How do you cut the state by a quarter?

That's the extraordinary challenge that George Osborne has set himself. <i>Independent</i> writers explain the measures likely to be taken &ndash; and how they affect each and every one of us
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Indy Politics

Home Office

Total budget: £10bn

Anticipated cuts: £2.5bn+

Where the axe could fall:

* Abolish the National Policing Improvement Agency (saving £600m)

* Cut 25,000 police officers, 14,000 police civilian staff and 2,700 community support officers (£1.1bn)

* Slim down immigration service, with the loss of 4,500 jobs (£350m)

* Slash the work of the Office for Security and Counter Terrorism by a quarter (£200m)

* Reduce the budget for the Identity and Passport Service by a quarter (£30m)

* Cut the work of the Serious Crime Agency by a quarter with 1,000 job losses (£115m)

Verdict A political nightmare. More than half the department's income funds the police service. To make inroads in its budget would mean throwing tens of thousands of police officers on the dole. That would sit badly with the Tory Party's much-vaunted tough stance on crime.

Nor would ministers be keen to take an axe to the UK Border Agency given the emphasis the Tories put on strengthening immigration controls. Even at this early stage, cutting Home Office spending by 25 per cent looks close to impossible.

Nigel Morris, Deputy Political Editor

Business and Skills

Total budget: £20.9bn

Anticipated cuts: £6bn

Where the axe could fall:

* Trim the choice of university courses, slash the bureaucracy and reduce the number of lecturers and students, plus charging higher fees (saving £2bn to £3bn).

* Close underperforming further education colleges and universities, via "merger". Rationalisation seems overdue in London, for example, where there are now 40 universities (£1bn).

* Further cuts to regional development (£100m).

* Involve business directly in funding "blue skies" technological research (saving £100m).

cScrap Labour schemes to boost electric car use and manufacture (£100m).

* The department has already cut spending by £836m this year: biomedical research, training and the regional aid agencies were targeted.

Verdict Universities, further education and training dominate the department and they are extremely vulnerable. However, the department could raise much bigger sums – maybe £15bn – if it managed to privatise the likes of the Royal Mail, the Tote, the student loan book and Urenco, the manufacturer of enriched uranium.

Sean O'Grady, Economics Editor


Total budget: £15.4bn

Anticipated cuts: £4bn+

Where the axe could fall:

* Slash spending on motorways and main roads; scrapping of road improvement schemes in Devon, Sussex, Leicestershire and Lancashire (£800m).

* Slash subsidies for Network Rail and some rail franchises by one quarter leading to losses of thousands of rail jobs as less profitable services are axed. Services to disappear; ticket price rises for passengers; station improvements scrapped (£1.1bn).

* Reduce subsidies for bus companies by one-third resulting in thousands of job losses, cut services and rises in fares (saving £650m).

* State support for London's transport network cut by one-quarter with knock-on effects on jobs and fares. Crossrail budget under fresh scrutiny (saving £700m).

* Cuts to road safety schemes, bus priority lanes and cycling routes (£500m).

* High Speed 1 route from London's St Pancras International Station to Folkestone sold to private sector (raising £1.5bn).

Verdict Everyone will notice the impact. Rail and bus services will be trimmed back, there will be more delays and fares will rise. Expect more congestion on the roads.

Nigel Morris, Deputy Political Editor

Work and Pensions

Total budget: £5.7bn

Anticipated cuts: £1.5bn

Where the axe could fall:

* Make thousands of civil servants redundant by closing some Jobcentres (£750m).

* Trim back administration costs such as spending on computer systems (£680m).

Verdict The Department handles vast sums of public money, distributing pensions and benefits totalling more than £130bn. George Osborne has announced plans to cut welfare spending by £11bn a year – and hopes to achieve an even bigger saving.

Nigel Morris Deputy Political Editor


Total budget: £67bn

Anticipated cuts: £8bn

Where the axe could fall:

* Scrap Labour's school-building programme (saving £55bn in 20 years, and £4bn next year)

* Sack education authority staff (£1bn)

* Sack 50,000 extra classroom assistants hired under Labour (£750m)

* Axe quangos (£420m)

Verdict These cuts could lead to strikes by classroom assistants and town-hall staff, construction industry job losses, and would-be students being put off from going to university.

Richard Garner, Education Editor

Foreign Office

Total budget: £2.1bn

Anticipated cuts: £500m

Where the axe could fall:

* Reductions to the size of staff overseas and the size of buildings.

* Others will take over some of the functions of DfID.

Verdict The new government has targeted specific countries where the UK should try to extend its influence, and the FCO will have to tailor its budget accordingly. This does mean, however, that Britain will be effectively bowing out of competing for political, cultural and commercial influence in swathes of regions.

Kim Sengupta, Defence Correspondent

Ministry of Defence

Total budget: £36.9bn

Anticipated cuts: Reductions in the cost of military equipment and personnel will be decided at the end of the year when the Strategic Defence Review reports, rather than in October when other departments will learn their fate.

Where the axe could fall:

* Scrap the two new aircraft carriers for the Royal Navy (£5bn)

* Reduce the number of fast jets for the RAF

* Cut the size of the Army from just over 100,000 to around 80,000 (the savings would depend on which ranks they concentrate the cuts)

The savings being made before the Strategic Defence Review will have to be in areas such as civilian personnel, IT projects and the possible closure of bases.

Verdict The effects of the Strategic Defence Review cuts will shape British military policy for the next decade. The Army says future wars will be land-based counter-insurgencies such as in Afghanistan.

The Royal Navy and the RAF each insist there will be much less appetite for wars of intervention in the future and thus the country needs mobile "platforms".

By Kim Sengupta, Defence Correspondent

Energy and Climate Change

Total budget: £3.2bn

Anticipated cuts: £800m

Where the axe could fall:

* Cut £500m+ from the £1.7bn Decc funding of the Nuclear Decommissioning Authority, in charge of cleaning-up civil public sector nuclear sites.

* Take £50m out of the £200m set aside for decommissioning the former British Energy nuclear power stations sold to energy company EDF.

* Take £25m from £100m set aside for old liabilities of the coal industry.

* Cut £80m from the £310m Warm Front programme which tackles fuel poverty through grants for boilers and insulation for those on low incomes.

* Take £60m out of the £250m funding for the Environmental Transformation Fund, which helps developing countries respond to climate change.

* Cut £30m from £150m spent annually on green technologies, or from the support given to quangos like the Energy Saving Trust or the Carbon Trust (£30m support annually).

Verdict Slowing down the nuclear decommissioning programme is not likely to be politically controversial. Headlines will come if the Government severely cuts the technologies and support services helping Britain on the road to a low carbon economy.

Michael McCarthy, Environment Editor

Environment & Food

Total budget: £2.95bn

Anticipated cuts: £740m

Where the axe could fall:

* Cut £250m plus from the £1bn set of programmes headlined "A Healthy Natural Environment", including wildlife and land management sustainability

* Cut £180m plus from the £772m set of programmes headlined "Addressing Environmental Risk and Emergencies" which includes Flood Management and Animal Disease Protection

* Cut £65m from the £251m set of programmes headlined "A Respected Department"

* Cut £50m from the Rural Payments Agency which has administration costs of £178m

* Sell off the Forestry Commission (saving £70m in annual costs)

Verdict Remember that farmers' payments of £1.87bn are from the EU and are protected; but the £24m in the accounts for "environmental farming" is the Treasury's funding for agri-environmental schemes which help farmland wildlife, and this is not safe from cuts. Expect an outcry if this is cut. The Forestry Commission looks a very likely candidate for a sell-off.

Michael McCarthy, Environment Editor

Culture, Media and Sport

Total budget: £2.1bn

Anticipated cuts: £500m

Where the axe could fall:

* Scrap grant to the British Film Institute to build a new film centre on the South Bank (£45m)

* Cut subsidies to museums and galleries by one quarter; jobs could be lost and entrance fees introduced or raised (saving £125m)

* Trim support to arts bodies by a quarter; some theatres/arts cinemas would shut, others be forced to put up prices (saving £110m)

* Reduce backing for sports organisations by a quarter (£50m)

* Cuts to libraries/tourism/heritage organisations (£100m)

* Possible 10 per cent cut to 2012 Olympics budget (£60m)

Verdict The DCMS, which has already axed free swimming lessons for children and pensioners and library modernisation, looks certain to be in line for deep cuts. There will be inevitable cries of anguish in the arts, heritage and sports worlds. The days are over when the department was nicknamed "the ministry of fun".

Nigel Morris, Deputy Political Editor

National Health Service

Total budget: £100bn

Anticipated cuts: £15-20bn over four years

Where the axe could fall:

* Management costs to be slashed by half (£1bn).

* Thousands of jobs at risk.

* "Unnecessary" treatments, such as hysterectomies, identified by Nice (£600m)

* More treatment provided outside hospital by GPs

* Public sector pay freeze (£2bn)

Verdict Although protected from cuts in its overall budget, the NHS will still have to make huge savings over the next four years as demand grows from an ageing population and advances in treatment. Ministers have promised that "frontline" services will be protected but managers warn this is unlikely to be possible, given the scale of the cuts required. The NHS will also come under increased pressure from cuts elsewhere, as in the social care budget.

Jeremy Laurance Health Editor

Local Government

Total budget: £30bn

Anticipated cuts: £7.5bn

Where the axe could fall:

* Cut out quangos, funding agencies, ring-fenced budgets and excessive reporting requirements.

* Cutting the £25bn in grants to local councils by a quarter (£6.25bn, leading to cuts in libraries, refuse collection, childcare provision, care for the elderly, leisure facilities... depending on the decisions of individual authorities).

* Cuts to social housing (£750m).

* Cuts to house building (saving hundreds of millions from the £7.3bn housing budget).

Verdict Everyone will notice the impact on their local communities. Cuts to libraries, leisure centres and care for the elderly look inevitable – as well as tens of thousands of job losses in town halls. House building will be scaled back, increasing homelessness.

Tom Peck

Ministry of Justice

Total budget: £9.2bn

Anticipated cuts: £2.5bn+

Where the axe could fall:

* Legal aid budgets cut by one-third through much stricter targeting (£600m).

* Reduce the courts budget by one-quarter – more than 100 courts could close and 4,500 people lose their jobs (£300m).

* Cut spending on prisons by one-quarter; any improvements to jails would be abandoned; up to 7,000 prison officers could lose jobs and others have overtime payments slashed (£550m).

* Slash the budget for probation by one-quarter; 5,500 probation officers could be axed (£400m).

* Reduce spending by the Tribunals Service by one-third (£100m).

* Cut numbers of civil servants at MoJ headquarters (£100m).

Verdict A painful squeeze on the MoJ is under way: it yesterday announced plans to close 103 magistrates' and 54 county courts. Politically unpalatable heavy cuts to the prison service would run counter to Tory instincts. It would mean thousands of prison officers being sacked as well as inmates being locked in their cells for longer.

Nigel Morris Deputy, Political Editor