George Osborne goes for growth (by firing 10,000 civil servants)

Chancellor warns he will squeeze departmental budgets so he can find £5bn to boost economy

More than 13,000 civil service jobs could be axed as a result of an extra £5bn of spending cuts to be announced by George Osborne in his Autumn Statement.

The Chancellor told cabinet ministers today that his squeeze on their departmental budgets would be tightened so he can switch money from day-to-day spending to building projects to help secure economic growth. They include up to 100 new free schools and academies, providing an extra 50,000 places where they are most needed at a cost of £1bn;  science, skills and transport projects.

Most departments will have to shave 1 per cent off their running costs in 2013-14 and save 2 per cent the following year, saving £3.4bn on top of existing cuts. The rest of the “go-for-growth” funds will come from underspent Whitehall budgets. Funds for health, schools, overseas aid, nuclear decommissioning and HM Revenue & Customs will be protected and the Ministry of Defence will be allowed to carry forward spending from one financial year to the next.

Treasury sources said frontline services would be safeguarded and most of the savings would come from administration, but admitted that some jobs would be lost. They said the “gold standard” was the Department for Education, where Michael Gove’s “zero-based” review is expected to cut 1,000 civil service jobs, a quarter of the total.

The Public and Commercial Services Union predicted last night that the new cuts would mean almost 13,500 civil service jobs being lost, in addition to the 50,000 due to be axed over the next two years and the 63,000 already cut since 2010.

Ministers argue that the building projects will create jobs as well as growth. The independent Office for Budget Responsibility will update its March forecast that the 730,000 public sector job losses between 2011-17 will be outweighed by the creation of 1.7 million jobs in the private sector.

Work and Pensions will be among the non-exempt departments facing pressure for job cuts. Mr Osborne will also announce more savings on the benefits bill, with payments like jobseekers allowance likely to rise by less than inflation next April. In return for accepting that, the Liberal Democrats are likely to win a squeeze on the rich, through a cut in the maximum £50,000 a year of pension contributions that attract tax relief.

The Chancellor faces the embarrassment of seeing the OBR downgrade its growth forecasts and having to admit he may miss his key fiscal target to see total government debt falling as a share of GDP by 2015-16. He will trumpet the £5bn switch as a sign that, with the eurozone struggling, the Government is doing everything it can to secure growth without departing from its deficit-reduction strategy. He will argue that average annual spending on building projects will be slightly higher under the Coalition than the previous Labour Government.

A Treasury spokesman said: “We are committed to solving today’s problems, but also preparing for tomorrow’s challenges by investing in our future and equipping Britain for the global race.”

Labour dismissed the £5bn spending boost, claiming that none of the road building projects announced a year ago had started yet.

Rachel Reeves, the shadow Chief Treasury Secretary, said: “The Chancellor seems to have finally admitted that abolishing the Building Schools for the Future programme and his other deep cuts to infrastructure investment were a catastrophic mistake which cost jobs and weakened our economy. But this extra funding for new free schools will be smaller than the huge cuts he made two years ago to school and college buildings. George Osborne must explain which frontline services he will cut further to pay for this.”

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
people
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
News
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
Voices
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Sport
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
sport
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

Commercial Litigation Associate

Highly Attractive Package: Austen Lloyd: CITY - COMMERCIAL LITIGATION - GLOBAL...

Systems Manager - Dynamics AX

£65000 - £75000 per annum + Benefits: Progressive Recruitment: The client is a...

Service Delivery Manager (Software Development, Testing)

£40000 - £45000 per annum: Ashdown Group: A well-established software house ba...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little