UK government departments to face further cuts, chancellor reveals in budget

By on 17/03/2016
The UK's Chancellor of the Exchequer George Osborne. Photo by UK Treasury

UK government departments will be asked to find another £3.5 billion (US$5bn) in savings by 2020, following a prolonged period of public spending cuts, chancellor George Osborne has announced.

The announcement comes months after Osborne’s autumn spending review requested that ministries, with the exception of health, defence and the Foreign Office, reduce their day-to-day spending by 18% by 2020.

Revealing the budget in Parliament yesterday, Osborne said that he would ask chief secretary to the Treasury, Greg Hands, and Cabinet Office minister, Matthew Hancock to “undertake a further drive for efficiency and value for money … to save a further £3.5 billion in the year 2019-20.”

The official budget document states that the government will “conduct a departmental efficiency review, which will help deliver a further £3.5 billion of savings.”

The measure is needed to help Osborne fulfill his plan to deliver a £10bn surplus on the public finances by 2020, he said.

However, Paul Johnson, director of the Institute for Fiscal Studies (IFS) think-tank, has said that Osborne only has a 50-50 chance of meeting this target.

The budget document states that departmental spending will fall in real terms by an average of 0.9% per year from 2016 to 2020, compared to 1.7% between 2010 and 2016, and that once “the public finances move into surplus in 2019-20, total departmental resource spending will grow in line with inflation from 2019-20 to 2020-21.”

Former head of the civil service Lord Kerslake has told the BBC that after years of austerity, “it’s hard to see where the easy choices are now.”

The trade union for senior civil servants, the FDA, has reacted angrily to the request for further efficiency savings.

FDA general secretary Dave Penman said: “Once again, when the Chancellor’s numbers don’t add up he comes to the well of public services to drink again by announcing further budget cuts.

“It’s only three months since departmental budgets were set and yet departments are now expected to deliver an additional £3.5bn of savings in 2019/20 through another efficiency review.

“But that’s not all. By announcing a change to the discount rate on public sector pensions – without any consultation – they are effectively removing a further £2bn from public services and transferring it to the Treasury to give the illusion of a surplus: a political con trick that can only further damage public services.”

General secretary of the Public and Commercial Services (PCS) union – the UK’s largest civil service union, Mark Serwotka described further cuts to civil service departments as “devastating”, adding that “tens of thousands of jobs are already under threat and hundreds of offices are earmarked for closure, hitting vital services from tax collection to our justice system.”

 

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See also:

Tom Scholar appointed new permanent secretary of UK Treasury

Sir Nicholas Macpherson, Permanent Secretary, HM Treasury, UK: Exclusive Interview

UK cross-government leadership group highlights departmental ‘good practice’ initatives

Interview: John Manzoni, chief executive, UK Civil Service

Stephen Lovegrove appointed new permanent secretary of the UK’s Ministry of Defence

About Winnie Agbonlahor

Winnie is news editor of Global Government Forum. She previously reported for Civil Service World - the trade magazine for senior UK government officials. Originally from Germany, Winnie first came to the UK in 2006 to study a BA in Journalism & Russian at the University of Sheffield. She is bilingual in English and German, and, after spending an academic year abroad in Russia and reporting for the Moscow Times, Winnie also speaks Russian fluently.

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