Cuts Watch #110: Even Bigger Cuts Possible
According to the Press Association, the Chancellor has told Government Departments to prepare plans for cutting spending by 40 per cent, not the 25 per cent announced in the emergency budget last month. The Telegraph reports that last night Danny Alexander (the Chief Secretary to the Treasury) sent cabinet ministers a letter giving them three weeks to produce two plans – one for 25 per cent cuts, the other for 40 per cent. Health and International Development are exempt, according to the Telegraph, and Education and Defence are asked for plans for 10 and 20 per cent cuts.
The Office for Budget Responsibility calculated that the 25 per cent cuts announced in the Budget would reduce general government employment by 610,000 by 2015-16. If 40 per cent cuts are instead implemented this would suggest that the employment impact would be two fifths higher: over a million jobs.
The Coalition seems to have two lines of defence: that Departments are only being asked for “illustrative plans” and that Labour plans would have meant 20 per cent cuts if they had won the election. Patrick Hennessy, writing in the Telegraph, seems to have spoken to very senior government figures; he speculates that “the main hope for departments of avoiding the full extent of 40 per cent cutbacks is the summer-long drive by ministers to cut the welfare bill, currently running at £192billion a year.”