UK Politics

Autumn Statement: Osborne to make fresh spending cuts

George Osborne

George Osborne will announce a fresh round of spending cuts for Whitehall departments when he gives his Autumn Statement on Thursday.

The chancellor has written to cabinet colleagues to say budgets will face total extra reductions of £1bn a year for the next three financial years.

The first £1bn will come mainly from unspent reserves, he will say.

Labour urged ministers to ensure the economic recovery did more to help "most working people".

In his statement, Mr Osborne is expected to say health, schools, foreign aid, local government, revenue and customs and the security services will be protected.

Treasury officials said that, although financial discipline and efficiency savings would play their part, departments would have to find cuts of 1.1% in 2014/15 and 2015/16.

The Ministry of Defence will have some flexibility to protect any underspent budgets. So the biggest losers in Whitehall will be those such as the Department for Work and Pensions, the Department for Business, Innovation and Skills, the Home Office and the Ministry of Justice.

Officials refused to say what the savings would be used for, but the government does have to find money to pay for recent commitments such as marriage tax breaks, more free school meals and potentially any fuel duty freeze the chancellor may announce.

Officials said the tough decisions showed that this would be a responsible recovery and there would be no giveaways while the government completed its long term plan to fix the economy.

Some of the details of Mr Osborne's statement have already been announced, including:

  • An extra £150m to update and build kitchens and dining rooms in English primary schools
  • A move towards subsidising offshore wind farms instead of onshore wind farms
  • Plans for £375bn of investment in energy, transport, communications, and water projects
  • Selling off the government's 40% stake in the Eurostar rail service
  • A further £50m to redevelop Gatwick Airport's railway station
  • Financial support for the development of a new nuclear power station at Wylfa, north Wales
  • A confirmation that a UK guarantee has now been agreed for the £1bn Northern Line extension to Battersea in London
  • Improvements to the A50 around Uttoxeter, in Staffordshire, and improvements to the A14 around the port of Felixstowe in Suffolk

The BBC has also learned that the chancellor will cap business rate increases in England and Wales to 2% next year, rather than the rate of inflation, in an effort to boost firms and High Streets.

For Labour, shadow chancellor Ed Balls said: "Growth being back is good but this is no recovery at all for most working people. We need action now - to deal with the cost-of-living crisis, to freeze energy bills, to get young people back to work, to help parents with childcare, to boost investment in our economy and manufacturing and housing for the long term.

"These are the things to do to help working families to build an economy which works for all. I really hope the chancellor will deliver on that agenda, but I'm not holding my breath."

In the House of Commons, Deputy Speaker Dawn Primarolo said Mr Osborne would be "mortified" that details of his statement had been reported ahead of Thursday.

This followed Conservative MP Peter Bone saying: "This is not the first leak… and the chancellor must be mortified and I wonder if he is coming to announce a leak inquiry".

Ms Primarolo said she had not seen media reports about the statement but she was "sure he's correct that the chancellor will be mortified".

She added: "The Speaker has made it absolutely clear that any government announcement should be made first to this House."

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