Benefits for young people will be targeted as George Osborne seeks to cut another £25 billion off public spending.

The Chancellor insisted "substantial" savings would still be needed from welfare after the general election to eradicate the deficit.

However, he played down the prospect of means-testing handouts for pensioners, such as winter fuel payments and free television licences.

Speaking on BBC Radio 4's Today programme, Mr Osborne suggested protection for other universal pensioner benefits would also be kept.

"These pensioner benefits are something we have protected through this parliament," he said.

"We made a promise, it is a promise based on values. A value of supporting people who have worked hard and saved hard all their lives.

"Those values have not changed.

"We haven't written our manifesto yet, but if you were going to be looking for savings in welfare, pensioner benefits is not the place I would first turn to. I would look at housing benefit for the under-25s.

"There are plenty of people listening to this programme who cannot afford to move out of their home.

"But if you are on benefits, you can get housing benefit under the age of 25.

"There are people, for example, on incomes of £60,000-£70,000 living in council homes. I would look at that issue."

The comments came ahead of a speech in which Mr Osborne is due to brand 2014 the "year of hard truths", warning voters only further austerity measures can pay for tax cuts and better job prospects.

Yesterday Prime Minister David Cameron committed the Conservatives to retaining the triple lock on the state pension, which means it rises by whichever is higher of inflation, average earnings, or 2.5%.

Mr Osborne said raising the age at which people receive the state pension was the single biggest public spending saving he had made as Chancellor.

He said means-testing other universal benefits would only save a "few tens of millions of pounds".

"It is not where you need to make the substantial savings required to make sure that this country continues with the place it has which is to reduce its deficit," he added.

"We need to find a further £25 billion of cuts after the election. We have to make decisions about where of course those cuts are to be found, we have to make decisions about whether we seek them in departments or whether we seek them in the welfare budget."

In his speech in Birmingham later, Mr Osborne will caution voters that tax cuts can only be afforded if further significant reductions are made in public spending.

"As a result of the painful cuts we've made, the deficit is down by a third and we're borrowing nearly £3,000 less for every one of you and for every family in the country," he will say.

"That's the good news. The bad news is: there's still a long way to go.

"We're borrowing around £100 billion a year - and paying half that money a year in interest just to service our debts. We've got to make more cuts...

"That's why 2014 is the year of hard truths. The year when Britain faces a choice.

"Do we say 'The worst is over; back we go to our bad habits of borrowing and spending and living beyond our means - and let the next generation pay the bill'?

"Or do we say to ourselves 'Yes, because of our plan, things are getting better. But there is still a long way to go and there are big, underlying problems we have to fix in our economy'?"

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