The 2013 spending round is underway. Osborne has said he will find a further £5bn efficiency savings in the public sector.
Among the savings will be a £1.9bn cut in departmental administration budgets, over £1.5bn by scaling back or stopping non-priority projects and improving project management, and around £1bn from ensuring the government acts as a "single customer" when purchasing goods and services.
He will also be targeting public sector pay while attempting to minimise job losses (however, there will still be another 144,000 cuts to come by 2015/16).
Pay rises will be limited to one per cent (saving at least £1.3bn), while pay awards will be held down. In addition, automatic progression pay will be abolished by 2015/16 in schools, the NHS, prisons and the police. The armed forces will be exempt.
He added that, in the past year, every public sector job loss has been offset by five in the private sector.