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UK outlines start of massive cuts to “wasteful spending across the public sector”

Tuesday, May 25th 2010 - 00:43 UTC
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Chancellor George Osborne anticipates further slashing when the emergency budget next June 22 Chancellor George Osborne anticipates further slashing when the emergency budget next June 22

Less than a fortnight after the Conservative-Liberal Democrat coalition took power in Britain, Chancellor of the Exchequer George Osborne outlined plans to cut £ 6.2 billion pounds (8.92 billion USD) from government spending to help reduce the budget deficit.

“In the space of just one week, we have found and agreed to cut six and a quarter billion pounds of wasteful spending across the public sector,” Osborne said on Monday. He also warned that this is just the start and warned there will be much worse in his emergency budget next month.

The government intends to eliminate the bulk of the UK's budget deficit, currently estimated at 156 billion pounds, over the next five years.

There will be a civil service recruitment freeze, cuts to IT programs, property and travel budgets. Government departments will have to trim hundreds of millions of pounds from their current outgoings. The biggest cuts are due to be made at the departments for business, local government, transport and the devolved administrations which run Scotland, Wales and Northern Ireland.

The British finance minister hinted that, in his opinion, the UK could find itself looking at a debt crisis along the lines of Greece, if it did not act fast.

“Around Europe, people are waking up to the challenge of those very large deficits. If we didn't take action now, I think we would be putting the stability of the British economy in grave danger,” Osborne said.

The coalition government has pledged to safeguard certain frontline services such as the National Health Service and schools. Defense and international aid spending were also spared the cuts.

The coalition said this was the first round of difficult cuts on spending, and “will not be the last”. Chief Secretary to the Treasury, Liberal Democrat David Laws, admitted these cuts were “the easiest efficiency savings and the most obvious areas of waste.”

“As we go further into this process, the more difficult decisions will have to be made, and we're all conscious of that,” Laws said.

The coalition did not say how many public sector jobs might go, but they did say the bulk would come from not filling unoccupied posts rather than redundancies. However, there is still a very real possibility of strike action by unions.

The economy and the issue of cutting the budget deficit was a key issue in the election campaign, lost by former Prime Minister Gordon Brown's Labour Party. Now in opposition, Labour continue to warn that cutting public spending this soon represents a serious risk to the UK's economic recovery.

Shadow Chancellor Alistair Darling told the BBC there was a lack of detail: “There could be thousands of jobs affected by this, there could be measures that could damage growth. I would be very, very concerned about that.”

“I think it could hit the chances of a strong recovery and put us in the slow lane for growth out of the recession,” said former Chief Secretary to the Treasury, Liam Byrne.

And union leaders described the plans as 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“ said Brendan Barber, TUC general secretary.
But employers' group, the CBI, said it was ”encouraged“ by the steps being taken, saying they were a ”painful but necessary” move in showing the UK was serious about tackling its borrowing levels.

The coalition is aware it also needs to take its own share in the cuts being handed out. Public servants will now be banned from traveling first class, and government ministers will no longer have a dedicated car and driver, in order to encourage use of public transport.

Categories: Economy, Politics, International.

Top Comments

Disclaimer & comment rules
  • NicoDin

    Oh! the 2nd powerful fleet in the world according with some nationalist here AKA Royal Navy is going to replace its all ships for canoe made in China.

    May 26th, 2010 - 06:02 pm 0
  • zethe

    It's not a nationalist claim, google it.

    And, no. We're currently building two new massive aircraft carriers, new destroyers and new submarines.

    May 29th, 2010 - 08:13 pm 0
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