The coalition Government declared that the “years of plenty” for public spending were over yesterday, as it admitted that its £6.2bn package of immediate savings was “only the start” of a huge programme of cuts.
Ministers were accused of hiding crucial details of the cuts after announcing headline reductions for Whitehall departments, some of which were unable to give a full breakdown of how they would be achieved.
George Osborne, the Chancellor, and his Liberal Democrat deputy David Laws put the emphasis on cutting Whitehall waste and omitted some sensitive areas at a Treasury Press conference.
It emerged later that the savings would include £130m from police administrative costs; cuts in low carbon projects; a £100m reduction for Network Rail; £108m for London's transport network; £5m for the Arts Council and £266m for regional development agencies.
Other measures include: axing 10,000 planned extra university places; scrapping offers of temporary jobs under the young person's guarantee scheme to save £290m; ending child trust funds, designed to provide a “nest egg” for young people when they reach the age of 18; a £1.16bn squeeze on local government; a £150m reduction in the housing budget; saving £1.7bn from delaying and renegotiating contracts and halting projects; £95m from IT schemes and £600m from cutting the costs of quangos.
There will be an immediate freeze on Civil Service recruitment to save £120m and on “unnecessary spending” on outside consultancy, advertising and computer contracts; ministers will share drivers or use public transport to cut the cost of the Government car service by a third, and ministers and officials will normally travel second class to cut the £45m-a-year bill for first-class trips.
Mr Laws said he wanted to send a “shockwave” through Whitehall. He admitted: “These are only the first steps we will need to take in order to put our finances back in shape. There will be many more tough decisions, but the British people understand that these choices can no longer be ducked. The years of public sector plenty are over. But the more decisively we act, the more quickly we can come through these tough times.”
The extent of the squeeze over the next three years is expected to emerge in the Budget on June 22, with the details of the cuts needed to meet spending ceilings revealed in a spending review this autumn.
Yesterday's downpayment amounts to only 1% of total government spending and a fraction of the £156bn deficit in the public finances.
The Institute for Fiscal Studies (IFS) warned of more pain to come. It said yesterday's measures would cut borrowing by only £5bn this year.
“This is less than a tenth of the fiscal repair job that Alistair Darling's 2010 Budget forecast suggested will be needed over the next few years,” it said.
Labour warned that immediate cuts would threaten the fragile recovery. Alistair Darling, the shadow Chancellor, urged the coalition to “come clean on the |detail of what these cuts mean” — including how many jobs would be axed. The turnover in Civil Service jobs is about 30,000 a year.
Mr Laws said the impact on jobs would be “modest” and achieved mainly by the recruitment freeze. The Chief Treasury Secretary promised the coalition would “cut with care”, insisting: “We are going to be a progressive Government.”
There were a few crumbs of comfort. The Government announced it would protect the budgets of schools, Sure Start centres and the education of 16-19-year-olds this year, as well as health, defence and international development.