budget, but the teaching budget for universities is to be slashed by 40%, while his overall departmental budget is cut by 28%.

Schools were among the winners with a small real terms increase, with spending rising from £35 billion to £39 billion. Overall, the Department of Education's budget will fall by just over 3%.

Local councils will see a 28% cut in central government funding, with the devolved administrations in Scotland, Wales and Northern Ireland losing 6.8%, 7.5% and 6.9% respectively.

Mr Osborne said that he had acted to restore ''sanity to our public finances'' and deal ''decisively'' with Britain's record peacetime deficit.

''To back down now and abandon our plans would be the road to economic ruin. We will stick to the course. We will secure our country's stability. We will not take Britain back to the brink of bankruptcy,'' he said.

Shadow chancellor Alan Johnson said that the Government's ''rush'' to cut the deficit was a ''recipe for unemployment''.

''Today's reckless gamble with people's livelihoods runs the risk of stifling the fragile recovery,'' he said.

''We believe we can and should sustain a more gradual reduction, securing growth.''

There were signs of unease also on the Liberal Democrat benches with deputy leader Simon Hughes stressing the need to ensure the cuts were administered as fairly as possible.

''There will be difficult times ahead in many households and communities and it would not be right to jump to conclusions about what the effect of today's decisions will be either nationally or locally,'' he said.

Official Treasury documents

• Complete Spending Review document
• Impact on equalities document
• Funding policy document
• Policy costing document
• Data sources document

Key Points

• Britain has the largest structural budget deficit in Europe at £109bn

• The UK is paying £43bn a year in debt interest.

• Next year, current expenditure will be £651bn, then £665 billion the year after, £679bn the year after that, before reaching £693bn in 2014/15, as set out in the Budget in June.

• Debt interest payments will be lower by £1bn in 2012, £1.8bn in 2013 and £3bn in 2014, a total of £5bn over the course of the spending review.

• Total public expenditure will be £702 billion next year, then £713 billion, £724 billion and £740 billion in 2014/15.

• The government will deliver £6bn of savings at Whitehall - up from a projected £3bn.

• There will be some redundancies in the public sector, which is "unavoidable when the country has run out of money".

• The core Cabinet Office budget will be reduced by £55 million by 2014/15.

• The Treasury will see its overall budget reduced by 33% and the department's building will be shared with part of the Cabinet Office.

• Total Royal Household spending will fall by 14% in 2012/13, while grants to the Household will be frozen in cash terms with a temporary additional facility of £1 million to support the costs of the Diamond Jubilee.

• The Ministry of Defence budget will reach £33.5 billion in 2014/15, a saving of 8per cent.

• There will be overall savings in funding to local councils of 7.1%, but ring-fencing of all local government revenue grants will end from April next year, except for simplified schools grants and a public health grant.

• Local government grant funding for social care to increase by an additional £1 billion by the fourth year of the review and a further £1 billion for social care will come through the NHS to support joint working with councils.

• Each Government department will next month publish a business plan setting out its reform plans for the next four years.

• Police spending will fall by 4% each year of the spending settlement, with the aim of avoiding any reduction in the visibility and availability of police in our streets.

• Those on the highest incomes will contribute more towards the fiscal consolidation, not just in cash terms but also as a proportion of their income and consumption of public services combined.

• Legislation to introduce a permanent tax levy on banks will be published tomorrow.

• HM Revenue and Customs budget will be expected to find resource savings of 15% through the better use of new technology and greater efficiency, while spending £900 million more on targeting tax evasion and fraud to help collect a missing £7 billion in tax revenues.

• The state pension age for men and women will reach 66 by the year 2020, saving over £5 billion a year by the end of the next Parliament.

• Government to consult on changes to contribution discount rates to public pensions, with the aim of saving £1.8 billion per year in the cost of public service pensions by 2014/15.

• Local authorities to get greater flexibility to manage Council Tax and direct control over Council Tax Benefit within an overall budget that will be reduced by 10% from April 2013.

• A benefits cap together with all other welfare measures will save £7 billion a year.

• The child element of the Child Tax Credit will be increased by £30 in 2011/12 and £50 in 2012/13 above indexation, meaning annual increases of £180 and then £110 above the level promised by Labour.

• Universal benefits for pensioners will be retained exactly as budgeted for by the previous government and the temporary increase in the Cold Weather Payment will be made permanent.

• Total health spending to rise each year over and above inflation from £104 billion this year to £114 billion by the end of the next four years.

• Government aims to save up to £20 billion a year in the health service through better value for money, the cash to be reinvested in health care.

• Scotland, Wales and Northern Ireland will see cash rises in their devolved budgets, although below the rate of inflation. Scotland's budget will rise to £25.4 billion in 2014/15, Wales to £13.5 billion and Northern Ireland to £9.5 billion.

• Administration in the Department for Business, Innovation and Skills will be cut by £400 million, 24 quangos will be cut and low-priority programmes like Train to Gain will be abolished.

• Investment in adult apprenticeships will help 75,000 new apprentices a year by the end of the spending review period.

• Average annual savings of 7.1% will be found from the Department for Business budget but the science budget will be protected with no cash cut, leaving it at £4.6 billion a year.

• Settlement for the Department for Energy and Climate Change will fall by an average 5% a year. Defra will deliver resource savings of an average 8% a year.

• Department of Culture, Media and Sport budget will come down to £1.1 billion by 2014/15, with administrative costs reduced by 41%. Free entry to museums and galleries will remain.

• BBC to fund BBC World Service and BBC Monitor as well as part-funding S4C, saving the Treasury £340 million a year, with the licence fee frozen for the next six years - equivalent to a 16% saving in the BBC budget over the period.

• £30 billion to be invested in transport projects over the next four years, including £14 billion to fund maintenance and investment in railways.

• The cap on regulated rail fares will rise to RPI plus 3% for the three years from 2012, to help pay for new rolling stock and improve passenger conditions.

• There will be a real increase in money for schools for each of the next four years. The schools budget will rise from £35 billion to £39 billion.

• A new £2.5 billion pupil premium to support the education of disadvantaged children will be introduced.

• Sure Start services will be protected in cash terms and 15 free hours of early education and care for all disadvantaged two-year-olds will be introduced.

• The Department for Education will be required to find resource savings of only 1% a year, central administration will be cut by a third and five quangos will go.

• Average saving in departmental budgets will be lower than the previous government implied, with cuts of 19% over four years instead of 20%, said Mr Osborne.

Expert reaction

The live blog below is provided expert analysis of the government's spending review, from:
• Chas Roy-Chowdhury, ACCA’s head of tax
• Gillian Fawcett, ACCA’s head of public sector
• Glenn Collins, ACCA UK’s head of advisory services
• Manos Schizas, ACCA’s senior policy advisor on all things small business

The blog was run by the Association of Chartered Certified Accountants (ACCA).