Chancellor Alistair Darling said in his pre-Budget speech that spending growth will fall to 0.8 per cent a year between 2011-12 and 2014-15.

He warned that the slower spending growth would mean cuts to some departmental budgets and a focus of resources on priorities.

But he said to fix government departments’ budgets for the next five years was “neither necessary or sensible”.

He praised the NHS for already having found £10bn in savings.

Mr Darling said: “We have already set out clear and firm departmental budgets for the next financial year, but to try and fix each department’s budget now, for the next five years, is neither necessary or sensible.

“But we can set out a clear direction, based on our economic priorities and our values as a government.

“We are clear that, following the investments made over the last decade, current spending growth can be set lower than in the past, and fall to an average of 0.8 per cent a year between 2011-12 and 2014-15.

“That will mean cuts to some budgets, as programmes come to an end or resources are switched to new priorities.  And some programmes will need to be stopped altogether. 

“And we believe that, if departments can find further savings and cuts within their existing budgets, as many are already announcing, this will release resources so they can continue to improve services.

“Already individual departments have made great strides in finding savings – £10bn in the NHS, £800m in education, over £400m in the police.”

In the speech, chancellor Mr Darling said his pre-Budget report would deliver the vision of “building a fairer society and securing opportunity for all”.

He said he was “confident that the UK economy will start growing by the turn of the year”. He is sticking to his previous Budget forecast of economic growth of 3.5 per cent in the UK in 2011-12.

But he said: “We can’t be complacent. We must continue to support the economy until recovery is established.”

He forecast public sector net borrowing as a share of GDP will fall every year and be more than halved by 2013-14.

This year, public sector investment reached a 30-year high, he said.