MOST government departments have been told to prepare for cuts to their budgets of around 10%, it has emerged.
Schools, the NHS and international aid will continue to remain protected but most other funding is expected to be slashed in 2015/16, government sources confirmed.
The Ministry of Defence, which Philip Hammond warned earlier this year would struggle to take any more cuts, is likely to get a one per cent real terms increase in its equipment budget and a five per cent reduction on the rest.
Treasury Chief Secretary Danny Alexander has written to each department setting out “planning assumptions” ahead of the Comprehensive Spending Review, which is due before the end of June.
To meet the £11.5bn savings target most departments have been warned to expect a 10% funding reduction.
That gives the Treasury some wriggle room for finalising cuts that are likely to amount to around 8-9% once negotiations have been finalised.
School funding will remain protected but the rest of the Department for Education’s budget faces a 10% cut.
The Government is committed to spending 0.7% of national income on aid, which will be met, but the rest of the Department for International Development’s budget – mainly for administration - will be subject to cuts.
Shadow Treasury Minister Chris Leslie said: “David Cameron and George Osborne never wanted or expected this spending review to happen.
“They said their plan would balance the books by the next election, but their failure to deliver economic growth means there is now set to be a deficit of over £90bn in 2015/16.
“That’s the reason why the Treasury is now looking for even more spending cuts and tax rises.”