A GOVERNMENT pledge to exclude pensions from benefit cuts has been criticised by Birkenhead MP Frank Field.

Chancellor George Osborne has set out plans to cut a further £25 billion from public spending - including £12 billion from benefits - after the 2015 election, as he said that the size of the state and the welfare system must become "permanently smaller".

His speech came a day after Prime Minister David Cameron promised that a majority Conservative government would preserve the so-called "triple lock" which sees state pensions rise in line with inflation or average earnings or by 2.5%, whichever is the higher.

Mr Osborne made clear that, by contrast, deep cuts can be expected in the rest of the welfare system.

"Welfare cannot be protected from further substantial cuts," said the Chancellor.

"I can tell you today that, on the Treasury's current forecasts, £12 billion of further welfare cuts are needed in the first two years of the next Parliament."

But Mr Field said: “In this rush to win votes, where are those ‘hardworking families’ that politicians only a few days ago were so keen to champion?

“Pensions are by far and away the biggest cost to welfare. If they are exempt then the £12 billion of cuts will fall totally on the smallest parts of the budget.

“It would be more honest if the Chancellor said that it’s going to be hardworking families who will bear the welfare cuts, it is they that will pay for the increased pensions and it is they who now have to wait longer before they draw that pension.”

Mr Osborne said 2014 was the "year of hard truths", warning voters that only further austerity measures can pay for tax cuts and better job prospects.

In the first major political speech of the New Year, Mr Osborne sought to draw clear economic dividing lines with Labour ahead of next year's general election, insisting that the Government's economic plan is working, but that more time was needed to "finish the job".

"Thanks to the hard work of the British people, our economy is on the mend - and our country is doing better," said Mr Osborne.

"But what was hard won can be easily lost. So we have a choice in 2014. W e can give up, go back to square one, risk everything.

"Or we can confront the hard truth that more difficult decisions are needed - and work through the plan that is turning Britain around. I say: 'let's finish the job'."

Mr Osborne said the Government's long-term plan for the economy was made up of five key elements - reducing the deficit, cutting income taxes and freezing fuel duty, creating jobs, reducing immigration and capping welfare, and improving education.

Speaking at the new Birmingham HQ of car parts firm Sertec as it announced plans to take on 400 workers over the next four years, Mr Osborne said the only way to ensure future jobs and prosperity for Britain was by reining in state spending on a permanent basis.