David Cameron says the spending cuts will affect "our whole way of life" as the Coalition prepares to learn economic lessons from Canada

Yesterday I noted David Cameron's Sunday Times interview in which he began preparing people for the economic pain to come.

This morning he will be making a speech in which he will set out in the starkest terms yet the likely impact of the spending cuts which the Government will implement in order to reduce the debt bequeathed by Labour:

"I want to set out for the country the big arguments that form the background to the inevitably painful times that lie ahead of us, why we need to do this, why the overall scale of the problem is even worse than we thought and why its potential consequences are therefore more critical than we feared."

"How we deal with these things will affect our economy, our society – indeed our whole way of life. The decisions we make will affect every single person in our country. And the effects of those decisions will stay with us for years, perhaps decades to come."

“It is precisely because these decisions are so momentous, because they will have such enormous implications and because we cannot afford either to duck them or to get them wrong that I want to make sure we go about the urgent task of cutting our deficit in a way that is open, responsible and fair.”

"I want this government to carry out Britain's unavoidable deficit reduction plan in a way that strengthens and unites the country."

The Telegraph this morning leads its coverage previewing the speech with the news that the Prime Minister and the Chancellor are seeking to emulate the success of mid-1990s Canada in turning round an alarming budget deficit in three years with radical spending cuts.

The paper suggests that the approach will therefore involve:

• An unprecedented public consultation exercise on what people expect from public services and where they think the cuts should fall;
• A fundamental re-evaluation of the relationship between government and the public sector;
• A new "star chamber" of Cabinet ministers vetting every departmental budget.

It reports:

Senior Conservatives, led by Mr Osborne, have examined the Canadian model while in opposition and have taken advice from those involved. The idea of a star chamber – copied from Canada – will transform the way spending rounds are carried out. A committee of around four senior ministers will “test” the claims of each department before their multi-billion pound budgets are agreed.

10.30am update:

David Cameron has just made his speech on the need to cut spending and reduce borrowing and he makes it clear where the blame lies for the problems:

"These problems have not just appeared overnight. I think people understand by now that the debt crisis is the legacy of the last government.  But exactly the same applies to the action we will need to take to deal with it. If there are cuts – they are part of that legacy."

In his speech, the Prime Minister then explained the shocking level of debt interest which Gordon Brown has bequeathed to the new Government:

"What I can tell you today – and what we did not know for sure before in fact what we could not know, because the previous Chancellor of the Exchequer did not make the figures available is how much the interest on our debt is likely to increase in the years to come.

Now we have looked at the figures. Based on the calculations of the last government, in five years’ time the interest we are paying on our debt is predicted to be around £70 billion. That is a simply staggering amount. 

No wonder the previous government refused to publish the information. Let me explain what it means. Today we spend more on debt interest than we do on running schools in England.  But £70 billion means spending more on debt interest than we currently do on running schools in England plus climate change plus transport.

Interest payments of £70 billion mean that for every single pound you pay in tax, 10 pence would be spent on interest. Is that what people work so hard for, that their taxes are blown on interest payments on the national debt? What a terrible, terrible waste of money. So, this is how bad things have got. This is how far we have been living beyond our means. This is the legacy our generation threatens to leave the next."

Read the full text of his speech at PoliticsHome,

Jonathan Isaby