Chancellor's work to 66 order – but sweeteners for region

Spending Review in full

Councils have warned of "real pain" for millions of people as they are forced to cut budgets and lay off staff after emerging as one of the biggest losers as George Osborne inflicted the deepest spending cuts since the 1970s, while police funding is also being slashed by a fifth.

Mr Osborne said he was bringing Britain "back from the brink of bankruptcy" but his prescription of 81bn of cuts over four years will be hard to swallow for many, with Labour accusing him of taking a "reckless gamble" with the economic recovery and branding the package unfair.

Having already slashed the welfare bill in June, the Chancellor returned to chop an extra 7bn – partly through cutting child benefit from higher-rate taxpayers and time-limiting some incapacity benefits.

This eased the impact on the budgets of Whitehall departments, which were cut by an average 19 per cent instead of the 25 per cent expected. Spending on schools, international development and the NHS was protected, but last night other departments were already warning of tens of thousands of job losses.

The state pension age will rise to 66 for men and women by 2020 – sooner than previously planned – and is likely to increase further in the future, while public sector workers will have to contribute more to their employee pensions.

But Mr Osborne – who described his package as "tough but fair" – avoided more anger from middle England as he withdrew from a plan to stop paying child benefit when youngsters reach 16 and protected pensioners' benefits such as winter fuel allowance and free bus passes.

Good news was generally in thin supply, but Mr Osborne did announce a multi-million pound scheme for Sheffield's roads and improvements to the East Coast Main Line and also revealed North Yorkshire area would pilot a roll-out of super-fast broadband to rural areas.

Mr Osborne said: "To back down now and abandon our plans would be the road to economic ruin. We will stick to the course. We will secure our country's stability. We will not take Britain back to the brink of bankruptcy."

But Michelle Mitchell, charity director at Age UK, said: "People at the end of their working lives will be disappointed that the rise in state pension age has been brought forward as this will impact most on the poorest."

Mark Burke, partner and regional head of Grant Thornton's government infrastructure advisory team in Yorkshire, said: "The aggressive reduction in government spending will help to put the economy on a firmer footing over the longer term. In the short term, however, it is a bitter pill for us all to swallow and a particularly hard knock for the 490,000 employed in the public sector who will soon start to lose their jobs.

WHERE CASH WILL BE SPENT IN YORKSHIRE

North Yorkshire to pilot rural roll-out of superfast broadband

Massive PFI scheme to improve Sheffield roads to go ahead

Motorists to be allowed onto hard shoulder to ease congestion on M1 and M62

Upgrades to East Coast main line to cut journey times to London

New south entrance to Leeds station approved

Humber ports given hope of slice of 200m to become wind turbine factories

1bn pledged for first major clean coal trial, with region in the running

Public sector to pool cash in Hull to tackle problem families