POLITICS

Cuts Will Come From Whitehall Not Benefits, George Osborne Insists

28/05/2013 10:33 BST | Updated 28/05/2013 10:34 BST
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Britain's Chancellor of the Exchequer George Osborne awaits the arrival of Indian Finance Minister Shri Chidambaram for a bilateral meeting in central London on May 16, 2013. AFP PHOTO / BEN STANSALL (Photo credit should read BEN STANSALL/AFP/Getty Images)

George Osborne has indicated there will be no further cuts to benefits, after he revealed seven government departments had already signed up to slash their budgets by a further 10%.

The chancellor is hoping to cut 2015/16 spending by £11.5bn in order to finance the NHS and infrastructure projects.

The Whitehall departments who have already negotiated their settlement include justice, energy and communities and local government.

However some departments, including the Home Office and Ministry of Defence, are believed to be resisting making deeper cuts to their spending.

Defence secretary Philip Hammond, himself a cheerleader for austerity, has previously warned the Treasury that the armed forces cannot take more large-scale spending cuts.

And The Daily Telegraph has reported that work and pensions secretary Iain Duncan smith has personally offered Hammond and home secretary Theresa May to cut the welfare bill by another £3bn each year to protect spending on the armed forces and police.

However Osborne told BBC Radio 4's Today programme on Tuesday morning that his "central assumption" was that the savings he required would come from central government departments and not from welfare.

"We've already accepted big cuts from welfare, now we've got to look for savings in Whitehall, in government, in bureaucracy," he said.

"Everyone who sits round the Cabinet table shares the same goal, which is to bring the deficit down, to fix our broken economy, to make sure money is going to job-supporting infrastructure projects."

The coalition has already made a series of cuts to welfare, including a £26,000 cap on the total benefits claimed by a household and restricting increases to a below inflation 1%.

In the wake of last week's terror attack in Woolwich, the Treasury has been under pressure not to cut funds for the police, armed forces or security services.

Osborne said: I'm not going to do anything which is going to endanger the security of this country at home or abroad or the fight against terrorism, but that doesn't mean that you can't take a vast institution like the Home Office and look for savings."

However the chancellor's critics have argued that the internal coalition wrangling over where to cut masks a greater failure.

Chris Leslie MP, Labour's shadow financial secretary to the Treasury, said the further cuts were only necessary because Osborne and David Cameron had failed to balance the books by 2015 as initially promised.

"Their failure on growth and jobs means the deficit is now set to be over £90 billion in 2015. That’s why the chancellor is now asking for even more spending cuts, with most big departments yet to reach agreement," he said.

Last week the International Monetary Fund eased up on its calls for Osborne to abandon his austerity measures. However it warned that the UK was "still a long way from a strong and sustainable recovery" and noted the chancellor was presiding over "the weakest recovery in recent history".

In light of the IMF report, Jonathan Portes, the director of National Institute of Economic and Social Research told HuffPost UK the entire discussion around the spending review "largely miss the point".

"As the IMF said, in the very short term - that is to say, now, not 2015 - more public investment, financed by borrowing, would be appropriate," he said.

"Looking beyond that, the UK does badly need a longer term strategy to ensure the long-term sustainability of the public finances and the welfare state, targeting spending where it can be most effective.

"But a spending review that covers only one year, and consists of a set of largely arbitrary targets and constraints, can't possibly help us towards such a strategy."