2 December 2012 Last updated at 08:46 ET

George Osborne: Deficit cut is taking longer than planned

Chancellor George Osborne says the rich will pay more, but welfare spending must also come down.

Chancellor George Osborne has admitted that curbing the UK's financial deficit is "taking longer" than planned.

But he told the BBC the government was "making progress" and that to "turn back now would be a complete disaster".

Mr Osborne, who delivers his Autumn Statement on Wednesday, said well-off people would "pay their fair share".

Shadow chancellor Ed Balls said Mr Osborne's judgement had been "woefully lacking" and more investment was needed to promote economic growth.

The coalition has set a target of reducing debt as a share of national income by the next general election, due in 2015.

UK public sector net borrowing, excluding financial interventions, hit £8.6bn in October, according to the Office for National Statistics (ONS), marking a rise from the £5.9bn borrowed in October 2011.

But last week the ONS confirmed that the UK's economy had grown by 1% during the third quarter of this year, following a recession lasting nine months.

'Pay our way'

Mr Osborne refused to divulge any details of the economic forecasts from the independent Office for Budget Responsibility, which will be unveiled during Wednesday's statement.

Analysis

Tim Reid BBC political correspondent

---

George Osborne wants to get some of the bad news out of the way early

But the admission that his key target on debt reduction is likely to be missed will be an open goal for his political opponents.

Labour, and others, will now seek to paint the chancellor as a man who has got his sums and his policies wrong.

Missing such an important target could also harm any prospect of the coalition parties doing well at the next general election.

David Cameron and Nick Clegg had hoped that, if the economy was back on track and the deficit down by 2015, they might persuade voters that the coalition government had done a good job.

If the books aren't balanced by then, voters might be less willing to agree.

But he told BBC One's Andrew Marr Show: "We had two targets. One was to get debt share falling as a share of national income by 2015/16 and also to balance the current budget.

"It is clearly taking longer to deal with Britain's debts. It is clearly taking longer to recover from the financial crisis than one would have hoped, but we have made real progress.

"The deficit is down by a quarter. There are a million more jobs in the private sector and to turn back now, to go back to the borrowing and the debt and the spending that Ed Balls represents would be a complete disaster for our country."

He added that some people were calling for more borrowing and others for more spending cuts, but the government had "got the right plan and we should stick to that plan".

Mr Osborne said of an economic recovery that "underpinning it will be the confidence of this country to pay its way in the world".

However, Labour's Mr Balls told the Andrew Marr Show that the chancellor's "judgement has been proved to be woefully lacking".

He added: "The growth plan is a shambles. There's nothing there... We are in a hole with no growth and borrowing rising."

What is the Autumn Statement?

• One of the two major statements the Treasury has to make to Parliament every year
• Governments decide what form they take and when to make them, so there have been many changes over the years
• Since 1997 the main Budget - which contains the bulk of tax, benefit and duty changes - has been in the spring before the start of the tax year in April
• The second statement has tended to focus on updated forecasts for government finances
• Over the past few years this distinction has become blurred, with the Autumn Statement becoming more of a mini Budget
• Under the last Labour government it was called the pre-Budget report

According to the Sunday Times, the chancellor is poised to cut the £50,000 annual tax relief cap on pension contributions to as little as £30,000 in his Autumn Statement.

The change, affecting the wealthiest pension pots, would reportedly bring in up to £1.8bn a year.

BBC political correspondent Iain Watson said the Autumn Statement was a Budget by any other name and some tax rises for the wealthy and cuts in welfare were widely expected.

Mr Osborne said: "The richest have paid more in all of my Budgets."

He added: "The richest will have to bear their fair share... more than they pay at the moment."

But Mr Balls said "a millionaires' tax cut worth £3bn" was not the way to go about this.

Former Liberal Democrat Treasury spokesman Lord Oakeshott told BBC One's Sunday Politics: "What matters in the Autumn Statement is to get the economy going."

He said his party "must fight much harder to ensure we get policies [in government] to get it going".