THE SNP has predicted that the first Tory majority Government Budget since 1996 will be "a sermon from an austerity cult" after it emerged George Osborne is to slash social housing payments and cut the benefits cap further than had been anticipated.

The Chancellor will on Wednesday launch a £650m budget raid on the BBC and announce cuts to tax credits, as he warned that the situation in Greece was an example of "what happens when countries don't get their own house in order".

Under expected reforms, those in social housing with household incomes of £30,000 or higher are expected to be told that they will have to pay the market rate to stay in their homes. The UK Government is in discussions with the BBC which will need to "make savings and contribute to what we need to do as a country" with its online content risking crowding out national newspapers, the Chancellor added.

It is believed that under a proposed deal the BBC would take over responsibility for free TV licences for over-75s, currently under the remit of the Department for Work and Pensions. In return, it may be allowed to charge for online services such as the popular iPlayer service.

In the Conservative manifesto, the party pledged to cut the benefit cap - the most one household can be paid in welfare annually - to £23,000. Mr Osborne suggested that the £23,000 cap would now apply only to London, and be "lower in the rest of the country." He declined to comment on reports that it could reduced to £20,000 or lower.

"We have got to have a welfare system that is fair to those who need it but also fair to those who pay for it," he said.

Mr Osborne indicated he is not planning to cut the top 45p rate of tax in the Budget - as some Tories are demanding - saying his priority is reducing taxes for lower and middle income earners.

"We made some promises in the election and I want to deliver on the promises," he said. "We want to take people on the minimum wage out of income tax, raise that tax free allowance to £12,500. For people earning a bit more we want to raise the higher rate to £50,000. Those are our priorities."

However, the opponents have said the expected measures risk plunging thousands into poverty. Labour's Shadow Scottish Secretary Ian Murray said yesterday that reductions in tax credits would affect up to 522,000 children in low income families north of the border.

The SNP's depute leader and Westminster finance spokesman, Stuart Hosie, said the scale of the cuts were not necessary and risked weakening the economic recovery. He added: "Working to deliver an economy in balance rather than surplus would provide the flexibility to deliver up to £93 billion of cumulative additional investment over the next four years.

"Our concern is that the Chancellor will not use this flexibility wisely and will repeat the mistakes of the last parliament adding to the terrible damage the Tories have inflicted over the last five years.

"This will be a budget less about boosting productivity and growth - more a sermon from an austerity cult - cutting where it is not necessary and weakening further the chance of a sustained recovery."

Meanwhile, deputy First Minister John Swinney has written to Mr Osborne outlining his opposition to deep cuts in tax credits and calling for more investment designed to improve productivity and protect those in low pay.

In the letter, he said: "The UK Government's approach to austerity has damaged the economy and undermined attempts to improve public finances. The deficit needs to be reduced, but this should be done in a more gradual manner in which more focus and resources are allocated to a program of additional investment in our economy."