George Osborne vows to cut welfare as coalition tensions surface Chancellor of the Exchequer George Osborne George Osborne vowed on Thursday to find "billions of pounds of welfare savings"as coalition tensions over how to eradicate the deficit bubbled to the surface. The chancellor spelt out a vision for the next parliament of a shrunken welfare state with reductions in public spending, allowing him to run budget surpluses, cut the national debt and reduce taxes. His pledge has sharpened dividing lines between Conservatives and Liberal Democrats over how to close the deficit before the 2015 election, with Nick Clegg's party preferring tax increases on the rich to cutting benefits. Although last week's Autumn Statement committed both Tories and Lib Dems to a new "charter of budget responsibility" and to eliminating the deficit half way through the next parliament, it has sparked an intense debate over how to do it. Danny Alexander, Lib Dem Treasury chief secretary, on Thursday accused some Tories of being "ideologically wedded to continuous cuts." Mr Alexander said his party would not sign up to "endlessly shrinking the state." While Mr Osborne has focused on cutting welfare and other spending, Mr Alexander said the Lib Dems would prioritise higher taxes on the wealthy as the fairest way of eliminating the deficit in the next parliament. "Tax rises on the wealthy will be needed to ensure the burden is shared fairly," he wrote for The Independent newspaper. A "mansion tax" on expensive homes, cuts in pension tax relief and a crackdown on non-dom status are all planned. The Autumn Statement saw Tories and Lib Dems unite around the cause of fiscal discipline and the proposed charter, which will commit the parties to eliminating the deficit in the middle of the next parliament. But Mr Osborne's vision of how to complete the job he started in 2010 is proving unpalatable for many Lib Dem activists, who see Labour as a more appealing coalition partner, despite doubts about the party's fiscal credibility. Labour has adopted the Lib Dem "mansion tax" proposal and shares Mr Alexander's view that tax rises will have to play a part alongside spending cuts in bringing the budget back to balance. The chancellor told the Commons Treasury committee on Thursday that the next government must cut welfare spending in order to run public finances without putting unacceptable pressures on public services such as health or education. Mr Osborne outlined his social security ambitions in response to concerns raised by the Office for Budget Responsibility, the fiscal watchdog, which said spending on public services was poised to fall to its lowest level since records began in 1948. "I think the next government will want to undertake further reductions in the welfare budget and further welfare savings," he said. The chancellor insisted that there was still scope to reduce spending on walfare, saying: "If you undertake further welfare savings then you don't reach that 1948 number." The Institute for Fiscal Studies think-tank said last week that another £12bn a year of cuts to the social security budget would be needed to ensure cuts to other government departments did not accelerate in the next parliament. Mr Osborne also revealed that the 2014 Budget will be on March 19.