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Treasury's 'shockwaves' as £6bn cuts revealed

By Channel 4 News

Updated on 24 May 2010

Treasury Chief Secretary David Laws talks of sending "shockwaves" through government departments as he outlines spending cuts of more than £6bn. Economics editor Faisal Islam says a raft of entire programmes will go.

Chancellor George Osborne and David Laws at the Treasury

Speaking at a joint press conference with the Chancellor George Osborne, Mr Laws listed the government offices which will now see their budgets slashed by hundreds of millions of pounds, prompting fears of mass job losses and service cut-backs.

The UK business department – now run by Liberal Democrat Vince Cable – will face the biggest cuts with £836m to be slashed from its spending.

Among the other Whitehall departments, Communities will be cut by £780m, Development by £704m, Transport by £683m, and Education by £670m.

Full list of savings from HM Treasury

More than a £1bn will be cut form the budgets of local councils, while Child Trust Fund payments will also be scrapped in a move the new government hopes will eventually save more than £500m.

Economics editor Faisal Islam has been tweeting his reaction to the figures as the cuts were announced:

9.59am: Hilarious outdoor four wedding and a funeral setting in the Treasury courtyard for the heralding in of Austerity Britain
10.07am: 6.25 billion, Osborne's found another £50,000 since breakfast... 'the fastes spending review in history'
10.42am: Initial take: These are totals; the dirty work is being left to individual departments ... ringfencing schools risks sending mixed messages.
12.16pm: so im standin up in a cramped midland line train, constructing a spreadsheet of worst affected departments for c4's lovely viewers..
12.28pm: so Transport faces a whopping 9.75% cut, CLG communities a frankly incredible 17.72% cut, DECC 7.1 per cent... all in next few months
12.39pm: Worth noting there 'only' £5.4bn of departmental cuts . 500m is respent, 320m (trust fund) comes via annually managed expnd.. Libdem effect
12.42pm: economic pedants like me could point out that Osborne has not delivered the 6bn departmental cuts, 5.4bn rounds down to 5!
12.50pm:From my s/sheet: Educ, 1,3% CUT, Business, 4.3% CUT, Home Office 3.7%cut, MoJ 3.5% CUT, Law officers 2.6%, Foreign Office 2.5%, Defra 6% CUT
12.55pm:And a recap of the Big Losers: CLG Communities: 17.72% CUT Mr Pickles, Transport 9.76% CUT Mr Hammond, 7.1 per cent CUT for Huhne @ DECC

The Olympic Delivery Authority will also have its budget cut by £27m.

Mr Laws said: "This is only the first step that we will need in order to put out public finances back in place, but we believe the British public will understand this must be done."

As expected, quangos, regional development agencies, IT, consultancy, and travel will be other areas where the new administration will look to rein back spending.

Existing government contracts will also re-examined to see whether further savings can be made.

Mr Osborne, who has been criticised for putting the recovery at risk by making cuts this year, said: "If we don't take action soon we will be spending more on servicing our debt than on the education of our children."

He said that urgent action on addressing the UK's deficit of £160bn, protecting the most vulnerable, and creating confidence in the overall health of the British economy were the driving principles of today's announcement. 

Health and Defence budgets were not included in today's cuts, while the coalition government also said it had found money to protect existing Sure Start and schools spending.

However, as he talked of freezing – and in some instances cutting - public sector pay, Mr Laws warned Whitehall that a new culture of austerity was set to be ushered in.

Gary Gibbon blog: how easy is it to make efficiency savings?

He said departments would now be subject to "draconian controls" over future spending, amid his desire to send "shockwaves" through government departments.

Mr Osborne also claimed that budget cuts would not result in hundreds of job losses, as departments would simply leave existing vacancies empty.

While Mr Laws said his Lib Dem colleague Mr Cable had been "very pleased" to help with the cost-cutting protest – despite seeing his department hit with the biggest cuts.

More from Channel 4 News
- Spending cuts: where the £6bn axe will fall

Live blog: spending cuts

You can read below in our live blog how the cuts were announced and the reaction to them.

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