Whitehall departments are to face fresh spending cuts over the next two years, with the money saved spent on infrastructure projects, Chancellor George Osborne told a pre-Budget meeting of the Cabinet today.
Those without special protections will have to trim an extra one per cent off their spending in 2013/14 and 2014/15. A total of £2.5bn more will be saved over the two years as a result and redirected into major building schemes designed to help get economic growth underway. Details of the projects that will benefit will be announced by Mr Osborne in tomorrow’s Budget.
The health, education and international aid budgets are ring-fenced.
Police and local council budgets will be protected from extra cuts in 2013/14, but not the year after, while the Ministry of Defence will be allowed to roll over an underspend in its budget to the next two years.
Other departments will be hard hit, however, raising the prospect of extra job cuts in Whitehall. Mr Osborne and the Lib Dem Chief Secretary to the Treasury, Danny Alexander, believe there is scope for extra efficiencies as departments are expected to underspend by more than £6bn this financial year.