Osbourne Outlines New Spending Cuts

This BBC article details the new spending cuts that will be implemented by the coalition governemtn in an effort to reduce the UK's budget deficit. Last week I reported on the announcement by Chancellor George Osbourne that he would announce the details this week, and here they are. The cuts plan to end ineffective elements of employment programmes, send a shock through government departments and discourage wasteful spending. The rest of the cuts as according to the government will go as follows:

• £1.15bn in "discretionary areas" like consultancy and travel costs, £95m through savings in IT spending, £1.7bn through delaying/stopping contracts and projects and renegotiating with suppliers


• £170m from reducing property costs, at least £120m from a civil service recruitment freeze and £600m from reducing quango costs and £520m from other "lower value" spend


• The biggest cuts by department are £683m (4.6% of departmental budget) at Transport, £780m (7.2%) at Communities and Local Government, £836m (3.8%) at Business, £670m (1.1%) at Education and £325m (3.2%) Department for Justice


• The devolved administrations in Scotland, Wales and Northern Ireland would have to save £704m - although they would have the option of deferring savings until the following year


• And local authorities - which will be expected to save £1.165bn - will be given more "flexibility" to find savings as "ring-fences" around government grants are being removed.

The Labour party has responded to this announcement with harsh criticism of the cuts saying that it's a "fantasy" to think that these cuts will not lower employment levels along with potential economic growth. Union representatives have also expressed concern with the cuts saying that with the state of the UK and its major trading partner's economies it's not the time to begin cutting back.

This announcement is the first big public policy move made by the new coalition government and their support level will have a lot to do with the success of these cuts. Much like the stimulus package that President Obama put into place this move is aimed to help the economy out of their current recession.

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Photocredit: The Telegraph