Training will bear brunt of cutbacks

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THE Department of Employment has emerged as a casualty of the public spending round, with Training and Enterprise Councils expected to bear the brunt of a significant cut in its budget over the next two years.

The department is understood to face a cut of more than 6 per cent in its planned spending over the next two years, after taking account of inflation. A source there said: 'Everyone faced a tough round, and there was no reason to think we would escape'.

The Chancellor is expected to cut the overall government expenditure totals below the plans announced after July's public spending cabinet.

This would please the financial markets and deflect some anger from the Tory right over the scale of likely tax increases.

Last year's Autumn Statement allocated the Employment Department a cash budget of between pounds 3.7bn and pounds 3.75bn this year and in each of the next two years.

Inflation was assumed to run at between 2.75 and 3.25 per cent over that period, a projection that is likely to be cut when the public spending plans are published at the end of the month. This means that retaining the old cash plans would limit the real decline in resources implied by the plans. But the likely cuts suggest the department will not enjoy the benefit of lower inflation.

The Training and Enterprise Councils are thought to bear the brunt of likely cuts.

Tecs account for around pounds 2bn of the department's budgets and may face cuts from plans of around pounds 150m in the next two years.

Tecs are the main route through which the department delivers help on training, with considerable involvement from local businesses.

The cuts to the Department's budget may be less contentious after last week's figures showing that the fall in unemployment since the beginning of the year may be accelerating.

Unemployment tumbled by 49,000 in October to a 13- month low of 2,855,100, the largest drop for four-and-a- half years.

However, Treasury and Employment Department officials are concerned that the fall in unemployment may not retain its recent pace, with growth in the next few years possibly subdued as the Government tries to stick to its inflation target.