Osborne reveals spending cut details

24 May 10
Chancellor George Osborne today set out £6.2bn of government spending cuts to be made this year
By Lucy Phillips

24 May 2010

Chancellor George Osborne today set out £6.2bn of government spending cuts to be made this year.

The new government announced that budgets for schools, Sure Start and 16–19 education would be protected, alongside those already named (health, defence and international development), but confirmed there would be savage cuts elsewhere. These include an £836m cut from the business department, £683m from transport and £535m from work and pensions.

The Department for Communities and Local Government will have to make savings of £780m, with councils losing £1.165bn. But ring-fences around £1.7bn of grants for local authorities will be removed ‘to help local government deliver their savings’, and as part of a wider ambition to devolve more powers from Whitehall.    

Other departmental cuts include £670m from education, £451m from the Treasury, £367m from the Home Office, £325m from justice, £162m from environment and rural affairs, £88m from culture, media and sport, £85m from energy and climate change, £79m from the Cabinet Office and £55m from the Foreign Office. An efficiency and reform group will be created in Whitehall to oversee the cuts.

The devolved administrations will need to make savings of £704m this year, although they have been given the option of deferring their share until the following financial year because spending settlements have already been made.

The coalition government, which has been in power for less than two weeks, said that most of the savings would go towards paying off the country’s £156bn deficit. However, half a billion of the total savings will be ‘recycled’ in measures to ‘stimulate economic growth’ and ‘build a fairer society’. These include 50,000 adult apprenticeships, £50m for the further education capital fund and £170m for social housing.

Announcing the measures alongside the chancellor, Chief Secretary to the Treasury David Laws said: ‘These are only the first steps which we need to take to put our public finances back in shape. There will be many more tough decisions... the years of public sector plenty are over but the more decisively we act the more quickly and strongly we can come through these times.’

Beyond departmental cuts, £320m savings will be made from scrapping the Child Trust Fund  – although some of the money will be recycled to provide respite care for parents with disabled children.  There will be £1.7bn in savings from delaying and stopping government contracts and projects; £1.15bn of cuts to discretionary spending on travel, consultants and advertising; and £95m in cutting back IT programmes. Property costs will be reduced by £170m while civil service recruitment will be frozen for the rest of the financial year, saving £120m. Quangos will be subject to £600m of cuts, and another £520m will be gained through reducing ‘other low value spend’.

Unions immediately condemned the move. Unite accused the new coalition of ‘taking a fundamental economic wrong turn by sucking £6bn out of a still fragile economy’.

Assistant general secretary Gail Cartmail said it was the ‘harbinger of some very painful cuts’ that would come to light in the June 22 emergency Budget and autumn Spending Review.

The Universities and College Union denounced further cuts to university budgets, including the halving of the number of additional student places next academic year.   





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