Chancellor’s first cuts

May 28, 2010 Updated: September 29, 2015

LONDON—Plans to rein in the country’s biggest peacetime deficit by paring away £6.2 billion in 2010-11 were announced by George Osborne, the Chancellor of the Exchequer, on Monday.

Areas falling under the scalpel include the Child Trust Fund, MPs’ and Cabinet Ministers’ travel, civil service jobs, Whitehall department budgets, financial support for the devolved administrations in Scotland, Wales and Northern Ireland, local authorities grants, and quango budgets.

“If we didn’t take action now, we would be putting the stability of the British economy in grave danger,” Mr Osborne told reporters in London on Monday, May 24th.

These cuts will be dwarfed by spending reviews later this year. Job losses in government-funded sectors are likely to pass public dissatisfaction back to the government as departmental budgets are decimated over the three years starting April 2011.

"This is the first time this government has announced difficult decisions on spending," Mr Osborne told the news conference. "It will not be the last."

The acceptance of facing hard times is welcomed by Richard Lambert, Director-General of the Confederation of British Industry (CBI). “[D]epartmental spending cuts and a civil service recruitment freeze, are painful but necessary steps to demonstrate the UK’s seriousness about tackling the deficit,” he said in a statement. “Just as private sector firms had to take strong action to cut costs during the recession, so too must the public sector.”

He believes there is considerable scope to make even greater savings “by re-engineering public service delivery”.

The Trades Union Congress (TUC) represents most workers’ organisations and so has a large membership of government workers. In a statement, its General Secretary, Brendan Barber, said the announced cuts were deeply worrying.

“With the UK economy and the economies of our trading partners in Europe so fragile, this is not the right time to be cutting back,” he said.

“Reducing investment in employment programmes for young people and regional development is particularly short-sighted … cuts in local government budgets will particularly affect the most vulnerable who rely on social care and other important services.”