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| Budget 2013: Osborne to unveil extra £2.5bn in 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, schools 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. |
| In its 2010 spending review, the government originally announced departmental spending cuts averaging 19% - equivalent to £81bn - up to 2014-2015. | |
| Chancellor George Osborne told his colleagues of the new austerity measures at Tuesday's cabinet meeting. | |
| 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. |
| Unspent cash | Unspent cash |
| 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. | |
| A No 10 spokesman said 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 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. | Total annual underspends across Whitehall have averaged about £6bn since 2007 and the figure for 2012-3 will be announced on Wednesday. |
| Energy Secretary Ed Davey, whose department will have to find extra savings, denied ministers had been taken by surprise by the chancellor's announcement, saying they had been given "more notice" of it than expected. | |
| "What was really noticeable around the cabinet table was people supporting the overall approach not only of the chancellor but the Chief Secretary to the Treasury Danny Alexander," he told the BBC. | |
| "We have to get to grips with this (the deficit). In countries where they don't they're paying a very heavy price." | |
| 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. |
| 'Perfect opportunity' | 'Perfect opportunity' |
| Lib Dem business secretary Vince Cable has led calls for this in cabinet but David Cameron and Nick Clegg have previously 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 ahead of what are expected to be further announcements on growth initiatives on Wednesday. | |
| The TUC estimated that the extra £2.5bn a year for infrastructure would "boost growth by a measly 0.06%". | The TUC estimated that the extra £2.5bn a year for infrastructure would "boost growth by a measly 0.06%". |
| "Worse still, funding it through departmental spending cuts will mean further reductions in public services," said general secretary Frances O'Grady. | "Worse still, funding it through departmental spending cuts will mean further reductions in public services," said general secretary Frances O'Grady. |
| "With interest rates negative in real terms, the chancellor has the perfect opportunity to invest in Britain's future, rather than raiding departmental budgets to cover his failed economic strategy." | "With interest rates negative in real terms, the chancellor has the perfect opportunity to invest in Britain's future, rather than raiding departmental budgets to cover his failed economic strategy." |
| The government's target for eliminating the structural deficit has already slipped by a year to 2017-8 and Labour have said the lack of growth in the economy has pushed borrowing up again. | |
| The Office for Budget Responsibility will publish its latest forecasts for economic growth and borrowing alongside the Budget. A review of spending for the 2015-16 period will take place in June, Mr Osborne said recently. |