George Osborne 'finds' £12bn in welfare cuts ahead of Budget

Chancellor George Osborne has said he has now "found" the £12 billion of welfare savings promised in the Tory election manifesto as part of the party's plan to eliminate the deficit in the public finances.

The Chancellor is expected to set out his plans in the first all-Conservative Budget on Wednesday.

Savings are expected to be made :

• Removing taxpayer-funded subsidies for social housing tenants who earn more than £30,000 per household - or £40,000 in London

• Cutting the benefits cap (the limit on the amount people of working age can claim) to £23,000 in London. It is understood that it could be cut to £20,000 outside the capital

• Reducing what Mr Osborne calls "very, very expensive" child and working tax credits

• Slashing £650 million funding to the BBC by passing the cost of providing free TV licences to the over-75s back to the corporation

The Chancellor has suggested that he will not reduce the top rate of income tax from 45p to 40p - a controversial move called for by some senior Conservatives, which would have been seen as a tax break for the rich.

Shadow chancellor Chris Leslie said Mr Osborne should introduce tax breaks for employers that pay the living wage as a way of boosting people's incomes and warned against underestimating the importance of tax credits to families.