Chancellor George Osborne set out a four-year plan of cuts today which he said would drag the country “back from the brink”.

Unveiling a Comprehensive Spending Review which could result in almost half a million job losses over four years, Mr Osborne said: “Tackling this budget deficit is unavoidable.”

In the biggest and most brutal round of public spending cuts for more than 80 years, the Chancellor told MPs: “Today’s the day when Britain steps back from the brink, when we confront the bills from a decade of debt.”

He added: “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.”

The key points:

• Queen agrees to a one-year cash freeze in the Civil List for next year.
• Pension age for men and women to be 66 by 2020 – four years earlier than planned.
• 500,000 state jobs to go over the next four years.
• Structural deficit to be eliminated by 2015.
• Police funding cut by four per cent a year.
• Additional £2bn for social care.
• Spending on NHS and schools to be protected.
• Welfare measures to save £7bn.
• £1.8bn savings to public sector pensions.
• NHS to make £20bn ‘productivity’ savings by 2014.

Mr Osborne confirmed that the Office for Budget Responsibility had estimated that 490,000 jobs could go over the four years.

But he sought to reassure the public, saying: “Much of it will be achieved through natural turnover, by leaving posts unfilled as they become vacant. Estimates suggest a turnover rate of over eight per cent in the public sector.

“But yes, there will be some redundancies. . . that is unavoidable when the country has run out of money.

“We feel responsible for every individual who works for the Government, and we will always do everything we can to help them find alternative work.”

Yesterday, the full human cost of the painful process was laid bare when it emerged one in 10 civil servants will lose their jobs by 2014.

Another 500,000 workers are expected to be made redundant in private companies that rely on public sector contracts or grants.

Chief Secretary to the Treasury Danny Alexander let slip the forecast of the cull when an open copy of the long-awaited Comprehensive Spending Review on his lap was captured by photographers, 24-hours before Mr Osborne began unravelling its details today – dubbed Axe Wednesday.

For Shropshire – including Telford & Wrekin – where one in three jobs is in the public sector, that could see upwards of 7,000 posts axed.

If one in ten of those were to lose their jobs, more than 7,000 people could be out of work. Branch secretary of Unison in Shropshire, Patricia Wilson, said: “The public sector is one of the largest employers in Shropshire. I don’t see that figure as scaremongering, it’s very close to what we would say.

“The thing about Shropshire is that we’ve been led to believe that these cuts will not impact on frontline services. But that’s absolutely rubbish. The public have to know that job losses will impact immediately on services.”

Mr Osborne said the Queen had agreed to a one year cash freeze in the Civil List for next year.

He added: “Going forward, she has also agreed that total Royal Household spending will fall by 14 per cent in 2012/13 while grants to the Household will be frozen in cash terms.”

The chancellor announced that people would have to work longer before they get their state pension.

He said the state pension age for men and women will reach 66 by the year 2020 – four years sooner than previously expected.

He said this would involve a gradual increase in the state pension age from 65 to 66, starting in 2018.

The move would save over £5 billion a year – “money which will be used to provide a more generous basic state pension as we manage demographic pressures”, he said.

The Chancellor pointedly observed that Gordon Brown was not in the Commons today.

He said “How ironic that it was the last Labour Prime Minister himself who once observed that the ‘public finances must be sustainable over the long term. If they are not then it is the poor . . . that will suffer most’.”

Mr Osborne added: “That’s why we are restoring order to our public finances before that is allowed to happen.”

As expected Mr Osborne confirmed that spending on the NHS, schools and overseas aid would be ring-fenced.

But he said spending on police would fall by four per cent each year. However, he added: “Our aim is to avoid any reduction in the visibility and availability of police in our streets.”

The chancellor turned his sights on Britain’s benefit bill, announcing a further £7 billion in cuts. But Mr Osborne pledged that low income families with children would be protected from the “adverse effect from these essential savings”.

One way this would be achieved, he said, was through an increase in the child element of the Child Tax Credit by a further £30 in 2011-12 and £50 in 2012-13 above inflation. He scotched speculation that it would be scrapped for all children over 16.

He also pledged to maintain universal benefits for pensioners.

By London Reporter Sunita Patel