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Chancellor demanding more spending cuts from departments to fund Autumn Statement giveaways
George Osborne is demanding a round of last-minute spending cuts from Whitehall departments to fund more than £2bn of giveaways in his Autumn Statement on Thursday.
The Chancellor has angered Conservative and Liberal Democrat ministers by asking for emergency savings on the eve of his statement so that he can balance the books. The departments under pressure include the Home Office, Justice, Defence, Business and Work and Pensions.
Mr Osborne's move has reopened a Cabinet debate over the previous decision to ring-fence the NHS, schools and overseas aid budgets, meaning any extra savings must be found from the non-protected departments that have already suffered cuts announced since 2010.
Although Cabinet sources say a deal will be done by Thursday, one said there was resentment that Mr Osborne had launched a "mini spending review" to finance moves to cut domestic energy bills by £50 and populist measures announced at this autumn's Tory and Liberal Democrat conferences. These were scrapping a rise of almost 2p a litre in petrol duty due next September (£750m); bringing in free school meals for all five-to seven-year-olds (£700m); and rewarding marriage in the tax system (about £700m).
About £1bn could be raised from a new crackdown on tax avoidance that is likely to affect rich individuals and companies. But extra savings from some departments, and under-spending by others, will be needed to make the Chancellor's sums add up.
Nick Clegg and Vince Cable, the Liberal Democrat Business Secretary, are said to have fought off a Treasury attempt to shave the budgets for growth measures, skills training and finance for small businesses. An extra £250m will be handed to the British Investment Bank to help small and medium-sized firms.