Latest Public Sector News

09.11.15

DCLG signs up to 30% cuts by 2020, signalling more pain for councils

The Treasury and three other departments – Communities and Local Government, Transport and Environment – have agreed to slash spending by 8% per year until the end of this Parliament, chancellor George Osborne is expected to announce today.

According to media reports, the four departments are the first to agree to the steep cuts ahead of the Spending Review on 25 November, where Osborne will outline £20bn of savings for this Parliament.

The cutback – an overall average of nearly 30% of existing budgets over this Parliament – is in line with the chancellor’s modelled savings announced in July, where he asked departments to look into scenarios of 25% and 40% reductions.

The move will also allow communities secretary Greg Clark, transport secretary Patrick McLoughlin and environment secretary Liz Truss to join Whitehall’s public expenditure committee, responsible for imposing cuts on remaining departments.

And for the chancellor, who will announce the agreements during a speech today (9 November), the announcement should act as an incentive for departments that are still resisting planned cuts.

He is expected to say: “These savings will be achieved by a combination of further efficiencies in departments, closing low value programmes, and focusing on our priorities as a country.

“There is no economic security, there is no national security, there is no opportunity, when you lose control of the public finances. It is only when you control spending, and live within your means, that you can build a country with security and opportunity at its heart. And that’s what the Spending Review I will present will be all about.”

But it is unclear whether other departments will cede to pressures, with work and pensions secretary Iain Duncan Smith threatening to resign if his brainchild, universal credit, suffers any financial blows. His department is expected to see £12bn in welfare savings, a significant part of which will likely take shape in £4.4bn tax credit cuts.

And according to the Guardian, home secretary Theresa May and foreign secretary Philip Hammond are still fiercely resisting cuts to police budgets and the Foreign Office.

But Osborne is adamant that his upcoming plans will provide a surplus budget by 2019-20 rather than a deficit, with Britain “saving instead of borrowing; paying down our national debt share, rather than adding to it”.

Prime minister David Cameron will add to these claims in a speech to the CBI today, where he will say: “By finishing the job of repairing our finances, we are able to provide economic security for working families at every stage of their lives.

“It’s good news that today we can confirm four departments have provisionally completed their spending settlements. By making the further savings we need over the course of this Parliament, we can prioritise what matters for working families: schools, the NHS and our national security.”

By the end of this government, Whitehall hopes to have cut a total of £98bn from public spending. As well as the four confirmed departments, this will also be partly supported by £200m public health cuts established last week.

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