Osborne orders MORE spending cuts, telling Whitehall to find 5billion to pay for schools and transport linksChancellor to use today's statement to set out plans to cut spending further
Transport, schools, science and skills will benefit from proceeds made
Plans will be announced when growth forecasts will be downgradedChancellor will tell MPs that government departments are being ordered to trim an additional 1% from their budgets next year and further 2% in 2014

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UPDATED:

09:47 GMT, 5 December 2012


Chancellor George Osborne will announce his spending plans to the Commons in his Autumn Statement today

Chancellor George Osborne will announce his spending plans to the Commons in his Autumn Statement today

Tens of thousands of school places will be created at 100 new academies and free schools as part of a 5billion investment programme to be funded by a fresh round of spending cuts.

Chancellor George Osborne will use today’s autumn statement to set out plans to cut spending further in most Whitehall departments over the next two years, with the proceeds poured into transport, schools, science and skills.

Education is the big winner, in another indication that the Conservatives will make their school reforms a central plank of the next election campaign.

Mr Osborne’s decision to invest 1billion of his war chest to create 50,000 new places at 100 academies and free schools, which are independently run in the state sector, is also being seen as a ‘reward’ for Education Secretary Michael Gove’s success in trimming bureaucracy.

A significant proportion of the money will go on building or expanding primary schools.
The Chancellor will tell MPs today that government departments are being ordered to trim an additional 1 per cent from their budgets next year and a further 2 per cent in 2014.

Sensitive areas such as the NHS, HM Revenue & Customs and nuclear decommissioning will be protected.

Today’s statement is expected to signal that Britain’s age of austerity will have to last until at least 2018, thanks to weaker than expected economic growth and higher than expected borrowing.

The Chancellor will say: ‘This Coalition Government is confronting the country’s problems, instead of ducking them.

Why austerity is set to continue: Independent growth forecasts predict slower growth than George Osborne is planning for, meaning he will have to change his spending plans

Why austerity is set to continue: Independent growth forecasts predict slower growth than George Osborne is planning for, meaning he will have to change his spending plans

‘The public know that there are no miracle cures. Just the hard work of dealing with our deficit and ensuring Britain wins the global race.’

Ministers have been told to emulate Education Secretary Michael Gove who has found more savings than other Whitehall departments

Ministers have been told to emulate Education Secretary Michael Gove who has found more savings than other Whitehall departments

Mr Osborne is expected to hit the banks by increasing the annual levy on their balance sheets and limit pension tax breaks for the best-off as he seeks to demonstrate that his ‘all-in-this-together’ mantra will continue as austerity is extended.

However, the Chancellor is also expected to make big savings at the other end with a fresh squeeze on the vast welfare bill, with key benefits likely to be frozen.

Government sources said the additional belt-tightening in Whitehall was entirely manageable, pointing to under-spends in some areas.

But union bosses predicted it would mean tens of thousands of additional public sector job losses.

Labour said the Chancellor’s boost for investment spending – designed to stimulate economic growth – was an admission of a ‘catastrophic mistake’ in cuts made since the 2010 election.

Mr Osborne will insist today that the Coalition is investing more on capital projects as a share of national income in this Parliament than any of the three Labour administrations that went before.

As well as new schools, cash will be used to build roads, invest in science projects and improve skills, partly through investment in further education colleges.

The Cabinet was told that 5billion must be found from Whitehall budgets in the next two years

The Cabinet was told that 5billion must be found from Whitehall budgets in the next two years

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Prime Minister David Cameron said
yesterday: ‘Government departments aren’t actually spending up to their
budgets so I think we can say to them: “You’ve got to cut back some
spending, including some unnecessary spending”, and let’s put that money
into things that will make a difference in our country and in our
economy.’

Deputy Prime Minister Nick Clegg
said: ‘Everybody accepts in Government that when money’s tight, when
everybody is having to tighten their belts and when everybody is facing
very stretching bills for households up and down the country, we have a
responsibility to taxpayers and the nation to make sure the money we do
have is used for the best possible purposes.’

Labour’s Treasury spokesman Rachel
Reeves said: ‘The Chancellor seems to have finally admitted that
abolishing the Building Schools for the Future programme and his other
deep cuts to infrastructure investment were a catastrophic mistake.’

But CBI director general John Cridland
said: ‘Targeting money at schools, transport and science will not just
create construction jobs today but also invest in our competitiveness
tomorrow.’

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