Make plans for 40 per cent cuts, Alexander tells Whitehall

5 July 2010

5 July 2010 | Angeline Albert

Whitehall departments have been asked to draw up plans for spending cuts of up to 40 per cent, HM Treasury has confirmed.

Chief secretary to the Treasury Danny Alexander has written to government departments telling them how much they must cut. Education and defence ministers were told to draw up two plans prior to the autumn spending review, one involving a 10 per cent fall in its budget and another involving a 20 per cent cut. Other departments were also told to come up with two plans, one modelled on a 25 per cent reduction and another involving a 40 per cent drop. As reported by SM, the Department of Health and the Department for International Development have been protected from cutbacks.

Back-office and administration costs of central government departments face up to 50 per cent cuts, according to the Sunday Telegraph. The Treasury is yet to confirm this.

A Treasury spokesperson said: “We are determined to tackle the record budget deficit in order to keep interest rates lower for longer, get the economy growing, protect jobs, and maintain the quality of essential public services. The Cabinet has been briefed on the planning assumptions their departments should use for the initial phase of the spending review. These are not final settlements, and do not commit the Treasury or departments to final settlements.”

In addition, public sector spending cuts for this year of £1.5 billion are set to be announced later today by the Treasury. This is in addition to the £6.2 billion the government has already said it intends to save this year.

Furthermore, education secretary Michael Gove is expected to make an announcement at 4.30pm today of £1 billion in cuts – potentially including a halt to the majority of 700 Building Schools for the Future (BSF) projects.

A Department for Education spokesman told SM: “As a programme, we, the government, believe BSF is bloated and overambitious. Every year £6 billion goes to UK schools and colleges for refurbishment and rebuild and BSF is just one part of many schemes. This is not the end of rebuilding and refurbishment.”

The Labour government had set aside around £50 billion for BSF, which was launched in February 2004 and was designed to rebuild or refurbish 3,500 schools over the lifetime of the programme.

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