Some Government departments will face swingeing budget cuts of up to 10 per cent on top of existing savings, as part of a new Whitehall drive.
Total departmental resource budgets will be cut by one per cent next year and two per cent the year after. But with sensitive big-spending departments such as health and schools being spared any cuts at all, “unprotected” departments will have to find an extra 10 per cent of cuts on top of those already planned.
And the small print of the Government’s Autumn Statement suggests that the pain will not stop there. Treasury officials say next year’s Comprehensive Spending Review will aim to find an additional £10bn of spending cuts, which must be identified over the winter months.
The result is likely to be significant cuts to departments such as Work and Pensions, Justice and Defence, which are thought to have been slower in cutting staff levels than others.
“If all departments reduced their spending on administration in line with the best-performing departments like Education, and Communities and Local Government, then another £1bn could be saved,” Mr Osborne said.
He added that if more departments provided services digitally and reduced their property portfolios then that would also save £1bn.
Initial cuts are likely to mean that the Home Office has to find £235m over next two years and the Ministry of Justice £215m. This could mean further cuts to police numbers as well as a squeeze on the court services. The Business Department could be expected to make savings of up to £500m while the Department of Work and Pensions would be on the line to save £224m. Health and Education will also be expected to make efficiency savings, although they will be able to reinvest the savings in front-line services.
But critics pointed out that there had already been a reduction of almost 53,000 civil servants since the start of the spending review – about 11 per cent of the total work force. They warn that if the cuts are not effectively handled the best civil servants could leave, damaging Whitehall competence.
Senior Government sources believe that large parts of the civil service are still over-resourced. Recently the Department of Education announced that around 1,000 career civil servants faced redundancy within two years as the ministry focuses on priority work. Spending will fall by £290m. Describing the cuts in the department, one senior figure said: “It’s a start.”