Unemployed will have to wait seven days before signing on, and Britons abroad lose winter fuel allowance in spending review

George Osborne has unveiled a series of tough new welfare measures, including a seven-day wait before unemployed people can claim benefits, as he identified an extra £11.5bn in spending cuts for the first year after the 2015 general election.

The chancellor said the changes would save £350m in the year 2015-16, helping ensure Britain "lives within its means" as the economy recovers from its worst downturn in a generation.

Osborne told MPs in his 50-minute statement: "While recovery from such a deep recession can never be straightforward, Britain is moving out of intensive care, and from rescue to recovery."

The chancellor announced in his budget in March that he would have to cut current spending by £11.5bn, or 8.5%, for 2015-16 after admitting that he would not meet his target of ensuring debt falls as a proportion of GDP until 2017-18.

The continuing austerity will lead to the loss of automatic pay rises for civil servants, the effective abolition, by introducing a temperature test, of winter fuel payments for British pensioners living abroad, and cuts across Whitehall that will see the communities and local government department's current spending budget cut by 10%.

The chancellor told MPs: "The damage from our banking crisis is worse than anyone feared. We have to deal with the world as it is, not as we wish it to be. So this country has to continue to make savings."

But the chancellor tried to show the coalition is committed to promoting growth when he said that Danny Alexander, his Liberal Democrat deputy, would unveil £100bn in infrastructure projects on Thursday.

Osborne was forced to put the brakes on further welfare cuts last year after the Lib Dems rejected further measures. But the chancellor has managed to squeeze a further £350m in cuts to benefits after toughening the rules for jobseekers.

There will be a new seven-day wait before people can claim benefits. "Those first few days should be spent looking for work, not looking to sign on," Osborne said.

Under the changes, half of all jobseekers will have to attend their local jobcentre every week rather than once a fortnight. Benefit claimants who cannot speak English will lose their benefits if they refuse to attend a language course.

The chancellor said: "If you're not prepared to learn English, your benefits will be cut. Taken together, this new contract with people on benefits will save over £350m a year, and all that money will enable us to afford extra support to help people get into work."

Osborne placed the welfare changes at the heart of his statement – he left the announcements until the final section – as he sought to step up the pressure on Labour, which he called "the welfare party". The chancellor sought to portray Ed Miliband's party as both profligate, for opposing most of the welfare cuts introduced in recent years, and mean, as he appeared to raise questions about Labour's commitment to the basic state pension.

As he forecast in the budget, the chancellor announced that a cap would be introduced from April 2015 on the parts of welfare spending that do not rise and fall with the fluctuating economy. This will mean that housing benefit, tax credits, disability benefits and pensioner benefits will be included in the cap.

But Osborne made clear that the state pension would be exempt, drawing a distinction with Labour, which recently announced that it would be included in its cap.

The chancellor echoed the language of Gordon Brown as he mocked Ed Balls by saying: "I have had representations that we should include the basic state pension in the welfare cap. That would mean that a future government could offset a rise in working-age benefits by cutting the pensions of older people.

"That penalises those who have worked hard all their lives. Cutting pensions to pay for working-age benefits is a choice this government is certainly not prepared to make. It is unfair. We won't do it. And we reject those representations."

Balls insisted that Labour remained committed to the so-called triple lock, according to which the state pension would rise in line with average UK earnings, the rise in CPI inflation or a standard rise of 2.5%, whichever of those three is the highest.

But there was some common ground with Labour, which recently said it would withdraw winter fuel allowance for the rich: Osborne said the allowance would effectively be withdrawn from Britons living abroad. The chancellor, who said it is impossible under EU law to cut the allowance for those living in the European economic area, said: "From the autumn of 2015, we will link the winter fuel payment to a temperature test. People in hot countries will no longer get it. It is, after all, a payment for winter fuel."

The chancellor confirmed that the schools, health and overseas aid budget would be protected. He said £3bn would be spent by 2015-16 to ensure that the NHS and local authorities worked together to improve the provision of social care.

Osborne, who predicted the changes would save £1bn, said: "Let's stop the tragedy of people being dropped in A&E on a Friday night to spend the weekend in hospital because we can't look after them properly in social care.

"By 2015-16, over £3bn will be spent on services that are commissioned jointly and seamlessly by the local NHS and local councils working together. It's a huge and historic commitment of resources to social care, tied to real reform on the ground, to help end the scandal of older people trapped in hospitals because they cannot get a social-care bed."

The education budget increases from £52.8bn in 2014-15 to £53.2bn in 2015-16, allowing for 180 new free schools to be created in that year. The schools funding system in England would also be reformed to ensure it was distributed more equally, he said.