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The government’s business department will see its budget slashed by £636m this year to help the coalition deliver £6.2bn of cuts.
Chancellor George Osborne and Treasury minister David Laws have revealed the Department for Business, Innovation and Skills (BIS) must cut £836m by April 2011, but will receive £200m investment, taking its net budget reduction to £636m.
Employment programmes such as the Young Person’s Guarantee (YPG) will also take a hit, with £320m being saved by ending the temporary jobs offer under the YPG and removing recruitment subsidies from the Six Months Offer, which Laws described as “poor value for money”.
Outlining the government’s “first steps” to address the national deficit of £156bn, the government also revealed the Department for Work and Pensions (DWP) would have to make savings of £535m.
At least £120m will also be saved this year through a Civil Service recruitment freeze, and £600m will be cut from the cost of quangos.
The Whitehall recruitment freeze will apply across government departments, agencies and non-departmental public bodies (NDPBs), with exceptions being made for the graduate Fast Stream scheme, business-critical appointments (which must be authorised by the secretary of state), and key front-line staff.
Regional Development Agencies will see their budgets slashed by £270m.
Some £95m will also be cut from IT spending, while £1.15bn will be saved by cutting “discretionary areas” such as consultancy fees, advertising and travel costs.
The government will aim to cut £10m by cracking down on first-class travel and £5m by restricting ministerial entitlement to a dedicated car and driver. Ministers instead will be encouraged to use public transport, walk or rely on car pools. Laws insisted “first-class fares should be avoided” and warned any department using first-class travel could see the costs of their transport deducted from future budgets.
Local government will be forced to make £1.165bn of savings through reduced grants to local authorities, but the coalition will remove the ringfences around more than £1.7bn of grants to local authorities in 2010-11, to give them greater flexibility to re-shape their budgets.
But the government refused to outline how many public sector jobs could be lost by the savings. The Chartered Institute of Personnel and Development previously warned 500,000 jobs could go over the next five years.
Laws said “the years of public sector plenty are over” and the cuts outlined today were “designed to send shock waves through government” so ministers questioned any spending they made in the future.
Osborne said: “This is just the first step towards creating better public services, a stronger economy and a fairer society.”
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Savings made in the health, international development and defence departments will be reinvested into services in those areas so will not contribute to the £6.2bn savings needed this year.
But £500m out of the £6.2bn of savings will be used to invest in “improving Britain’s growth potential and building a fairer society”, which will include £50m for further education colleges and £150m to pay for 50,000 new adult apprenticeship places, focused on small and medium-sized businesses.
