Where will the axe fall? Whitehall waits for the bloodbath

As George Osborne puts the final touches to this Wednesday's Comprehensive Spending Review, Matt Chorley and Brian Brady reveal how much pain the big departments face.

David Cameron used to joke that George Osborne would move into his grace and favour flat in Downing Street only when protests at the spending cuts "turned really violent". But his hopes of remaining one step removed from the £86bn bloodbath were dashed when he was forced to intervene in ferocious rows between the Treasury and Whitehall departments, most notably the Ministry of Defence.

What was a funny one-liner during the summer party season is about to become a grim reality. Before the Chancellor even rises to his feet in the Commons on Wednesday, those opposed to the cuts will already have laid siege to Parliament in a TUC rally.

By then it will be too late. Today "the Quad", the four men in charge of the process, will meet at Mr Cameron's country retreat, Chequers, to finalise the cuts package. While the hardline demand for defence cuts is thought to have softened to about 7 per cent in the past 48 hours, and education and social care will be spared the worst, there is no question of other budgets which ministers thought had been settled being reopened. However, the scale of the cuts in some departments has caught several ministers by surprise, one even warning that achieving them is "a metaphysical impossibility".



Defence

Cameron blinks as the top brass presents Armageddon scenario

The MoD has been forced to accept a 7.8 per cent cut in its budget, almost twice the level first put to the Treasury, The Independent on Sunday has learnt. Liam Fox, the Defence Secretary, drew up radical plans for a 3.8 per cent reduction, which included the loss of Harrier jump jets, amphibious ships and a substantial slice of the surface fleet. But the Treasury insisted on a further 4 per cent, which a senior MoD source admitted had led to "salami-slicing" of budgets that may have to be revisited in future years.

The MoD was already faced with a £38bn black hole in its finances, the equivalent of a budget cut of about 9 per cent, even before the review, making the final level of savings 16.5 per cent. The successor to Trident will continue to be funded from the MoD budget, but funds will be found from the Treasury reserve for Afghanistan.

Mr Cameron was forced to intervene in the stand-off after he discovered plans to cut the Army by a sixth to 82,000. Under pressure from service chiefs, he insisted there was "no way" he could back the idea. Mr Cameron also blocked a proposal from the MoD to place a two-year moratorium on all military activity outside Afghanistan. "We are not going to have people not training on Salisbury Plain or no ships sailing for two years," a Downing Street source said.

Mr Cameron is to order a review into the reserved forces, amid concerns the Territorial Army, in particular, is treated as an "afterthought" in Whitehall, despite playing a key role on the frontline.

Supporters of the Prime Minister point to his patriotic commitment to the Armed Forces as his motivation for stepping in to settle the Treasury row. But critics fear the PM has been "got at" by the uniformed service chiefs who briefed him later on Thursday about the "catastrophic" impact of reining in military spending.

Dr Paul Cornish, Carrington professor of international security at Chatham House, said there appeared to have been little strategic work to look radically at the future role of the forces. "What we have got is carry on with everything, for a bit less. It is neither strategy-led nor Treasury-led, but led by government indecision," said Dr Cornish who publishes a report today entitled Strategy in Austerity.

One senior military analyst added: "Senior military people have been lobbying hard to defend their patch, and everyone seems to have forgotten about thinking radically."

Work & Pensions

Ministers turn on benefits cheats in a desperate effort to find more savings

The DWP, facing a huge cut of some 35 per cent, will reach for a familiar target as it launches the latest official assault on the cheats blamed for taking billions of pounds from the benefits system. Measures in the "fraud and error strategy" include a new investigation service, the appointment of more than 200 new investigators to catch benefit and tax credit cheats, and the use of shared data to track professional fraudsters. The department also wants stiffer penalties, the abolition of cautions, the introduction of three-year benefit bans for people with multiple convictions, and "naming and shaming" fraudsters where they live.

Unveiling the plan that he hopes will tackle the £5.2bn fraud and error bill, the minister for Welfare Reform, Lord Freud, will say: "We are reforming the system and stepping up our efforts to catch the benefit and tax cheats who are stealing money which is meant for the most vulnerable people in our society."

Squeeze the contractors

Cabinet savings enforcer "persuades" private contractors to slash their charges for government work

Ministers have already shaved hundreds of millions of pounds off the cost of government contracts, after giving contractors a "take-it-or-leave-it" offer to reduce their overcharging by at least 10 per cent. Cabinet Office minister Francis Maude has reported "significant" successes following meetings with the first contractors on his list, and managed to beat their planned 40 per cent overcharge down to at least 30. Officials claim the process has already produced savings of up to £800m.

Mr Maude's "efficiency and reform group" has succeeded in getting most of the company bosses to agree to reduce their overcharging to between 20 per cent and 30 per cent. "The bosses of some of the most famous companies in the country have come out of Francis's office looking pretty miserable," the source said. "For some of these companies, the Government is their biggest client. If they want to win contracts in future they will have a better chance if they co-operate now."

Local government

Danny Alexander seeks to reassure pensioners over social care, but questions remain elsewhere

The charity Age UK last week warned of the dire consequences, particularly for the over-75s, of a 25 per cent cut – some £2.2bn – in spending on services including home care, meals on wheels and day centres. But the IoS understands that Danny Alexander will insist that the personal services grant to local authorities will be protected until 2015. A Treasury source said, "We have already announced the link with earnings for pensions and have protected the health budget. On Wednesday we will announce that there will be enough money for local authorities to protect social care services too." However, campaigners remain concerned over issues such as cold weather payments.

Labour fights back

The Opposition hopes to capitalise on the public anger

New Labour leader Ed Miliband and his shadow Chancellor, Alan Johnson, counter the coalition's claim that the cuts are unavoidable. Their "No to no alternative" strategy includes an assault on deficit reduction with capital investment that create jobs.

Mr Johnson criticised the assertion of Mr Osborne that "the deficit was wrong and that his emergency budget measures were unavoidable". Labour's united front suffered, however, when Mr Miliband appeared to slap down his Treasury spokesman over higher education funding. Mr Johnson had written an article in The Independent on Sunday after Mr Miliband's election as Labour leader, warning him: "For goodness' sake, don't pursue a graduate tax. We should be proud of our brave and correct decision to introduce tuition fees." But in an interview with the Yorkshire Post, Mr Miliband backed the graduate tax; in a sharp rebuke to Mr Johnson and others in the shadow Cabinet who oppose the idea, he said: "I think people realise I'm the leader of this party and everyone will accept collective responsibility."

Scotland

Partying like it's 2005

Michael Moore sought to tackle "scare stories" about a post-CSR Scotland regressing to the bad old days of the 1980s, but he was hardly reassuring. "That is not what is going to happen," the Scottish Secretary said. "Indicatively we would anticipate that the spending that we are talking about may take us back to roughly 2005-06." Or, as one aide put it: "We aren't so much talking about firing up the Quattro as switching on the Prius." Only when removal vans are being fired up in Downing Street will the real impact of the cuts be known.

Public backs Cameron and Osborne on economy

For years, David Cameron and George Osborne wanted voters to think they could be trusted with the economy. Now, admittedly with the assistance of the Liberal Democrats, they are running the show, and a new poll for The Independent on Sunday reveals 45 per cent of people believe they are the right people to steer Britain through the downturn.

Only 23 per cent back Ed Miliband, the new Labour leader, and Alan Johnson, his shadow Chancellor. Older voters trust the Tory pair most, but with a third of all voters responding "don't know", the Labour duo appears to remain an unknown quantity to many. How they respond to the Comprehensive Spending Review will be crucial.

Cameron and Osborne may be the most trusted, but 46 per cent also think the coalition "understands the interests of the wealthy better than the interests of ordinary people", rising to more than half among the least well-off.

Specific policies are also criticised as unfair, including higher tuition fees, welfare reforms and the programme of spending cuts. But there are differences between the parties. Among Tories, 55 per cent think the loss of hundreds of public sector jobs is a price worth paying to reduce the deficit, falling to 30 per cent of Lib Dems and only 10 per cent of Labour voters.

Both coalition partners are braced for unpopularity as the cuts bite. The Tories at least start from a relatively high base. In the past two weeks, their rating has risen by one point to 40 per cent, with Labour down two points to 34 per cent, signalling the end to hopes that a new leader would create a bounce in popularity.

In that fortnight, the Lib Dems, who started with 24 points in May, dropped another point to 14 per cent. Almost a quarter of those who voted Lib Dem in May would now vote Labour, a trend Mr Miliband will hope to accelerate in the coming months.

Suggested savings: Sounds like a good idea ...

Charging better-off patients to visit their GP Could raise £1.1bn Charging those not on benefits £20 to visit the GP would manage demand, according to the Social Market Foundation.

Why not? All the main parties are signed up to the principle of the NHS being free at the point of access. Patients with long-term illnesses would be forced to pay out large sums and the genuinely sick could be deterred from seeking medical help.

Cut winter fuel payments to wealthy pensioners: £1.3bn Even over-sixties who are still working receive the £250 payout, which is supposed to help to pay for heating bills. Expats, many living in warm countries, receive £16m a year.

Why not? Think of the headlines. David Cameron told voters to "read my lips" when he promised the winter fuel allowance, along with other pensioners' benefits, would be protected.



Scrap Trident: £15bn-£34bn Opponents of the nuclear deterrent, including Greenpeace, claim a successor to Trident would cost £34bn, about double what the Ministry of Defence estimates.

Why not? The Tories are committed to retaining it. Britain would lose its status as a permanent member of the UN Security Council.



Stop paying Whitehall civil servants bonuses: £130m The budget for performance-related pay for senior civil servants is falling by two-thirds, saving £15m. More junior members of staff will continue to receive incentives.

Why not? Incentivising staff to do well can prevent complacency in the notoriously conservative civil service.



Withdraw from Afghanistan immediately: £2.6bn a year Why not? The coalition is committed to troops leaving by 2015. A rushed withdrawal could leave a vacuum in the war-torn country, into which the Taliban would flood.



Stop using management consultants: £2bn Some consultants employed by central government are on salaries of up to £600,000.

Why not? It can be cheaper to bring an expert in on a short-term contract for a specific task, instead of having them on staff full-time and eligible for other benefits including pensions, etc.



Scrap government advertising: £253m In the run-up to the election, spending on advertising and marketing rose by 40 per cent.

Why not? Some public information messages need to reach as many people as possible, particularly those related to safety and public health.



Abolish the Royal Family: £38m a year At a time of austerity, it seems anachronistic to use public money to support a hereditary monarchy.

Why not? Britain's monarchy generates more than £500m a year from overseas tourists, according to VisitBritain. And what would Prince Philip do?

Voices
Numbers of complaints about unwanted calls have trebled in just six months
voices
News
people
Arts & Entertainment
Picture of innocence: Ricky Gervais and Karl Pilkington in ‘Derek’
tvReview: The insights of Ricky Gervais's sweet and kind character call to mind Karl Pilkington's faux-naïf podcast observations
Arts & Entertainment
Tangled up in blue: Singer-songwriter Judith Owen
musicAnd how husband Harry Shearer - of Spinal Tap and The Simpsons fame - helped her music flourish
VIDEO
Have you tried new the Independent Digital Edition iPad app?
Arts & Entertainment
Paul Weller: 'I am a big supporter of independent record stores but the greedy touts making a fast buck off genuine fans is disgusting'
music
Arts & Entertainment
William Shakespeare's influence on English culture is still strongly felt today, from his plays on stage to words we use everyday
arts
Sport
Karim Benzema celebrates scoring the opening goal
sportReal Madrid 1 Bayern Munich 0: Germans will need their legendary self-belief to rescue Champions League tie in second leg
Life & Style
Looking familiar: The global biometrics industry is expected to grow to $20bn by 2020
tech
Sport
Manchester United manager David Moyes has claimed supporters understand the need to look at
sportScot thanks club staff and fans, but gives no specific mention of players
News
Strange 'quack' noises could be undersea chatter of Minke whales
science
News
weird news... and film it, obviously
Life & Style
Balancing act: City workers at the launch of Cityfathers
lifeThe organisation is the brainchild of Louisa Symington-Mills who set up Citymothers in 2012 - a group boasting more than 3,000 members
Arts & Entertainment
tv
News
Fresh hope: Ruth Womak and her dog Jess. A free training course in basic computing skills changed Ruth’s life
educationHow a housing association's remarkable educational initiative gave hope to tenant battling long-term illness and depression
News
Rohff is one of France’s most popular rappers
people
News
news
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
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Senior Construction Solicitor – Surrey

Excellent Salary Package: Austen Lloyd: This is a rare high level opportunity ...

Construction Solicitor NQ+ Manchester

Very Competitive Salary: Austen Lloyd: This is an excellent opportunity within...

Corporate Finance

£80000 - £120000 per annum + Highly Competitive Salary: Austen Lloyd: US QUALI...

Banking / Finance Associate - City

Excellent Package: Austen Lloyd: Banking / Finance Associate - We have an exce...

Day In a Page

Migrants in Britain a decade on: The Poles who brought prosperity

Migrants in Britain a decade on

The Poles who brought prosperity
Philippe Legrain: 'The eurozone crisis has tipped many into disillusionment, despair and extremism - we need a European Spring'

Philippe Legrain: 'We need a European Spring'

The eurozone crisis has tipped many into disillusionment, despair and extremism - this radically altered landscape calls for a new kind of politics, argues the economist
A History of the First World War in 100 moments: A moment of glory on the Western Front for the soldiers of the Raj

A History of the First World War in 100 moments

A moment of glory on the Western Front for the soldiers of the Raj
Judith Owen reveals how husband Harry Shearer - star of This Is Spinal Tap and The Simpsons - helped her music flourish

Judith Owen: 'How my husband helped my music flourish'

Her mother's suicide and father's cancer also informed the singer-songwriter's new album, says Pierre Perrone
The online lifeline: How a housing association's remarkable educational initiative gave hope to tenant battling long-term illness and depression

Online lifeline: Housing association's educational initiative

South Yorkshire Housing Association's free training courses gave hope to tenant battling long-term illness and depression
Face-recognition software: Is this the end of anonymity for all of us?

Face-recognition software: The end of anonymity?

The software is already used for military surveillance, by police to identify suspects - and on Facebook
Train Kick Selfie Guy is set to scoop up to $250,000 thanks to his viral video - so how can you cash in on your candid moments?

Viral videos: Cashing in on candid moments

Train Kick Selfie Guy Jared Frank could receive anything between $30,000 (£17,800) to $250,000 (£149,000) for his misfortune - and that's just his cut of advertising revenue from being viewed on YouTube
The world's fastest elevators - 20 metres per second - are coming soon to China

World's fastest elevators coming soon to China

Whatever next? Simon Usborne finds out from Britain's highest authority on the subject
Cityfathers tackles long-hours culture that causes men to miss out on seeing their children

Cityfathers tackles long-hours culture

The organisation is the brainchild of Louisa Symington-Mills, a chief operating officer who set up Citymothers in 2012 - a group that now boasts more than 3,000 members
Brits who migrate to Costa del Sol more unhappy than those who stay at home

It's not always fun in the sun: Moving abroad does not guarantee happiness

Brits who migrate to Costa del Sol more unhappy than those who stay at home
Migrants in Britain a decade on: They came, they worked, they stayed in Lincolnshire

Migrants in Britain a decade on

They came, they worked, they stayed in Lincolnshire
Chris Addison on swapping politics for pillow talk

Chris Addison on swapping politics for pillow talk

The 'Thick of It' favourite thinks the romcom is an 'awful genre'. So why is he happy with a starring role in Sky Living's new Lake District-set series 'Trying Again'?
Why musicians play into their old age

Why musicians play into their old age

Nick Hasted looks at how they are driven by a burning desire to keep on entertaining fans despite risking ridicule
How can you tell a gentleman?

How can you tell a gentleman?

A list of public figures with gallant attributes by Country Life magazine throws a fascinating light on what it means to be a gentleman in the modern world