The coalition is being urged by senior Conservative backbenchers to cut public spending further and faster, even going as far as abolishing government departments.

Speaking on Tuesday night in Westminster at a meeting of the Thatcherite group Conservative Way Forward, Dominic Raab said the coalition needed to think about scrapping or "hiving off" government departments.

He singled out the Department for International Development and the Department for Energy and Climate Change as possible offices to abolish.

"DfID should be rolled into the Foreign Office", he said, adding: "We don't need two departments for the Environment".

He said the coalition should make deeper cuts in government and quangos, in order to make room for tax-cuts. "We've got to stand by our principles", he declared.

Raab called for the Conservatives to defend bankers more robustly. He said it would be a mistake for the party to "give succour to the politics of envy" through "banker bashing".

"We've got to be the one party in Westminster and beyond it standing up for the politics of aspiration. With the richest 1% paying 30% of income tax, we shouldn't be shy of challenging Labour. If that's not fair, how much of the bill should they be paying?

"If we're not careful we're going to lose people. We're going to lose people with the grit and gumption to turn this country around. We need to stand up for the wealth creators," he said.

Speaking alongside him, Priti Patel said the government had become "trapped" in how it tries to reduce the deficit. "It's all about salami slicing," she complained.

The coalition, she argued, needs to think "more creatively" about ideas like "greater market liberalisation".

"Government should be liberalising our economy to enable small businesses to grow" she added.

Conor Burns, PPS to Northern Ireland Secretary Owen Paterson, said the coalition was not fighting hard enough to explain government cuts.

"We're falling into our opponents' polarisation of the debate", he warned, "I don't think the public yet understand how seriously the situation we have inherited is. Until they do understand it, I don't think they'll understand the fundamental messages we need to put to them".

The Conservative Way meeting was held to examine the legacy and influence of the group's Honorary President Margaret Thatcher. The pressure group was originally founded in 1991 to celebrate her political achievements.