Chancellor George Osborne says he will only cut taxes if there are further major reductions in public spending as he warned the recovery is not yet complete.
In a speech in Birmingham today Osborne will say a further £25bn worth of cuts are needed after the next election and there is “still a long way to go” to eliminate the deficit.
Sky News reports he will say: “As a result of the painful cuts we’ve made, the deficit is down by a third and we’re borrowing nearly £3,000 less for every one of you and for every family in the country.
“That’s the good news. The bad news is: there’s still a long way to go. We’re borrowing around £100bn a year – and paying half that money a year in interest just to service our debts. We’ve got to make more cuts.
“That’s why 2014 is the year of hard truths. The year when Britain faces a choice.
“Do we say ‘the worst is over; back we go to our bad habits of borrowing and spending and living beyond our means – and let the next generation pay the bill’.
“Or do we say to ourselves ‘yes, because of our plan, things are getting better. But there is still a long way to go and there are big, underlying problems we have to fix in our economy’.”
Speaking to the BBC this morning, Osborne also backed benefits for wealthy pensioners, claiming cutting them would only save tens of millions.
Instead he favoured cutting housing benefit for under 25s as it was unfair on youngsters who were forced to live at home.