Here's a quote from p17 of the full Treasury report:

"Even after these spending cuts, total public spending (Total Managed Expenditure) in 2014-15 will be higher in real terms than in 2008-09. At 41 per cent of GDP, this will be around the same level of public spending as in 2006-07. Spending on public services in 2014-15 will be higher than 2006-07 levels in real terms."

There are no cuts! What is reduced is the rate of increase in real terms of public spending!!!

Why is the press not pointing this out? Oh, I've just realised why: because the press is a ass. The press thinks that a drop in inflation means prices are falling.