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Osborne to unveil extra £2.5bn cuts Osborne to unveil extra £2.5bn cuts
(35 minutes later)
The government is to announce further spending cuts in Wednesday's Budget, with the savings going to large-scale infrastructure projects designed to boost economic growth.The government is to announce further spending cuts in Wednesday's Budget, with the savings going to large-scale infrastructure projects designed to boost economic growth.
Most Whitehall departments will have to cut 2% of their spending over the next two years, amounting to about £2.5bn.Most Whitehall departments will have to cut 2% of their spending over the next two years, amounting to about £2.5bn.
But health, defence and HM Revenue & Customs budgets will be unaffected. But health, schools and HM Revenue & Customs budgets will be unaffected.
The cuts come on top of the 3% spending reductions announced for the next two years in last year's Autumn Statement.The cuts come on top of the 3% spending reductions announced for the next two years in last year's Autumn Statement.
Chancellor George Osborne told his colleagues of the plan at Wednesday's cabinet meeting. Chancellor George Osborne told his colleagues of the plan at Tuesday's cabinet meeting.
Schools and overseas aid will also be shielded from the cuts, while local government and police budgets will be protected for the first year, Overseas aid will also be shielded from the cuts, while local government and police budgets will be protected for the first year.
However, other government departments - such as justice, environment and Scotland, Wales and Northern Ireland - will be told to deliver a further 1% cut to their day-to-day budgets in both 2013-14 and 2014-15.However, other government departments - such as justice, environment and Scotland, Wales and Northern Ireland - will be told to deliver a further 1% cut to their day-to-day budgets in both 2013-14 and 2014-15.
Unspent cash
A No 10 spokesman said the announcement had been greeted with "unanimous agreement" around the cabinet table, with ministers saying it "was the right thing to do".A No 10 spokesman said the announcement had been greeted with "unanimous agreement" around the cabinet table, with ministers saying it "was the right thing to do".
The spokesman said the move had been made possible by under-spending at government departments this year, which "reflected the success that secretaries of state across the board have had, working with the Treasury, on bringing departmental resource spending down". The move had been made possible by under-spending by government departments this year, which "reflected the success that secretaries of state across the board have had, working with the Treasury, on bringing departmental resource spending down".
The Ministry of Defence is being given special leeway to roll over unspent cash worth £1.6bn to the department over the next two years.
Total annual underspends across Whitehall have averaged about £6bn since 2007 and the figure for 2012-3 will be announced on Wednesday.
The government has come under pressure to increase spending on capital projects, such as roads and housing, with its critics saying it is not doing enough to help economic growth.The government has come under pressure to increase spending on capital projects, such as roads and housing, with its critics saying it is not doing enough to help economic growth.
Lib Dem business secretary Vince Cable has led calls for this in cabinet but David Cameron and Nick Clegg have ruled out funding such a move by increased borrowing.Lib Dem business secretary Vince Cable has led calls for this in cabinet but David Cameron and Nick Clegg have ruled out funding such a move by increased borrowing.
Lord Deighton, the minister charged with accelerating the delivery of major infrastructure projects, briefed cabinet on progress on Tuesday.Lord Deighton, the minister charged with accelerating the delivery of major infrastructure projects, briefed cabinet on progress on Tuesday.
A review of spending for the 2015-16 period will take place in June, Mr Osborne said recently. In its 2010 spending review, the government originally announced departmental spending cuts averaging 19% up to 2014-2015. A review of spending for the 2015-16 period will take place in June, Mr Osborne said recently.