Magazine article Public Finance

Four Departments Face Spending Squeeze

Magazine article Public Finance

Four Departments Face Spending Squeeze

Article excerpt

Gordon Brown gave an unambiguous signal that the days of plenty are over for the public sector as he used his Budget statement to announce that four Whitehall departments would have their expenditure cut in the next spending round.

The chancellor, addressing a packed House of Commons on March 22, set the tone for next year s Comprehensive Spending Review when he declared that the affected ministries' budgets would be cut by 5% per year in real terms in 2008/09,2009/10 and 2010/11, using 2007/08 budgets as the baseline.

The Department for Work and Pensions, Revenue & Customs, the Cabinet Office and the Treasury will have their funding reduced in cash terms by 2.25% a year, which Brown said would release £1.8bn over that period.

The yearly budgets for the departments were not available as Public Finance went to press.

Brown told MPs that the departments had agreed to undertake 'necessary modernisation", which would be paid for from a fund worth more than £800m.

The chancellor also told MPs that Home Secretary Charles Clarke had agreed to a funding freeze. 'The home secretary has agreed that he can invest more in priorities like policing and security, while making savings in other areas within a three-year budget at its 2007/08 real terms level.'

Browns announcement provoked immediate fears that the fund would be used to pay for more redundancies among civil servants.

Mark Serwotka, general secretary of Whitehall's Public and Commercial Services union, told PF that the cuts would damage services and hamper the drive to implement policies the chancellor lauded elsewhere in his speech. …

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