Chancellor George Osborne has pledged to maintain control of welfare spending, but warned the full weight of the spending restraint may eventually fall on Whitehall budgets unless soaring costs are curbed.

Mr Osborne said the next spending review 'will have to confront this issue' of soaring welfare costs, and published analysis showing the Government would need to make annual £10.5bn savings by 2016 in order to maintain the current rate of reductions in departmental spending fixed through the 2010 settlement.