Parents could face yet more cuts to child benefit as the Government prepares to unveil a radical spending review which could see budgets reduced by a third in some departments.
George Osborne, the Chancellor, is set to axe benefits for children aged over 16, according to reports.
But Labour called on the Government to raise money by taxing bankers instead.
The Government will unveil the results of its spending review on Wednesday, with dramatic cuts expected in every department except health and international development.
Birmingham City Council will be hit as the Department for Local Government’s £33.6 billion budget is slashed.
Local Government Secretary Eric Pickles gave a taste of what is to come at the recent Tory conference in the city, when he told council leader Mike Whitby at a reception: “I can promise you a lot less money.”
Defence spending will be cut by around £2.7 billion, with up to 7,000 armed forces personnel and 25,000 civilian posts lost.
But the cut, around 7.5 per cent of Britain’s £37 billion defence budget, will be one of the smallest, following Defence Secretary Liam Fox’s public row with the Treasury.
Defence Minister Peter Luff (Con Mid Worcestershire) has denied reports that he threatened to resign if the cuts were too great.
A series of benefits cuts, including limiting child benefit to children below 16, will save around £9 billion from the Work and Pensions budget.
NHS spending will be protected, but efficiency savings including scrapping health authorities and primary care trusts will save £20 billion.
Universities face a massive £4.2 billion cut - with students picking up the bill through higher tuition fees - but schools in authorities such as Birmingham will enjoy a slight budget increase thanks to the introduction of a “pupil premium” targeted at youngsters in deprived areas.
Police face dramatic budget cuts of up to 12 per cent. West Midlands Police Chief Constable Chris Sims has already warned that more than 2,000 jobs might go.
Birmingham MP Andrew Mitchell (Con Sutton Coldfield), the Secretary of State for International Development, has succeeded in protecting his department’s £7.7 billion budget, but aid to developed countries such as India and China will be cut with funding transferred to poorer nations.
Ministers say the cuts are needed to reduce Britain’s borrowing, which is currently £155 billion a year - more than the annual cost of the National Health Service. The nation pays around £40 billion in interest alone.
A series of tax increases have already been announced, including putting up VAT from 17.5 per cent to 20 per cent, continuing the 50 per cent tax rate for incomes above £150,000 and freezing the threshold at which the 40 per cent income tax rate is paid.
The Goverment’s deficit-busting plans were backed by in a letter signed by 35 business leaders including Marks & Spencer chairman Sir Stuart Rose, BT chief executive Ian Livingston and Asda chairman Andy Bond.
But Alan Johnson, Labour’s Shadow Chancellor, called on Ministers to impose more taxes on banks.
He said: “Families take the strain while bankers grab the bonuses. There is no justification for such an unfair sharing of the burden.”
MP John Spellar (Lab Warley) said: “While everyone recognises that we need to have some cutbacks, we must not be panicked into drastic cuts that will damage the economy, hit families hard and are totally unnecessary.”