Alistair Darling has used his final Budget before the general election to warn of a looming era of austerity in public services.
The chancellor revealed all government departments would today set out details of how they can save £11bn.
He told MPs: "It is clear that the next spending settlement from 2011 onwards will be very tough - the toughest for decades."
Darling confirmed public sector pay settlements would be held at a maximum 1% in each of the two years from 2011.
And he promised public sector pensions would be reformed to ensure they were "affordable".
Darling also offered an unspecified funding boost for older people's social care, paid for by freezing the inheritance tax threshold for four years.
In an apparent reference to the forthcoming care White Paper, he said the health secretary would shortly set out further proposals on care funding.
More to follow