Chancellor George Osborne to set out cuts framework
Chancellor George Osborne will set out a framework for the introduction of "painful" spending cuts which David Cameron said would affect the lifestyles of everyone in Britain over the coming years.
Conservative Mr Osborne and Liberal Democrat Chief Secretary to the Treasury Danny Alexander will tell MPs how they will draw up a "once-in-a-generation" spending review this autumn, which is expected to slash as much as £60 billion from annual expenditure.
They will announce the establishment of a so-called "star chamber" of ministerial and civil service heavyweights before which departmental ministers will be required to justify their budgets.
Ministers could be asked to consider whether services currently provided by their departments could be better supplied by the private or voluntary sectors. They will be questioned about their methods of delivery and challenged to find ways of "doing more for less".
A Treasury official said: "Anyone who thinks the spending review is just about saving money is missing the point. This is a once-in-a-generation opportunity to transform the way that government works."
The star chamber plan follows the example of former Canadian premier Jean Chretien, who slashed 20% from federal budgets in the 1990s by telling ministers that nothing was off the table in his review of their departmental spending. It is hoped that the approach will prevent the gruelling spending round becoming an old-style "stitch-up" in which ministers try to cut a deal with the Chancellor or go over his head to the Prime Minister to plead for more money.
In a bid to win broader consent for cuts which could total almost one-tenth of state spending, members of the public, charities and other interested parties are to be invited to give their views ahead of the spending review on where money could be saved. Mr Osborne's emergency budget on June 22 will unveil some of the tax changes designed to rein in Britain's £156 billion fiscal deficit and will give the overall figures for spending in the years ahead.
But it is not until the spending review expected in October that the precise shape of departmental budgets - and the programmes and jobs which will have to be axed to meet them - will become known. In a keynote speech on the economy in Milton Keynes, Mr Cameron said the state of the Government's books was "even worse" than he had thought before the election.
He accused Labour of "reckless" spending and said the public sector had to be brought "back into line". And he warned that if drastic cuts were not implemented in the UK, the Treasury would be spending an annual £70 billion on debt interest within five years - more than on schools in England, transport, and fighting climate change put together, and the equivalent of over £1 billion a week.
"How we deal with these things will affect our economy, our society - indeed our whole way of life," he said. "The decisions we make will affect every single person in our country. And the effects of those decisions will stay with us for years, perhaps decades, to come."