Seven government departments ‘agree spending cuts’

Mr Osborne said that cuts made in the spending review will ensure that money is available for the NHS and infrastructure projects in line with public demand.

The departments which have agreed to the cuts include justice, energy and communities and local government.

It is part of an overall government push to cut spending by 2015-16.

Most government departments were warned in March to expect a 10 per cent reduction in funding, although this was expected to give the Treasury room for flexibility.

The final cuts could amount to 8 to 9 per cent once negotiations have been finalised.

The chancellor said that the cuts would help the government reduce the deficit and spend money where “the public wants it spent”.

Government ‘waste’

When asked if welfare would face further cuts, Mr Osborne told ITV’s Daybreak: “We’ve taken decisions on welfare but we have also got to look at Whitehall, look at the waste still in government.

“And today a whole range of departments, like the justice department, energy department, communities department, are all accepting significant savings to make sure the money, that after all comes from the people watching this programme and their taxes, is well spent.”

Defence Secretary Philip Hammond has previously warned the Treasury that the armed forces cannot take more large-scale spending cuts to the MoD.

In the wake of the murder of soldier Lee Rigby in Woolwich, Mr Osborne said: “The key thing is to make sure we maintain our ability to defend ourselves at home and abroad, and of course that’s an absolute priority for us.

“That doesn’t mean you can’t find savings in the way these big departments operate, including the Ministry of Defence.”