Speaking to the CBI in London, the Chancellor said he had already informed Whitehall departments to further slash their spending, part of the £13 billion in cuts pledged by the Treasury in line with the Tory's three-year deficit reduction plan.
“When it comes to saving money, we all know that the more you can do early, the smoother the ride,” said Osborne. “And without fixing the public finances so our country lives within its means, there can be no economic security for businesses or working people.”
According to the Institute for Fiscal Studies, the cuts will see budgets in many Whitehall departments slashed by a third by 2018. Allied to welfare cuts and a crackdown on tax avoidance, the Tories argue the reductions will turn Britain’s deficit into a surplus by 2019.
The chancellor also plans to boost national productivity by creating a new government-owned company to sell public assets, including shares in Lloyds Banking Group, Eurostar and the pre-2012 income contingent repayment student loan book.
So announcing that new Chief Sec @GregHands is today asking govt departments to identify further savings for this financial year.— George Osborne (@George_Osborne) May 20, 2015
Osborne said: "If we want a more productive economy, let's get the Government out of the business of owning great chunks of our banking system - and indeed other assets that should be in the private sector. To help that happen, I can tell you that we're merging UK Financial Investments and the Shareholder Executive into one organisation, to return Government investments back to the private sector."
Promising to make Britain “the most prosperous country in the world,” the chancellor said: "It would be very easy at the beginning of a second term to take our foot off the pedal. That's not what we're going to do. I want Britain to find that extra gear. So we deliver for working people. And with your help, that's exactly what I intend to do."
TUC general secretary Frances O'Grady responded to Osborne's speech by warning that productivity will not be boosted by "slashing public investment." She said: "It's no good putting your foot on the pedal if you keep cutting the fuel in the tank. The extreme cuts the Chancellor is planning will put growth at risk during a recovery that is already precarious.
"A firm foundation for higher productivity requires a much better economic plan. We need the Government to invest in skills and infrastructure. Employees should be given a stronger voice at work, rather than removing their protections. And a fairer share of growth must go to wages so that workers have more money to spend."
CBI director general John Cridland said: "Productivity is a missing piece of the growth puzzle and the Chancellor is right to focus on this issue.
"By improving vocational education for 14-18-year-olds, investing more in innovation and upgrading the UK's infrastructure, we can make sure the benefits of growth are felt by all.
"Businesses fully support prioritising deficit reduction, which is critical to maintaining the UK's credibility in international markets and keeping the costs of borrowing low for growing firms."