Deadline arrives for ministers' plans to cut spending by up to 40%

George Osborne is to be given proposals from cabinet ministers on Friday about how they plan to cut their departmental budgets by 25% or 40%, marking the start of negotiations about how the government will slash £20bn in central government spending.

The chancellor set the deadline for submissions from departments with non-protected budgets for Friday, asking them to model the two different scenarios of cuts before November’s spending review.

The reductions will affect all departments except health, spending on education per pupil, national security and international development.

Osborne ordered departments to find the savings over the summer, with another £12bn to be taken out of the welfare bill and £5bn recovered from tackling tax evasion if he is to meet his target of eliminating the deficit in 2019-20.

Public sector employees and public bodies were separately challenged to submit their ideas to the Treasury about how their area of work could save money.

Friday is also the deadline for local authorities to hand over proposals for how spending could be devolved from Whitehall to their region.

Before the deadline, the Local Government Association said it believed at least £60bn of central government spending should be devolved to local areas over the next five years.

Some of the deals already submitted and offers being finalised include Derbyshire and Nottinghamshire calling for a 10-year transport settlement and fully devolved housing investment, and Gloucestershire asking for control of all healthcare budgets, fully integrated health and social care and a single vision for health and wellbeing for the county.

The Liverpool city region has proposed retention of 100% of business rates income and the ability to franchise all local bus services, while Leicester and Leicestershire want devolution of funding and the ability to commission skills programmes locally. Hampshire, South Hampshire and the Isle of Wight are collectively calling for further investment in world-class marine and aerospace clusters and university research centres.

But the LGA, which represents more than 370 councils in England and Wales, said Osborne ought to increase his ambition on devolution and hand control of at least £60bn worth of funding down to local areas.

Gary Porter, chairman of the LGA, said it was crucial that decisions were taken closer to where people live in order to rebalance the economy. “Devolution is not an end in itself. If our public services are to survive the next five years, councils also need fairer funding alongside the freedom to pay for them,” he said.

Powered by article was written by Rowena Mason Political correspondent, for on Friday 4th September 2015 00.08 Europe/ © Guardian News and Media Limited 2010