Government sets out £6 billion cuts

The government has been setting out where it will cut the first £6.2 billion from public spending this year.

In a speech outside Parliament, Conservative Chancellor George Osborne and his Liberal Democrat deputy David Laws outlined the contribution that different government departments will be expected to make. 

The Department of Health was one of the departments left off the list, on the grounds that its funding is protected; meaning that it can recycle its own efficiency savings.  

Osborne and Laws also set out some cross-government savings. Some £95m will be cut from government IT spending. And £1.7 billion will be saved by delaying and stopping contracts, with immediate negotiations to achieve cost reductions from the major suppliers to the government.

The pair also announced that £120m will come from a recruitment freeze across the civil service during 2010-11. They also said that £600m will be saved by abolishing quangos.

Savings on management consultants are likely to prove attractive, if difficult to achieve. Past efficiency savings drives have almost invariably led to fewer Whitehall staff and more use of consultants.

Freedom of Information data showed that the DH, its IT programme NHS Connecting for Health and the NHS Purchasing and Supplies Agency spent £470m on management consultants in the three years from 2005-6 to 2007-8.

The spending came in addition to an estimated £350m spent annually on consultants by 150 primary care trusts.

Today’s announcement is the first step in the coalition government’s attempt to eliminate the bulk of the UK’s public sector deficit – a figure beginning to decline but still projected to be £156bn this year – over the next five years.

The move on savings comes ahead of the government’s emergency Budget on 22 June and its autumn review of long-term departmental spending.