Public services will be cut and hundreds of thousands more jobs will go after the Chancellor’s announcement that departmental spending will be reduced by 25 per cent in the next four years.
George Osborne went further than expected and said that he would remove the deficit by the end of the Parliament, cutting spending by £83 billion — £30 billion more than Labour’s plans.
Libraries, adult social services and children’s homes will be closed or cut, major roads will not be repaired, defence equipment scrapped and university fees raised.
Economists also predicted that more than 500,000 public sector jobs would be lost in the next four years, with services transferred to the private and voluntary sector. The extent of the cutbacks could transform public services but lead to years of strikes and industrial unrest.
Unions said that the cuts would decimate public services and hit the poorest the hardest. Derek Simpson, general secretary of Unite, said: “This budget is vintage Thatcher. The Lib Dems have been conned into into hammering the poor, choking off investment and cuts that risk plunging this country into a longer and deeper recession.”
Advertisement
The Chancellor also reduced the £200 billion social security budget, which has doubled in ten years. He promised cuts of £11 billion over four years through reducing child tax credit, housing benefit, disability allowance and imposing child benefit freeze for three years. Single parents will have to go to work earlier and families risk eviction from council and private rented homes.
Departmental spending will fall by £61 billion — £17 billion more than outlined in the previous Budget — but Mr Osborne made clear that some departments would fare worse than others. He retained the Conservative manifesto pledge to protect the NHS and overseas aid but said the rest of the public sector would have to cut 25 per cent from their budgets.
Departments such as the Home Office, Transport, Local Government and Justice could face even more cuts to give protection to education and defence, he said.
The Government has followed the approach adopted by Canada in the mid-1990s where spending was cut across the board. However, some departments, such as transport and agriculture, suffered reductions of 50 per cent or higher. The Canadians managed to turn their deficit round in just over three years.
The Chancellor also expects to raise nearly £6 billion by linking benefits and annual public sector pension payments to a lower inflation index.
Advertisement
Normally these payments are linked to the retail price index, which includes mortgage payments, but Mr Osborne said that they would be tied to the consumer prices index. This is predicted to be at least one or two per cent lower for the rest of this Parliament.
Margaret Eaton, chairman of the Local Government Association, said: “Councils provide vital front-line services upon which millions of people rely. Ministers need to recognise that council services such as adult social care and safeguarding children are as important to residents as services such as education and health when the Government makes detailed decisions on spending in the autumn.”