Osborne ready to 'close deal' on spending review

Yet many big departments are still in talks over scale of cuts

With the Comprehensive Spending Review a little more than a week away, Treasury officials say that some of the biggest departments in government have yet to agree with the Treasury on the scale of cuts they will make.

Around £83bn a year is due to be taken out of annual public spending by 2015, in the most savage assault in 80 years. Defence, the Business Department, Education and the Benefits Bill will be the scenes of the most protracted arguments. The formal statement will be made on 20 October.

The coming few days will see "intensive" discussions between the Treasury and those departments that have yet to agree on cuts of anything up to 40 per cent in some areas.

The public expenditure committee, the so-called "star chamber" chaired by the Chancellor, is to meet on Tuesday. This meeting is aimed at agreement on capital spending – an area where deep cuts were already scheduled by Labour. The Coalition had said it wanted to introduce only limited further restrictions on infrastructure spending.

Some departments, such as Eric Pickles's Communities and Local Government, have already worked out their cuts and have been rewarded with a place on the committee.

There will also be daily meetings of "the quadrilateral", the powerful high-level ministerial group that sets the strategic goals of the review. This comprises David Cameron, George Osborne, the Deputy Prime Minister Nick Clegg, and Danny Alexander, the Chief Secretary to the Treasury.

In contrast to the "sofa" style of informal bilateral meetings that typified decision making under the last government, the cuts process appears to be a more formalised affair, using the traditional Cabinet committee structure.

Treasury sources expect that they will have provisionally settled all the "mid-cap" and smaller departments by mid-week, including transport, local government grants, the Ministry of Justice, law officers' spending, the UK Trade and Investment agency and the Export Credits Guarantee Department.

This, however, leaves some of the largest departments, headed by some big political beasts, still outstanding as the deadline looms: Business, headed by Vince Cable; Defence, where Liam Fox's opposition has been well trailed via leaks; Welfare, where arguments with the Secretary of State, Iain Duncan Smith have been conducted in public; and Education, under Michael Gove. The Treasury is not, though ruling out an accord with Mr Cable, and perhaps others, by mid-week.

A Treasury source said: "We're into the endgame. We're aiming to have settled all but the 'bigs' by the middle of the week, so that we can focus on them and close the deal."

Politically, ministers will be hoping to point up the contrast between a Chancellor sticking to painful decisions and the new shadow Chancellor, Alan Johnson, pulling back from even Alistair Darling's last plans to chop the deficit in half within four years.

The publication of Lord Browne's inquiry into tuition fees, and Philip Green's report on government waste, is also expected to strengthen the Treasury's hand.

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