UK government departments to find £3bn in savings

Chancellor announces departmental cuts which will claw back £200m in ‘non-NHS’ savings from the health budget and over £450m from higher and further education

House of Parliament at night

George Osborne’s first task in the new Conservative government will be to slash departmental budgets in order to find £3bn in savings. The cuts form part of a larger £4.5bn savings package, which will be topped up by the sale of the government’s 30% stake in the Royal Mail.

Details emerged last week of the Chancellor’s orders for non-protected government departments to find the savings, ahead of the July budget.

Hardest hit will be Transport (£545m) and Defence (£500m), while Business, Innovation and Skills faces cuts of £450m, with higher and further education expected to bear the brunt. Similarly, Education will face the same level of cuts to its budget, with £450m to be clawed back from non-school services.

The Department of Health must find £200m in ‘non-NHS’ savings, with early details implying the cuts will come from the public health budget of local councils. A further £105m will be lost from the coffers of the Department of Work and Pensions, by reducing fraud and error and cutting administration costs.

Hollyrood will also feel the pinch as the Scottish government’s budget for 2015/16 has been revised down by £107m, as will the Welsh, with a budget cut of £50m.

Mr Osborne said: “Reducing the deficit – that is how you deliver lasting economic security for working people. For, as everyone knows, when it comes to living within your means, the sooner you start the smoother the ride.”

While it remains unclear how the cuts will affect primary care, cuts to the Health budget have raised concerns. The announcement places further pressure to the shrinking pot which, according to a recent article in the British Medical Journal, may already be diverted by many councils to shore up other council services vulnerable to cuts.

Responding to the details of the cuts, chair of the Local Government Association, David Sparks, said: “Councils have worked hard over the past five years to shield residents from the spending reductions in government funding but the same efficiencies cannot be remade.”

He added: “With a further reduction in public spending expected next year, we urgently need a new settlement for England which devolves decisions about infrastructure, transport, housing, skills and health and social care, down to local areas so they can tackle the big issues facing their residents and ensure our public services survive the next few years.”

Full details of the savings are available at the website.