British Cabinet ministers have been ordered by the UK Treasury to plan for unprecedented cuts of 40 percent in their departmental budgets as the coalition widens the scope of its four-year austerity drive.
The eye-watering demand from Chief Secretary to the Treasury Danny Alexander was sent this weekend to Cabinet colleagues ahead of a week in which ministers will step up emergency cost cutting across the public sector.
The only departments not included in the Treasury trawl will be health and international development, which have been “ringfenced” for the current parliament. Education and defense will also escape lightly. Alexander has told Secretary of State for Education Michael Gove and Secretary of State for Defence Liam Fox, to plan for two scenarios — cuts to budgets of 10 percent at best and 20 percent at worst over four years. All other departments — including the Home Office, the Department for Work and Pensions and the Department for Transport — have been ordered to produce plans showing the impact of cuts of 25 percent and at worst 40 percent.
It is estimated that a 25 percent cut in the Home Office budget could mean a reduction in the number of police officers of almost 20,000.
In addition, all departments have been asked to show how they would slash day-to-day administration costs, excluding salaries, by 33 percent at the lower end and 50 percent at the higher end.
“We are determined to tackle the record budget deficit in order to keep interest rates lower for longer, protect jobs and maintain the quality of essential public services. These planning assumptions are not final settlements, and do not commit the Treasury or departments to final settlements,” a Treasury source said.
In the budget last month, Chancellor of the Exchequer George Osborne said that, with the exception of health and international development, departments faced average cuts of 25 percent. However, it was expected the pain would be spread fairly evenly.
Alexander and Osborne briefed the full Cabinet at a meeting on Tuesday last week. They stressed that asking ministers to look at the impact of 40 percent cuts did not mean they would be hit by such harsh settlements when final details were announced in the Comprehensive Spending Review on Oct. 20. Sources were at pains to point out that the previous Labour government had been planning cuts of 20 percent and as a result, the coalition’s settlement would mean more for education, defense and health.
The announcement of a 40 percent outer limit could be seen as tactical — to prepare the public for the worst in the hope that when final details are announced they will come as a less of a shock.
In a sign of how determined ministers are to act fast, the government is expected this week to halt the rebuilding of around 700 schools in order to save a further £1 billion (US$1.52 billion) a year.
And in a move that will cause bitterness among the bureaucrat mandarins drawing up the cuts, ministers intend to announce plans soon to slash payoff terms for hundreds of thousands of civil servants, many of whom fear redundancy as a result of the austerity measures. Last week, it emerged that at least 600,000 public service jobs could be lost.
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