George Osborne today announced the Government will sell off its remaining stake in Royal Mail as part of £4.5billion debt reduction plan.
The sale of the public's 30 per cent share of Royal Mail will raise £1.5billion, the Chancellor estimated.
The postal service was privatised in 2013, raising £3.3billion for the Government, but a cross-party report later claimed taxpayers lost out on an additional billion as the company was under-valued.
The remaining £3billion savings will come from Government departments, with Transport, Defence, Business and Skills and the non-schools budget in the Education department bearing the brunt of the cuts.
Speaking in the House of Commons this afternoon, the Chancellor revealed details of the first wave of cuts needed to meet the Tory election pledge to reduce spending in real terms.
He said: “I am today announcing that the Government will begin selling the remaining 30 per cent shareholding we have in the Royal Mail.
“It is the right thing to do for the Royal Mail, the businesses and families who depend on it – and crucially for the taxpayer.
“Further savings in departments this year – and selling our stake in the Royal Mail, getting on with what we promised, 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.”
The party committed to cutting spending by one per cent in the next tax year, and also vowed to slash £12billion from the welfare budget.
However, the cuts will not fall evenly across Whitehall as spending on Health, International Development and Education are ring-fenced, and pensioner benefits are also protected.
A report published this morning by the economic think-tank the Institute of Fiscal Studies warned of the “deep cuts” to other areas of Government.
It read: “This is because underlying pressures are increasing spending in other areas.
“Debt interest spending is forecast to rise as both government debt and the effective interest rate on that debt rises.
“Spending on public service pensions is forecast to rise as the numbers receiving such pensions grows.
“Spending on state pensions is forecast to rise as average state pension payments continues to rise.
“In addition commitments to increase spending in some areas, and not to cut other areas, increases the size of the cuts required elsewhere.”
Mr Osborne is also under pressure to maintain defence spending at 2 per cent of national income next year in order to honour the UK’s membership of Nato.
If he does make that commitment, the departments of Local Government, Transport, Justice and Business could face even deeper cuts to meet the Tories spending plans in 201/17.
Prior to the Tories election victory, David Cameron vowed to raise the threshold at which people pay 40p tax from £42,385 to £50,000 and increase the personal allowance to £12,500 by 2020.
These moves would cost the Treasury an estimated £7billion.
The cuts to departmental budgets are a contrast to MPs pay packets, which are set to swell by £7,000.
The Prime Minister has come under pressure to refuse the increase or give his extra cash to charity, moves which up until yesterday he refused.
But in an apparent U-turn, Downing Street has written to the independent body that sets salaries urging it to think again about the mooted 10 per cent increase.