Treasury, DEFRA, DfT and DCLG departments agree to meet George Osborne’s 8% per year cuts target
Four government departments have provisionally agreed deep spending cuts of 8% per year for the next 4 years. They are the Treasury, the DfT, DEFRA and DCLG. They have agreed to cuts in a spending review intent on slashing £20 billion from the cost of government. Capital spending is not covered by these cuts. George Osborne has said that controlling £4 trillion of government spending over the next 5 years is essential to guarantee the UK’s national and economic security. Osborne hopes that with these 4 departments agreeing to cuts, he can put pressure on ministers who are still resisting his demands for cuts in their departments, before his spending review on 25th November. The Home Office and the Foreign Office are not making cuts. With spending on health, international development, schools and education are protected, budgets in other departments are particularly vulnerable. Having reached a provisional settlement with the Treasury, Patrick McLoughlin, (Transport), Liz Truss, (Environment), and Greg Clark (Communities), will be allowed to join the government’s public expenditure committee as it imposes cuts on other departments. [There’s certainly no public money available to pay for extra roads etc needed in association with a new runway – or bail out a failed scheme ….] It is worrying for the environment, for Defra (and later DECC).
Four departments agree to meet George Osborne’s cuts target
Treasury, environment, transport and communities departments cede to chancellor’s austerity demands, but home and foreign ministries dig in
George Osborne says savings will be achieved by a combination of ‘further efficiencies in departments, closing low value programmes, and focusing on our priorities as a country’.
By Andrew Sparrow Political correspondent (Guardian)
Four government departments have agreed deep spending cuts of 8% a year for the next four years, George Osborne will announce.
The Treasury and the Departments of Transport, Environment, and Communities and Local Government are the first ministries to agree cuts in a spending review intent on slashing £20bn from the cost of government.
In a speech in London on Monday, Osborne will argue that controlling £4tn of government spending over the next five years is essential to guarantee national and economic security.
By naming the four departments that have reached a provisional agreement with the Treasury before the full results of the spending review are revealed on 25 November, Osborne hopes to put pressure on ministers who are still resisting his demands for cuts in their departments.
Negotiations with Theresa May, the home secretary, who is worried about cuts to police budgets, and Iain Duncan Smith, the work and pensions secretary, who is reportedly threatening to resign rather than accept cuts to his universal credit programme, are said to be proving particularly difficult.
Philip Hammond, whose Foreign Office has one of the smallest budgets in Whitehall, is also understood to be digging in, claiming that embassies may have to close under some of the proposals for his department.
With spending on health, international development, schools and education are protected, budgets in other departments are particularly vulnerable.
In his speech, Osborne will say that the four departments have agreed cuts to current spending worth on average 8% a year for the next four years. Capital spending is not covered by these cuts.
“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,” Osborne will say.
A Treasury source said further details of the impact of the cuts would be given when the spending review is announced with the autumn statement, but that Osborne believed the experience of the last parliament showed that “you can, by reform, get better results for less money with public services”.
Total government spending this year is due to reach almost £750bn. The Treasury said the cuts had to be seen in the context of the fact that the government would be spending about £4tn over the next five years.
Defending the need to bring the budget into surplus, Osborne will say that the government is still spending too much. “There is no economic security, there is no national security, there is no opportunity, when you lose control of the public finances,” Osborne will say.
“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.”
Osborne says under the government’s plans, the budget will be in surplus by 2019-20. “For the first time in a generation, Britain will be saving instead of borrowing; paying down our national debt share, rather than adding to it.”
Having reached a provisional settlement with the Treasury, Patrick McLoughlin, the transport secretary, Liz Truss, the environment secretary, and Greg Clark, the communities secretary, will be allowed to join the government’s public expenditure committee as it imposes cuts on the departments still holding out.
Greg Hands, the chief secretary to the Treasury, is due to hold talks with ministers from those departments yet to settle this week.
Also echoing the security theme of the Tories’ election campaign, David Cameron will use a speech to the CBI on Monday to claim that the spending review is about “putting the security
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.”
Labour’s shadow chancellor, John McDonnell claimed Osborne was trying to isolate the work and pensions secretary, Iain Duncan Smith, in the spending review.
“The big question that the people are asking the chancellor today is over the security of their incomes, and that if he’ll go ahead with tax credit cuts of £1,300 a year on average.
“The real test for the Tories’ spending review is whether it makes working people better off and ensuring a more balanced, prosperous economy which works for everybody. The chancellor’s record to date is a disappointing one of cutting investment to the lowest of any developed economy, and the slowest economic recovery on record.”
• This article was amended on 9 November 2015. An earlier version said total government spending this year was due to reach almost £750m. That has been corrected to £750bn.
Defra agrees around 30 per cent budget cut
Department of Environment, Food and Rural Affairs one of four key departments to agree to steep budget cuts over next four years as part of Chancellor’s austerity drive
By Madeleine Cuff (Business Green)
09 Nov 2015
The Department of Environment, Food and Rural Affairs (Defra) has agreed to steep departmental budget cuts as part of the government’s programme to deliver a budget surplus by 2020, George Osborne will announce today.
Defra is one of four departments – alongside the Treasury, the Department for Transport, and the Department for Communities and Local Government – that have agreed to cut their spending by an average of 30 per cent over the next four years.
They are the first ministries to reach a provisional agreement with the Treasury over budget cuts ahead of the results of the spending review, which will be unveiled later this month. As part of his plans to deliver a budget surplus by 2019/2020, Osborne plans to cut £20bn of government spending over the next four years.
In a speech later today, Osborne will say the savings will be achieved by a combination of “further efficiencies in departments, closing low value programmes, and focusing on our priorities as a country”.
The cuts affect the resource spending – the day-to-day expenditure of departments – rather than capital spending.
BusinessGreen understands that further detail about the specific impact of the cuts will not be announced until the results of the spending review are announced on November 25.
However, fears are mounting among green businesses and NGOs that the cuts couldaffect the delivery of a raft of sustainability policies across the departments for transport, local government and the environment, while also impacting departmental staffing levels.
Alastair Harper, head of politics at Green Alliance, predicted staffing budgets will bear the brunt of Defra’s cuts. “The question is whether the department will now have sufficient staff to develop and deliver on the government’s environmental policies such as the 25-year plan for nature,” he told BusinessGreen.
Nick Molho, executive director of the Aldersgate Group of green businesses, said significant staffing cuts in key departments such as Defra could undermine the effectiveness of green regulations, which could ultimately prove detrimental to business.
“Businesses need rules and standards to be applied in a way that is pragmatic and supports greater innovation and environmental protection,” he said. “This requires in turn regulators and government departments to have the time to interpret rules and standards effectively, which requires them to have sufficient resources at their disposal in the first place.”
Campaigners also voiced specific concerns about the potential impact on Defra’s spending in the areas of flood defence maintenance and regulating the nascent fracking industry through the Environment Agency, particularly given the steep spending cuts the department faced in the last parliament.
Writing on Twitter, Guy Shrubsole, climate and energy campaigner at Friends of the Earth, warned of the “false economies” that could result from deep cuts to spending on environmental protection. “When Defra made cuts this sharp in 2010, they came to regret false economies in flood defence cuts,” he wrote. “Will they make the same mistake again?”
Spending on health, international development and education is ring-fenced, leaving other departments more vulnerable to steep cuts. Since May the Treasury has been pressing ministers in unprotected departments to identify budget cuts of up to 40 per cent as part of its deficit reduction plan.
By naming the departments submitting to budget cuts, Osborne will today pile more pressure on those ministers still resisting. The Chancellor has previously declared that all unprotected departments must represent “high value for money”.
The Department for Energy and Climate Change is among the departments yet to reach a final agreement with the Treasury, but is expected to make further budget cuts that are likely to result in reduced staffing levels and cuts to key programmes, such as the Renewable Heat Incentive.
Defra declined to comment for this article.