George Osborne, the Chancellor, today outlined more than £80bn worth of public spending cuts in the biggest government spending review in decades.
He said the four-year cuts were guided by fairness, reform and growth.
He told MPs: “Today is the day we bring Britain back from the brink. Bringing the years of ever-rising borrowing to an end. Tackling this budget deficit is unavoidable and to back down and abandon our plans now would be the road to economic ruin.”
He said that a vast majority of the cuts would have to come from the country’s £200bn benefit bill and that he would slash spending on it by £7bn.
A new universal credit will replace benefits and tax credits over the next two parliaments.
The state pension age for men and women will reach 66 by the year 2020. This will involve a gradual increase in the State Pension Age from 65 to 66, starting in 2018
On benefits he added: “The guiding principle is this: It will always pay to work. The last government promised reform and flunked it.”
The Chancellor also revealed that the coalition government had earmarked £6bn worth of Whitehall savings – double than what had been originally envisioned.
As a result he said that there would 490,000 job losses in the public sector, a figure that had been previously, and widely, predicted.
The Treasury budget would have to fall by 33% and he added that the Cabinet Office would make savings of £55bn. The department would from now on share an office with the Treasury.
He said the Home Office would have to find savings of 6% a year and that police spending would drop by 4% a year.
The Foreign Office will see its budget decrease by 24% in the next four years, with an estimated budget of £2.2bn a year.
Council spending would have to be cut by one quarter in the next four years, added Osborne.
Other key announcements included:
· Spending on NHS, schools to be protected
· Structural deficit to be eliminated by 2015
· Extra £2bn in capital spending
· Additional £2bn for social care
· Permanent bank levy
Osborne concluded: “The action we have taken today bring sanity to the public finances.”
Alan Johnson called the cuts a "reckless scandal".
