The Chancellor of the Exchequer has unveiled a raft of deep cuts to the public purse identified as ‘wasteful spending’ in measures designed to tackle the massive £156 billion public deficit.
George Osborne announced yesterday in a joint statement, with Chief Secretary to the Treasury David Laws, that Whitehall budgets will be squeezed by up to £6.2 billion over the next financial year.
Vince Cable’s department of Business Innovation and Skills took the brunt of the financial hit with a £836 million reduction in his budget.
Under the proposals, local governments across the country stand to lose £1.165 billion through a reduction in individual grants.
However, the Treasury have announced at an end to ‘ring fenced’ budgets so local authorities will have discretionary powers over where to make up the savings.
The Chancellor said in his speech: “Certainly we can no longer rely on ever increasing public spending, or debt-fuelled consumption, to drive growth.”
Over the past decade, more than half of all jobs created were associated in some way with public spending.
Over the same period, business investment grew at around 1 percent each year, only a quarter of what it was in the 1990s.
Mr Osborne went on to say, “Our consumers became the most indebted, our country’s banks became more leveraged, and the Government borrowed more than any other major economy.
“So Britain does need a whole new model of economic growth, where we save and invest for the future, instead of building our economy on debt.”
Child trust funds will be scrapped by January which will save the coalition government £320 million.
And ‘ineffective’ employment programmes such as Future Jobs Fund will be axed delivering £290 million back into government coffers.
All frontline services in health, international development and defence will be protected and any savings made within the departments will be recycled into existing budgets.
Sure Start spending on education for 16-19-year-olds will be protected in these cuts.
The devolved administrations in Wales, Scotland and Northern Ireland will have to make savings of £704 million but in each case, they can defer the cuts and the pain until the next financial year.
A proportion of the 6.2 billion cuts will be reinvested by the government, with £500 million to fund projects in further education apprenticeships and social housing.
A new board called the Efficiency and Reform Group is being set to oversee the departmental cuts.
It will be chaired jointly by Mr Laws, Cabinet minister Francis Maude and a number of high-profile civil servants from across Whitehall.
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