Cameron softens up public for cuts

The Prime Minister said the Government would be "socially responsible" in finding massive savings across Whitehall but said it had a "duty" to cut back.

Writing in a Sunday newspaper, he compared Britain to a failing company and his Tory-Lib Dem coalition administration to new owners trying to make it profitable again.

Ministers are set for mounting tussles with the Treasury as they finalise cuts of up to 40 per cent ahead of October's announcement of the results of the spending review.

Mr Cameron signalled his personal backing for welfare reforms being drawn up by Work and Pensions Secretary Iain Duncan Smith – despite apparent Treasury concerns over the upfront costs.

The 5.2bn annual cost of fraud and error was "the one area of ingrained waste that outranks all others", he wrote – singling out the former party leader for praise.

"Many see it as a fact of British life that we have no hope of defeating. I passionately disagree. Simply shrugging our shoulders at benefit fraud is a luxury we can no longer afford – which is why Iain Duncan Smith is working on the radical steps we can take to deal with it."

Mr Cameron spent some of the first week of the long Parliamentary holiday trying to convince voters at public meetings of the need for a severe squeeze on spending.

In his article he warned: "Even with reform, the truth is there will be some things that we genuinely value that will have to go because of the legacy we have been left.

"I don't like that any more than anyone else, but this is the reality of the situation we're in and it's the duty of this Government to face up to it.

"I can best describe our approach as like the methodical turn-around of a failing business. When a company is failing – when spending is rising, sales are falling and debt is mounting – you need someone to come in with energy, ideas and vision and take a series of logical steps."

It was vital to root out "obvious" waste, he said, and there was also "ingrained" waste that had come to be accepted. He compared the cost of welfare and tax credit fraud and error to corporate sickness rates.

But on top of such "easy" decisions it was necessary to stop spending that was "acceptable in the good times, unaffordable in the bad times", he suggested.

Tax credits for better-off families were like company cars, he suggested: "They're appreciated by all, but if you're suffering losses for the third quarter in a row you've got to drop them."

Talking about efforts to raise cash, he wrote: "Over the coming months we will be setting out some other creative ways we can raise revenue, by selling off or better utilising some of the assets owned by the British taxpayer. "These are your possessions and we owe it to you to get the best value we possibly can out of them."

Attacking waste and being realistic about what could not be afforded would make it possible to prioritise things people care about. "Of course I can't promise to put a ring of steel around every service and every job. But by taking a methodical approach to stripping away every pound of spending that doesn't add much value, this spending review can help us minimise the impact of the cuts."