Cameron signals cuts in welfare, public sector

Prime Minister David Cameron leaves Workington police station in Workington, north west England June 4, 2010 Cameron met Cumbria Police Chief Constable Craig Mackey and other senior police officers investigating why a quiet taxi-driver gunned down 12 people in Britain's worst shooting rampage for years.

LONDON (Reuters) - Prime Minister David Cameron has signalled that growth forecasts would be revised down while welfare bills and public sector pay would be high on the target list for spending cuts, the Sunday Times reported.

The newspaper quoted Cameron, a Conservative who came to power in May, as saying that there were "serious problems" with the forecast of 3 percent growth in 2011 inherited from the previous administration.

"There is a huge amount of debt that has got to be dealt with. Crossing our fingers, waiting for growth and hoping it will go away is simply not an option," he was quoted as saying in an interview due to be published on Sunday.

Excerpts were sent to media late on Saturday.

Britain's budget deficit ballooned during the economic downturn due to lower fiscal revenues and higher welfare bills, reaching 156 billion pounds in the past fiscal year, or about 11 percent of Gross Domestic Product.

"You have to address the massive welfare bills. You have to address public sector pay bills. You have to address the size of the bureaucracy that has built up over the past decade," Cameron was quoted as saying.

"Otherwise you will have to make reductions across the board which you don't want to do. We need to address the areas where we have been living beyond our means."

Without giving quotes to that effect from Cameron, the Sunday Times said measures being considered included benefit freezes, cuts in tax credits for families with children and freezes or severe restrictions on public service pay increases.

Cameron said he would work to make the public understand why the measures were necessary.

His Conservative Party has been saying for a long time that Britain needed to rein in spending in order to avert a downgrade of its AAA credit rating, which would in turn raise the cost of borrowing for government.

"Proper statesmanship is taking the right action, explaining to people the purpose behind the pain ... We have got to take people with us on this difficult journey," he said.

George Osborne, the finance minister, is due to unveil an emergency budget on June 22.

The government, a coalition of Conservatives and Liberal Democrats, has already announced 6.2 billion pounds of cuts for this year, but Osborne's budget is expected to contain details of greater cuts stretching further into the future.

(Reporting by Estelle Shirbon; Editing by Charles Dick)