Coalition cuts £6bn in spending
Chancellor George Osborne has outlined his plans to cut public spending by £6.25 billion.
At present, the UK economy has a budget deficit of £156 billion – the record for peacetime. Mr Osborne has said radical action is necessary to get the economy back on track.
The main thrust of these cuts has been to quangos, IT projects, consultancy, property and ‘low-value spending’. There will also be a recruitment freeze within the civil service.
David Laws, the Liberal Democrat Treasury Chief Secretary said: “The years of public sector plenty are over. The more decisively we act the quicker and stronger we can come through these tough times.”
There will be £95 million of cuts from IT programmes and £170 million from property. Consultancy and travel costs are to come down by more than £1 billion.
Some £600 million will be saved by cutting back on quangos and £120 million will come from freezing recruitment within the civil service. Savings of £683 million will be made at the Department for Transport, £670 million will come from education and £325 million will be saved in the Ministry of Justice.
Further, there will be £836 million worth of cuts from business and £780 million will be saved at the Department of Communities and Local Government.
The Child Trust Fund scheme will also be abolished with contributions from birth and top up payments ending by 2011. This measure will save £320 million.
However, the coalition has pledged to protect funding for early years, schools and further education. Some £500 million worth of the money cut will be reinvested in measures to bolster employment and skills.
As well as these cuts, Mr Laws has previously said that every spending commitment outlined by Labour this year will be reviewed in an attempt to make savings.
Plans to make £6 billion worth of immediate spending cuts was one of the key points in the Tory election manifesto. However, the Liberal Democrats had argued severe cut this year would jeopardise the economic recovery.
To learn more about the parties’ election pledges see ‘The election and your finances’.
Since he become Deputy Prime Minister, Mr Clegg has said the debt crisis in Greece and financial upheaval in the eurozone has necessitated the bringing forward of these spending cuts.
The coalition government has already announced plans for the creation of an independent Office for Budget Responsibility. Headed by Sir Alan Budd, the office will assess the state of public finances. Previously, this has been the job of the Chancellor of the Exchequer.
In addition to these cutbacks, Mr Osborne will present an emergency Budget on 22 June.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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