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UK's Osborne sharpens axe for austerity spending plan

Britain's Chancellor George Osborne speaks at the Bank of England's Open Forum 2015 conference in London, Britain in this file photograph dated Nov 11, 2015.

[LONDON] Britain's finance minister will on Wednesday unveil budgets for government departments over the next five years, in a spending review expected to herald further austerity measures and bitter recriminations.

George Osborne, a possible successor to Prime Minister David Cameron and his de facto deputy, is aiming to eliminate Britain's budget deficit and run a surplus by the end of the current parliament in 2020.

But he has faced stiff opposition from even within his own Conservative Party over cuts to welfare and other social spending that some see as too swingeing.

"As a nation determined to live within our means, we are facing painful choices, and the hardest of decisions," he said last week, referring to the spending review.

Mr Osborne hopes to enact 12 billion pounds (S$25.5 billion) of cuts to welfare spending and 20 billion pounds of reductions to public spending.

The plan is to be announced alongside the Autumn Statement, which sets out the government's overall taxation and spending plans, but which usually does not specify budgets for each government department.

Mr Osborne is still bruised after Britain's upper chamber of parliament last month rejected his plans to cut tax credits, a state benefit for those on low incomes.

In the spending review, he is expected to try and mollify his critics by announcing time-limited support for those set to lose out the most.

He is also expected to try and sweeten the review by announcing an affordable house building programme, amid complaints that demand for Britain's meagre housing stock has priced many properties out the reach of all but the wealthiest.

Highlighting Mr Osborne's limited room for manouevre, experts predict the sale of state assets to help shore up the Treasury's coffers.

Mooted privatisations include broadcaster Channel 4, coin and medal producer the Royal Mint and the Ordnance Survey mapping agency.

One of the more controversial cuts is expected to be to the budget of the interior ministry, which has been at the centre of a row in recent days after the Paris attacks. Police numbers have fallen sharply in recent years as part of the austerity drive, leading to fears London would struggle to cope with the kind of attacks that struck France.

Spending on healthcare will be ringfenced, although related care services are likely to face the axe.

Defence spending has already been increased, in a separate review unveiled on Monday that boosted funding for counter-terrorism, cyber defence and surveillance.

The opposition Labour Party has already dismissed the review.

"This concept of the Tories (Conservatives) having a 'long-term economic plan' is an absolute myth and they're in chaos, really in chaos on many fronts," said Labour finance spokesman John McDonnell in an interview published in the New Statesman magazine on Tuesday.

"We're going to destroy Osborne's credibility over the next six months," he added.