Budget 2012: Four more years of cuts to the welfare bill

Campaigners for the disabled attacked the plan, warning that the most vulnerable in society were already suffering as a result of the Coalition’s welfare reforms.

In January, the Government suffered a series of defeats in the House of Lords over the Welfare Reform Act, with a number of Liberal Democrats joining the opposition.

The plans included an annual £26,000 cap on benefit payments for each household. Further cuts to be agreed over the next three years are likely to provoke more hostility from Liberal Democrats, sharpened by a general election looming in 2015. The Chancellor praised Iain Duncan Smith, the Work and Pensions Secretary, for forcing the measures through in the face of “determined opposition from those who defend unlimited welfare”.

But he warned that the savings made from the welfare reforms would not be enough.

Mr Osborne told MPs that the Government must “maintain our control on welfare spending”. “The passing of the Welfare Reform Act two weeks ago was a historic moment,” he said.