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Cabinet told more savings have to be made

By Oliver Wright

Published 23/01/2013

George Osborne says te EU must change if Britain is to remain a member
George Osborne says te EU must change if Britain is to remain a member

Cabinet ministers have been warned to prepare for further budget cuts extending to 2016 as new figures showed another leap in public sector borrowing.

George Osborne told ministers attending yesterday's Cabinet that they would have to do “more for less” and must start identifying savings across all areas of their departments ahead of next year's Comprehensive Spending Review.

The warning came as it emerged that the Government borrowed £15.4bn last month — £500m more than the same month the previous year.

More bad news is expected later this week with the publication of official growth figures, which are expected to show that output contracted in the final quarter of 2012.

Acknowledging the severity of the current situation, the outgoing Bank of England Governor, Sir Mervyn King, stated last night in Belfast that Britain's 20-year-old inflation-targeting regime had “come of age” and should be reviewed.

Meanwhile, the Chancellor told colleagues that he expected them all to work to identify where they could merge functions to reduce costs.

“The Government has made very clear that there will be further squeezes on departmental spending,” said David Cameron's official spokesman.

“The focus (is) on doing as much as we can through service reform and efficiency, but there is an acknowledgment that the Government will have to continue to make difficult decisions.

Asked whether cuts to frontline services were inevitable, the spokesman said: “There is a sense across Government that there are further opportunities for big public service and back-office service reforms. It is very important that these are explored to the full.”

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