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Philip Hammond plays down George Osborne's call for 40% Whitehall cuts

Published 21/07/2015

George Osborne will say the further savings will complete the Conservatives' plan to eliminate the deficit in the public finances
George Osborne will say the further savings will complete the Conservatives' plan to eliminate the deficit in the public finances

George Osborne's demands for cuts of up to 40% from government departments have been played down as "aspirational" by a Cabinet minister.

The Chancellor warned that unprotected parts of Whitehall would be expected to deliver "more for less" in order to trim £20 billion off budgets over the next four years.

Firing the starting gun on the Spending Review process, the Treasury has written to departments asking them to prepare proposals that would achieve savings of 25% and 40% by 2019-20.

But Foreign Secretary Philip Hammond - whose own department is largely unprotected from cuts - said the figures were just "a ranging shot".

"Past experience would suggest that initial pitching by the Treasury should be regarded as aspirational and a ranging shot," he told MPs on the Foreign Affairs Committee. "But it is clear that to deliver the overall fiscal trajectory departments collectively will have to make substantial savings, double digit percentage savings."

Mr Hammond said he expected his department would need to "downgrade" some of its activities to save money.

"I am clear that the Foreign office will be able to achieve further efficiencies," he said. "But I do not think that savings on the scale that are indicated by the fiscal trajectory can be delivered simply by cheeseparing across the piece.

"I think we need to make some strategic decisions about where we need to focus resource and where we need to downgrade.

"For me personally I am clear that the crown jewel of the Foreign Office's capability is the network, the network of international platforms embassies and missions around the world.

"We must seek to protect that sharp end presence while addressing the need for further efficiencies."

Cabinet Office Minister Matt Hancock acknowledged that cuts of 40% would mean radical changes for the departments involved but said that it was important to look at all the options.

"We have got to see where we can best make the savings across the whole of government," he told BBC Radio 4's The World at One programme.

"It is worth looking at what that looks like in each case. In each department you do want to look at what a radical change would mean."

As part of the efficiency drive, Mr Osborne has signalled that he wants departments to to draw up plans to sell off billions of pounds worth of land and other public sector assets.

A document setting out the scope of the spending review, which will report on November 25, confirmed additional investment in the NHS and defence.

However officials pointed out that the Ministry of Defence alone currently owns around 1% of all the land in the UK - some 227,300 hectares.

Altogether, despite £1.7 billion worth of disposals in the last parliament, the Government still owns more than £300 billion worth of land and buildings.

Mr Osborne said the further savings - which follow the £12 billion in welfare cuts and £5 billion from tackling tax avoidance announced in the Budget - will complete the Conservatives' plan to eliminate the deficit in the public finances.

"We have shown with careful management of public money we can get more for less and give working people real control over the decisions that affect them and their communities," he told MPs at Treasury questions.

"The spending review will deliver better government and economic security."

But shadow chancellor Chris Leslie said Mr Osborne had no plan for "sensible savings" to public services.

"Departments are not being given a clear sense from the Treasury of what to plan for in the spending review, particularly since we've seen three sets of spending plans in the last few months," he said.

"Britain's public services need a coherent plan to balance the books and put productivity first, not a Chancellor who chops and changes from month to month, ditching manifesto commitments on childcare, rail electrification and elderly social care."

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