David Cameron has said that more public sector savings could lead to a cut in taxes for struggling households.

He made the comments in a speech on Tuesday, which sets out the “values” underpinning the government’s long-term economic plans.

“We have a long-term economic plan to secure this country’s future: cut the deficit, cut taxes, create more jobs, cap welfare, reduce immigration and deliver the best schools and skills for young people,” he said.

Labour responded saying the government’s austerity programme had left people and businesses feeling uncertain about the future.

It said it would put up taxes for the very well paid and create more middle income jobs, as part of its plan to move the economy to steadier ground.