George Osborne finalises deals with Cabinet ministers on budgets that will cut £11.5bn from spending

Chancellor also confirmed plans to use fines on bankers to help support the welfare of troops and veterans

George Osborne clinched a series of deals with senior Cabinet ministers last night over deep spending cuts to their departments.

The Chancellor reached final agreement over moves to cut £11.5bn from Whitehall spending in 2015-16 after a round of telephone calls.

A Treasury spokesman said: “We’ve completed the spending round savings early and without all the arguments you normally get.

“This shows our determination to take the tough decisions needed to deliver our economic plan and to turn Britain around.”

Mr Osborne and Danny Alexander, the Chief Secretary to the Treasury, have also finalised plans for new infrastructure projects – including road, rail, energy and technology schemes – to boost economic growth.

The proposals will be detailed on Thursday, the day after Mr Osborne sets out his package of spending cuts in the Commons.

The outcome means Whitehall’s “star chamber” will be not have to be convened to force recalcitrant ministers to sign up to reduced budgets.

Mr Osborne foreshadowed the deal by announcing yesterday he had reached agreement over the £34bn Ministry of Defence (MoD) budget.

Philip Hammond, the Defence Secretary, successfully resisted losses to frontline manpower in return for accepting more redundancies in civilian posts. Large military contracts will also be renegotiated to force their price down.

Vince Cable, the Liberal Democrat Business Secretary, had been holding out against cuts of at least £1bn to his £18bn budget, which includes higher education.

He argued that reducing spending on support for industry and universities would threaten Britain’s sluggish recovery. He finally agreed his new budget in talks yesterday with his fellow Lib Dem Mr Alexander.

The Education Secretary, Michael Gove, was under pressure to identify savings of £2bn from parts of his budget that are not ring-fenced, such as childcare and further education.

Much attention will be on the spending plans the Department for Work and Pensions, whose £210bn budget is by far the biggest slice of spending.

Iain Duncan Smith, the Work and Pensions Secretary, has offered further restrictions to housing and child benefit payments, but has been blocked by the Lib Dems.

The Department for Communities and Local Government, headed by Eric Pickles, was also among the last to settle.

Mr Osborne said the MoD cuts would require “tough choices”, but he added: “There will not be a reduction in our military capability, we are not going to reduce the number of our sailors, soldiers and airmen.

“In fact we are going to be able to spend some more money on things like cyber, which is the new frontier in defence.”

The shadow Chancellor, Ed Balls, indicated that an incoming Labour government could borrow more to invest in building projects, as The Independent predicted in April. 

He said: “If the economy is still weak then, living standards are still falling, if youth unemployment is still high, and if there’s still a case on our long-term infrastructure to get things moving with interest rates low, of course there’s a case for doing that.”

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA celebration of British elections
News
i100
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
science
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
News
A voter placing a ballot paper in the box at a polling station
i100
News
people
Arts and Entertainment
The Queen (Kristin Scott Thomas) in The Audience
theatreReview: Stephen Daldry's direction is crisp in perfectly-timed revival
Sport
football
  • Get to the point
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SThree: Trainee Recruitment Consultant - Dublin

£13676.46 - £16411.61 per annum + OTE: SThree: SThree Trainee Recruitment Cons...

Ashdown Group: Marketing or Business Graduate Opportunity - Norwich - £22,000

£18000 - £22000 per annum + training: Ashdown Group: Business and Marketing Gr...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + Commission: SThree: Are you great at building rela...

Ashdown Group: Database Analyst - Birmingham - £22,000 plus benefits

£20000 - £22000 per annum + excellent benefits: Ashdown Group: Application Sup...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power