A CALL by Liam Fox for a five-year freeze on public spending to pay down the national deficit and fund tax cuts as well as an end to protecting certain Whitehall budgets has been firmly rejected by David Cameron.

Just days before the Spring Budget, the former Defence Secretary – regarded as a standard-bearer for the Tory Right – insisted it was time to reverse the "great socialist coup" of the last decade by ending the culture of welfare dependency.

In a speech to the Institute for Economic Affairs, the ex-GP from East Kilbride said: "The country will be at its best when the Government is small and people are left to enjoy the fruits of their own labour.

"In leaving money in people's pockets, economic activity will follow. People will buy houses, invest for their future or just go shopping."

He suggested freezing public spending to free up £345bn over five years; withdrawing benefits like the winter fuel allowance from wealthy pensioners; a temporary Capital Gains Tax holiday; scrapping housing benefit for most under-25s to save £1.8bn and a stamp duty discount for the under-30s to help people get on the property ladder.

Vince Cable, the Liberal Democrat Business Secretary, accused Dr Fox of waging an "ideological jihad" against public expenditure. However, he agreed that ring-fencing the budgets of health, education and overseas aid risked distorting public spending.

However, Mr Cameron speaking at a Mercedes-Benz training academy in Milton Keynes to mark Apprenticeship Week, pledged to continue with Plan A, which includes protecting certain budgets.

"As Prime Minister, I am never short of advice but there's one piece of advice I won't take and that's the piece of advice that says you ought to cut the National Health Service budget," he said.