UK Politics

Spending review challenges remain for George Osborne

Picture of a Whitehall road sign

If the chancellor is to be believed, the Crown Prosecution Service generates a million print-outs per day - that's an awful lot of paper and an awful lot of ink - and an example of the kind of "waste" in central spending that George Osborne wants to clamp down on.

But his aim to save a further £11.5bn from departments in 2015-2016 will not be met by cutting out a few toner cartridges - it will require some very difficult decisions in sensitive spending areas such as the armed forces and the police.

Mr Osborne insists he has made a good start with the seven settlements he has announced so far. But it still leaves him with 80% of the cuts to find, and 29 days to do it.

It is complicated by the fact that 60% percent of government spending is also protected from any cuts, lying inside the "ring-fence" established by the government at the beginning of the parliament.

So the NHS, schools and overseas aid are safe from the current Whitehall wrangling - although these are exceptions that even some members of the cabinet have argued against.

That means that the big budget departments yet to agree a deal with the chancellor include the Home Office (£8bn a year), the Ministry of Defence (£26.5bn), Business (£15bn) and the money distributed to local government (£23.9bn).

Transport could also be vulnerable as it spends almost £5bn a year and is one of those departments that always gets it in the neck when a chancellor of the exchequer comes calling.

There has been pressure to look again at the welfare budget - which accounts for a third of all government spending annually, including pensions. But this is where the politics intervenes.

The Liberal Democrats have refused to allow any more cuts to welfare unless the Conservatives agree to look at the benefits that go to the elderly, such as the winter fuel payment and free television licences for the over-75s.

David Cameron promised at the last election not to touch those things during the current parliament and he calculates that breaking his word would be politically impossible.

The added complication for the chancellor is an understandable focus on security and counter-terrorism following the killing last week of Drummer Lee Rigby.

Mr Osborne made clear on Tuesday morning that he would not do anything to endanger the security of the country, though, tellingly, he also said that did not mean these big departments should not be expected to find savings in the way they operate.

The chancellor was keen to point out that the first seven deals with departments meant he was well on track to deliver agreements with the others.

He also insisted that the cuts would not impact frontline services. The Home Secretary, Theresa May, and the Defence Secretary, Philip Hammond, will, no doubt, take some convincing.

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