Here's why Osborne thinks 2014 is "the year of hard truths"

Chancellor George Osborne has spoken today on the economic choice Britain has this year.

Difficult decisions are needed in 2014, he said, with more cuts (£25bn after the next election) and repairs. He added that working through the plan to deliver economy success is "a choice for the British people".

Speaking at manufacturing company Sertec in Birmingham, this is the first time Osborne's publicly voiced the size of the cuts the Tories would make should they win the next election. He maintains the country's structural deficit can be closed through spending cuts, particularly when it comes to welfare.

Here are the five ways the government plans to continue the UK's economic turnaround:

Cutting the deficit

On the Treasury’s current forecasts, £12bn of further welfare cuts are needed in the first two years of next parliament.

We’ve still got a huge amount to do to reduce the deficit and get our debts falling.

We’re borrowing around £100bn a year – and paying half that money a year in interest just to service our debts.

We’ve got to make more cuts.

£17bn this coming year.

£20bn next year.

And over £25bn further across the two years after.

That’s more than £60bn in total.

Reducing taxes

If government wants to find a direct way to put money into people’s pockets, you do that by permanently cutting people’s taxes by permanently cutting the spending those taxes pay for.

That’s what the second part of our long term plan is about: cutting income taxes and freezing fuel duty to help hardworking people be more financially secure.

I’m helping with high street business rates and now I’m abolishing jobs tax altogether for those aged under 21.

Creating more jobs by backing business

You all know that there is no better financial security than having a job – and so that’s the third part of our plan: creating more jobs by backing small business and enterprise with better infrastructure and lower jobs taxes.

Capping immigration and welfare

Government is going to have to be permanently smaller – and so too is the welfare system.

But uncontrolled immigration, of the kind we saw over the last decade, brings pressures on public services and leads to abuse of our welfare system.

That’s why we’ve tightened the rules so people can’t just come to this country to claim benefits - and it’s why for the first time we’ve introduced an immigration cap.

Speaking on Radio 4 this morning, Osborne suggested that housing benefit for people under the age of 25 and people living in council houses whilst earning more than £65,000 a year are areas where savings could be made.

Delivering the best schools and skills

The final part of our economic plan is all about delivering the best schools and skills for young people so the next generation can succeed in the global race.

That’s why were turning more and more schools into academies, and creating new free schools.

I want the new jobs being advertised right here at this company to go to local kids coming out of the schools and colleges here.