George Osborne will today take the axe to public spending and claim the Government's tough policy of cuts is leading to economic recovery. The Chancellor will announce his spending review, setting out limits for 2015/16 and slicing £11.5bn off the budgets of Whitehall departments, an average of 8%. But he is also expected to pledge billions more to major big infrastructure projects in an attempt to boost growth over the years up to 2020. Echoing his Mansion House speech last week, the Chancellor is expected to tell MPs: "Britain is moving from rescue to recovery. But while the British economy is leaving intensive care; now we need to secure that recovery ... "We're saving money on welfare and waste to invest in the roads and railways, schooling and science our economy needs to succeed in the future. "I know that times are still not easy for families. But we have a clear economic plan. We've stuck to it. It is working. And I'm determined to go on delivering it. "Now, together, we're moving Britain from rescue to recovery, let's build an economy that works for everyone." Following the murder of Drummer Lee Rigby outside Woolwich barracks, the Chancellor will confirm a boost in spending on the fight against terrorism. Earlier this month, after agreeing Theresa May's Home Office budget, Treasury Chief Secretary Danny Alexander said: "Counter-terrorism policing is a crucial part of our national security and I took no convincing of the need to protect this area. "Given recent events in Woolwich, we cannot compromise on our national security." Tory MPs will be anxiously awaiting news of where spending cuts in the Ministry of Defence (MoD) budget will fall, following the Chancellor's pledge at the weekend that they will not involve further cuts in manpower levels. But they will welcome Mr Osborne revealing how he intends to implement a proposed cap on previously uncontrolled parts of the public finances, such as welfare, debt interest and payments to the EU. The cap on so-called "annually managed expenditure" was floated by Mr Osborne in his Budget in March, when he said he would impose a limit on a "significant proportion" of AME, which is made up of elements of public spending which can go up and down due to factors beyond the Government's control. The Treasury has signalled that the state pension will not be affected by any cap, and Mr Osborne has said it will not impact on the "automatic stabilisers" which come into effect in a downturn, suggesting that unemployment benefits could also be excluded. Mr Osborne reached agreement at the weekend with Vince Cable over the level of cuts at his Business Department - the last Whitehall ministry to finalise its settlement. All areas of departmental current spending will be asked to tighten their belts except the NHS, schools and overseas aid, which are ring-fenced. Attention will, however, be focused on whether departments like defence or the Foreign Office have succeeded in reassigning elements of their activities to the health or international development budgets. Mr Osborne said at the weekend that there would be a cut in numbers of civilian workers at the MoD, as well as a renegotiation of major contracts with suppliers to save money. But he insisted there would be no cuts in numbers of sailors, soldiers or airmen and no reduction in the UK's military capability. Labour leader Ed Miliband said on Wednesday morning: "What we see again today is the British people paying the price for this Government's failure. "The Government tells us the economy is healing but actually it is getting worse for ordinary families. What we actually need is a fairer plan to get growth moving, living standards rising and the deficit down." But in Treasury Questions on Tuesday, Mr Osborne insisted his economic plan was moving Britain "from rescue to recovery" and vowed to protect health and schooling. Mr Balls taunted the Chancellor: "The fact is that you promised to get the deficit down and it is rising. How can you still say we are all in it together, when for everyone else living standards are falling and the economy has flat-lined for three years? "Isn't this economic failure the reason why you will not balance the books in 2015 and why tomorrow you are coming back to the House to ask for more cuts in public services, because you are unfair, out-of-touch and now revealed as totally incompetent?" Mr Osborne replied: "Getting a lesson from you in how to balance the books is like getting a lesson from Dracula in how to look after a blood bank." Institute for Fiscal Studies (IFS) head Paul Johnson said: "The scale of the cuts is really astonishing, "If you really do carry on with the next two years up to 2017-18 as pencilled in, that will result in a whole slew of government spending one third or more less than it was in 2010. "So, if I was a betting man I would think there would be some kind of tax rises after the election." | 
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