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Chancellor George Osborne is preparing to reveal the biggest programme of cuts in the UK for decades, in his long-awaited Spending Review.
Average budget reductions of 25% to most Whitehall departments are expected alongside welfare cuts, following months of negotiations with ministers.
Reports suggest nearly 500,000 public sector jobs will go by 2014-15.
Labour leader Ed Miliband said the government were taking "an irresponsible gamble with our economy".
He said: "There is an alternative. What the government should be doing is putting in place a plan to reduce the deficit but also protect jobs and growth in our country.
"People will be very fearful about what is being announced today, fearful for their jobs and fearful for many of the services they rely on up and down the country."
On Tuesday 8% cuts to the defence budget were outlined separately in the strategic defence review. Overall 42,000 jobs - in the Ministry of Defence and in the armed forces - are to go by 2015.
Mr Osborne will outline cuts in other departments which could range between 25% and 40% - with the exception of health and international development - in addition to welfare cuts.
Mr Osborne, who attended a Cabinet meeting on Wednesday morning to discuss the Spending Review, has already announced plans to stop child benefit payments to higher rate taxpayers.
There had been reports it could be cut altogether for children once they reach the age of 16, rather than 18 as at present, but sources have told the BBC that will not happen.
Ahead of Wednesday's announcement, Deputy Prime Minister Nick Clegg has warned of a "hard road to recovery" ahead of the country.
In a letter to all Lib Dem MPs, he said decisions being taken by the coalition government were "tough" but "right" and he was "determined to ensure it is a road that leads to fairness too".
Chief Secretary to the Treasury Danny Alexander was photographed carrying the Spending Review on Tuesday - two pages of which were visible to photographers.
BBC Coverage
* Online: Live video and text coverage throughout the day
* TV: BBC Two and BBC News Channel special from 1130am
* Radio: BBC Radio 4 from noon and BBC Radio 5Live from 1130am
* Social Media: @BBCpolitics and @BBCLauraK on Twitter. Follow
While it said the wage freeze and flexibility over hours would help minimise redundancies, it suggested a forecast that there would be 490,000 fewer public sector workers by 2014-15 had been adopted by the government.
Thousands of protesters gathered in Westminster on Tuesday to lobby MPs ahead of the announcement. Dave Prentis, general secretary of the Unison union, said the coalition government was "taking a chainsaw to our public services... not because of a deficit, but because of an ideology".
The chancellor and Prime Minister David Cameron finalised the Spending Review package in a series of meetings with Nick Clegg and Danny Alexander at Chequers at the weekend.
It follows lengthy negotiations with cabinet colleagues over the summer.
BBC political editor Nick Robinson said Mr Osborne would outline percentage cuts in certain departments and there could be some illustrations of projects that have had to be abandoned and details of overall numbers of prison places to be cut.
But he said details of which specific jobs and services could be axed were unlikely.
The document Mr Alexander had been photographed with had shown that if there were voluntary agreements on public sector pay and hours, job losses could be reduced.
Further speculation suggested the BBC might be made to cover the cost of free TV licences for the over-75s - currently covered by the government - but it is understood this will not happen.
Labour leader Ed Miliband said the government were taking "an irresponsible gamble with our economy"
Instead it has emerged the BBC licence fee will be frozen for the next six years - and the corporation is to take over the cost of the World Service, currently funded by the Foreign Office, and the Welsh language TV channel S4C.
There have been several reports that winter fuel allowance, free TV licences and bus passes for the elderly could be curtailed - David Cameron has said he wants to stand by his "very clear promise" during the election campaign, in which he pledged that a Conservative government would keep all three.
The BBC understands that the schools budget in England will be spared large cuts but the social housing budget in England is to be halved and organisations representing rank-and-file police officers fear thousands of jobs will go.
Mr Osborne has pledged funding for big infrastructure projects like London's Crossrail project and the Mersey Gateway road bridge between Runcorn and Widnes - as well as the Synchotron scientific facility in Oxfordshire.
'Act of vandalism'
But Scotland's First Minister Alex Salmond accused the government of a "slash and burn" approach to capital investment which would threaten the "public-sector led" pick-up in Scotland's economy in recent months.
"This is an act not just of vandalism to the public services but potentially of wrecking the economic recovery," the SNP leader - who is expecting a sharp fall in the amount of money Scotland gets directly from the UK government - told the BBC.
First Minister of Wales, Carwyn Jones, has said the proposed cuts are "too fast and too deep" and will "have a significant and lasting impact on the economy".
Ahead of Mr Osborne's statement, it emerged that the government had borrowed a record £16.2bn to plug the gap in the public finances in September.
The figure, from the Office for National Statistics, marks the highest borrowing for September on record, and is unexpectedly up on the £14.8bn borrowed in the same month last year.
BBC News - Spending Review: Osborne prepares to unveil cuts
Average budget reductions of 25% to most Whitehall departments are expected alongside welfare cuts, following months of negotiations with ministers.
Reports suggest nearly 500,000 public sector jobs will go by 2014-15.
Labour leader Ed Miliband said the government were taking "an irresponsible gamble with our economy".
He said: "There is an alternative. What the government should be doing is putting in place a plan to reduce the deficit but also protect jobs and growth in our country.
"People will be very fearful about what is being announced today, fearful for their jobs and fearful for many of the services they rely on up and down the country."
On Tuesday 8% cuts to the defence budget were outlined separately in the strategic defence review. Overall 42,000 jobs - in the Ministry of Defence and in the armed forces - are to go by 2015.
Mr Osborne will outline cuts in other departments which could range between 25% and 40% - with the exception of health and international development - in addition to welfare cuts.
Mr Osborne, who attended a Cabinet meeting on Wednesday morning to discuss the Spending Review, has already announced plans to stop child benefit payments to higher rate taxpayers.
There had been reports it could be cut altogether for children once they reach the age of 16, rather than 18 as at present, but sources have told the BBC that will not happen.
Ahead of Wednesday's announcement, Deputy Prime Minister Nick Clegg has warned of a "hard road to recovery" ahead of the country.
In a letter to all Lib Dem MPs, he said decisions being taken by the coalition government were "tough" but "right" and he was "determined to ensure it is a road that leads to fairness too".
Chief Secretary to the Treasury Danny Alexander was photographed carrying the Spending Review on Tuesday - two pages of which were visible to photographers.
BBC Coverage
* Online: Live video and text coverage throughout the day
* TV: BBC Two and BBC News Channel special from 1130am
* Radio: BBC Radio 4 from noon and BBC Radio 5Live from 1130am
* Social Media: @BBCpolitics and @BBCLauraK on Twitter. Follow
While it said the wage freeze and flexibility over hours would help minimise redundancies, it suggested a forecast that there would be 490,000 fewer public sector workers by 2014-15 had been adopted by the government.
Thousands of protesters gathered in Westminster on Tuesday to lobby MPs ahead of the announcement. Dave Prentis, general secretary of the Unison union, said the coalition government was "taking a chainsaw to our public services... not because of a deficit, but because of an ideology".
The chancellor and Prime Minister David Cameron finalised the Spending Review package in a series of meetings with Nick Clegg and Danny Alexander at Chequers at the weekend.
It follows lengthy negotiations with cabinet colleagues over the summer.
BBC political editor Nick Robinson said Mr Osborne would outline percentage cuts in certain departments and there could be some illustrations of projects that have had to be abandoned and details of overall numbers of prison places to be cut.
But he said details of which specific jobs and services could be axed were unlikely.
The document Mr Alexander had been photographed with had shown that if there were voluntary agreements on public sector pay and hours, job losses could be reduced.
Further speculation suggested the BBC might be made to cover the cost of free TV licences for the over-75s - currently covered by the government - but it is understood this will not happen.
Labour leader Ed Miliband said the government were taking "an irresponsible gamble with our economy"
Instead it has emerged the BBC licence fee will be frozen for the next six years - and the corporation is to take over the cost of the World Service, currently funded by the Foreign Office, and the Welsh language TV channel S4C.
There have been several reports that winter fuel allowance, free TV licences and bus passes for the elderly could be curtailed - David Cameron has said he wants to stand by his "very clear promise" during the election campaign, in which he pledged that a Conservative government would keep all three.
The BBC understands that the schools budget in England will be spared large cuts but the social housing budget in England is to be halved and organisations representing rank-and-file police officers fear thousands of jobs will go.
Mr Osborne has pledged funding for big infrastructure projects like London's Crossrail project and the Mersey Gateway road bridge between Runcorn and Widnes - as well as the Synchotron scientific facility in Oxfordshire.
'Act of vandalism'
But Scotland's First Minister Alex Salmond accused the government of a "slash and burn" approach to capital investment which would threaten the "public-sector led" pick-up in Scotland's economy in recent months.
"This is an act not just of vandalism to the public services but potentially of wrecking the economic recovery," the SNP leader - who is expecting a sharp fall in the amount of money Scotland gets directly from the UK government - told the BBC.
First Minister of Wales, Carwyn Jones, has said the proposed cuts are "too fast and too deep" and will "have a significant and lasting impact on the economy".
Ahead of Mr Osborne's statement, it emerged that the government had borrowed a record £16.2bn to plug the gap in the public finances in September.
The figure, from the Office for National Statistics, marks the highest borrowing for September on record, and is unexpectedly up on the £14.8bn borrowed in the same month last year.
BBC News - Spending Review: Osborne prepares to unveil cuts
