Four more nightmare years of cuts

To the workers of Britain he offered a nightmare vision of four more years of austerity.

Many welfare benefits will be capped at just a 1 per cent "uprating" per year for the next three years - well below the forecast rate for inflation.

A further £5.18 billion is being slashed off welfare spending, in addition to the £18bn already cut.

Delivering his Autumn Statement, Mr Osborne sneered at the unemployed, declaring that he sympathised with the person "who leaves home every morning to go to work and sees his neighbours still asleep."

Public-sector workers will also be attacked through a continuing 1 per cent pay cap, while teachers will face an onslaught under a new performance pay regime.

However, bitterly controversial plans for regional pay differentials in the NHS, Civil Service and Prison Service have been shelved.

Spending by most government departments will be cut by an extra 1 per cent next year and 2 per cent in 2014 to save an additional £3.5bn.

Mr Osborne announced limited measures to tackle tax evasion by big companies.

He aims to raise an extra £2bn per year through combating tax evasion, a tiny figure when compared with the £100bn lost each year according to tax officers' union PCS.

But he also revealed a dramatic multibillion-pound cut in taxation of big companies by announcing that the rate of corporation tax would come down an extra 1 per cent immediately to 23 per cent, falling to just 21 per cent by 2014.

"This is the lowest corporation tax rate of any major Western economy," he boasted.

Mr Osborne claimed that it would now take four more years of spending austerity before Britain's debt started falling - not the three years he had previously expected.

Derisive laughter greeted his claim that "it's taking time, but the British economy is healing."

Wansbeck Labour MP Ian Lavery challenged Mr Osborne to say what his statement would do for the nearly 16 per cent of young people in his constituency who were unemployed.

The cavalier Chancellor replied that "these people" should "go to the jobcentre and see what jobs are available."

Communist Party general secretary Rob Griffiths called for a lifting of the struggle against austerity and privatisation.

He urged the TUC "to commit itself to winning the case among workers and the general public for generalised strike action in defence of public services and the welfare state."

Rail union RMT general secretary Bob Crow described the Chancellor's statement as "a recruiting sergeant for the growing resistance movement to this government of the rich, for the rich."

Tory MPs cheered wildly as Mr Osborne announced cancellation of the 3p rise in fuel tax due in January.

He also trumpeted plans to spend billions of pounds on roads and railways, including taking High Speed 2 to north-west England and West Yorkshire.

He announced changes to new Labour's discredited blueprint for PFI schemes and confirmed plans to extend London's Northern Line to Battersea Park plus a similar extension to the Olympic Park.