Government departments will have to find a further £3bn of cuts over the next three years, in a move likely to result in further job cuts and programme closures.
The Home Office, the Ministry of Defence and the Department for Business will be hardest hit from the fresh austerity measures, losing between them around £500m a year.
But there will be no further cuts to local council budgets, in a tacit admission by the Chancellor that they have suffered disproportionately in previous rounds. Spending on health, schools and international development will be maintained in line with previous commitments. Other areas to escape the new Whitehall austerity measures include HM Revenue and Customs and the intelligence agencies.
While the cuts are large, a £7bn underspend by Whitehall last year suggests that most departments are ahead of schedule in terms of reducing their budgets. However, unions warned that new investment would suffer and public services would be damaged in the long term. “Government departments, already struggling under budget cuts of up to half and the loss of tens of thousands of civil servants, will simply not be able to cope,” said Mark Serwotka of the PCS union.
“We desperately need investment in our public services, not more cuts, and a much more ambitious and determined plan to target the tax dodgers than this Government is committed to.”
Sir Merrick Cockell, chairman of the Local Government Association, said councils would be relieved that they were being excluded from the new round of savings.
“Local government has already played a huge part in reducing the deficit and the Chancellor has today acknowledged that any further cuts would push some councils to breaking point,” he said. “There are signs that local government is being listened to.”