Osborne Announces Departmental Cuts For Defra, DECC And DCLG

A total of £383m worth cuts will be made this year to Defra, DECC And DCLG as a part of new measures to down public debt. 

Addressing MPs as part of the Queen’s Speech debate on the economy, the Chancellor, George Osborne, announced that the in-year budget review process has completed, identifying further asset sales, underspends and efficiencies to contribute to the £4.5bn of debt reduction – including a major boost to the Exchequer from completing the privatisation of the Royal Mail.

The Chancellor confirmed that Whitehall departments outside of protected areas like the NHS, schools and aid have responded to the Treasury’s call for them to rapidly identify options to reduce spending this year.

Chancellor George Osborne – “I am today announcing that the government will begin selling the remaining 30% shareholding we have in the Royal Mail. Further savings in departments this year – and selling our stake in the Royal Mail. Getting on with what we promised”

Cuts of £83m at Defra, £70m at DECC and £230m at DCLG will be made throughout the year.

Whitehall departments have found a further £3bn savings this financial year – a significant first step toward the savings required. This is equivalent to around 3% of unprotected departmental spending this year.

The savings for 2015-16 announced yesterday (Thursday 4 June) are being achieved through further efficiency savings, tighter control of budgets to drive underspends in year, and driving through asset sales.

They include:

  • tightly managing departmental budgets in-year, so that instead of spending up to budget, departments deliver underspends. Departments across Whitehall including the Ministry of Defence, Department for Education and the Department for Business, Innovation and Skills have agreed targets to deliver
  • driving further efficiency savings in Whitehall budgets, including in the Department of Business, Innovation and Skills (BIS), the Home Office, Department for Work and Pensions, and the Department for Environment, Food and Rural affairs. These include making savings in higher education and further education budgets in BIS, and savings in the administration of arms lengths bodies in the Department for Education and the Department for Culture, Media and Sport
  • selling assets the government doesn’t need to keep, generating better value for money for the taxpayer. These include the Department for Transport bringing forward sale of land around King’s Cross, which is valued in the Department’s accounts at £345m, and increased receipts from sales of public sector land in the Department for Communities and Local Government

Chancellor George Osborne said: “I am today announcing that the government will begin selling the remaining 30% shareholding we have in the Royal Mail.

“It is the right thing to do for the Royal Mail, the businesses and families who depend on it – and crucially for the taxpayer.

“Further savings in departments this year – and selling our stake in the Royal Mail. Getting on with what we promised.

“Reducing the deficit – that is how you deliver lasting economic security for working people. For as everyone knows, when it comes to living within your means, the sooner you start the smoother the ride.”

The Chief Secretary to the Treasury, Greg Hands, wrote to government departments on 20 May, to ask them to identify savings and achieve underspends this year.

The following table breaks down savings by department, excluding receipts from Royal Mail share sales.

 

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