Spending Review: unprotected departments told to prepare a plan for 40% cuts

21 Jul 15

The government’s four-year plan to cut public spending by £20bn will be published on 25 November, George Osborne has announced, with unprotected Whitehall departments being asked to identify ways to make cuts of up to 40%.

The Spending Review, which will include departmental cuts in addition to £3bn of in-year reductions made for 2015/16 and the welfare savings set out in the summer Budget, will finish the job of deficit reduction, the chancellor said.

“We’ll invest in our priorities like the NHS and national security,” he stated. “Elsewhere in government, departments will have to find significant savings through efficiencies and by devolving power, so people have a greater say over the issues that affect them and their communities. We’ll deliver more with less.”

To start the review, Chief Secretary to the Treasury Greg Hands has today written to government departments asking them to draw up plans to cover two possible spending projections. One will demand reductions of 25% in resource spending by 2019/20 in real terms, while the other will demand they set out a 40% saving. These are the same reductions that were requested ahead of the 2010 review, under the last coalition government.

Spending on the NHS, schools, defence and international development will be protected, which is why such large savings will be required in other areas, the Treasury stated.

It is also expected that the review will develop a programme of asset sales, with departments asked to identify how they will help the government achieve its target of disposing of enough public sector land to build at least 150,000 homes by 2020.

Responding to the announcement, Local Government Association chair Gary Porter said councils have already made £20bn in savings since 2010 following reductions in government funding of 40% and had worked hard to shield residents from the impact.

“A 25% real terms reduction to the local government finance settlement would mean a decrease of £4bn by 2020 while a 40% reduction would mean this rises to £7bn,” he stated.

"For many councils, there are few efficiencies left to be made and these alone will not be enough to cope with further funding reductions. Vital services, such as caring for the elderly, protecting children, collecting bins and filling potholes, will struggle to continue at current levels.

For services to survive, there was a need for radical devolution of how public money is raised and spent, he added.

"Fairer funding for local services, and the freedom to pay for them, will allow councils to tackle the big issues facing their residents and protect services which bind our communities together and protect our most vulnerable."

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