Austerity 2.0: Hunt warns of spending cuts

Chancellor says ‘all departments' will need to find savings, and 'some areas of spending will need to be cut’

Chancellor says ‘all departments' will need to find savings, and 'some areas of spending will need to be cut’

The new chancellor warned this morning that “all departments will need to redouble their efforts to find savings, and some areas of spending will need to be cut”.

This is despite the government having U-turned on almost every measure set out in its mini-budget less than three weeks ago.

The government was planning to order government departments to cut 2 per cent of their revenue funding, it was reported, before former chancellor Kwasi Kwarteng was ousted last week. However reports say Hunt intends to go further.

Unions have also called for urgent clarification on energy costs support after the chancellor announced universal help for households would end earlier than planned. 

Support for businesses – which includes colleges – would be “targeted to those most affected” after the current price guarantee ends in April.

‘Redouble efforts to find savings’

In a televised statement today, Hunt said: “All departments will need to redouble their efforts to find savings, and some areas of spending will need to be cut. 

“But, as I promised at the weekend our priority in making the difficult decisions that lie ahead will always be the most vulnerable.”

Reversing measures such as a planned cut in the basic rate of income tax to 19 per cent while raising corporation tax will raise around £32 billion, Hunt said, but he claimed more work was needed to “eliminate volatility in markets”.

“There will be more difficult decisions to take on both tax and spending as we deliver our commitment to get debt falling as a share of the economy over the medium term.

More details are due to be confirmed on October 31.

It follows reports over the weekend that government departments were due to be asked to find savings of between 10 and 15 per cent of their capital budgets, and 2 per cent savings in revenue budgets. However, this was before Kwarteng was sacked.

The Association of Colleges chief executive, David Hughes, said a decade of austerity will have left very little to cut.

“It’s madness to think that colleges have any fat on the bones to cut after a decade of austerity + cost of living crisis. Less meddling, more trust, flexible use of resources are all vital for colleges to serve communities, people and employers,” he tweeted earlier.

Further cuts would lead to sector-wide protest

Further education leaders have already warned of protests if cuts hit the sector’s budgets. Colleges and training providers have told FE Week that finances are already under huge pressure due to high inflation.

The Association of Colleges, Association of Employment and Learning Providers, Sixth Form Colleges Association, alongside the University and Colleges Union were unanimous behind the idea of sector-wise protests in the face of more cuts.

Bill Watkin, SFCA chief executive, said: “If the request to find efficiency savings leads to the possibility of cuts in frontline services we will respond in the strongest possible terms.”

Sue Pember, the director of policy at HOLEX and a former DfE senior skills civil servant, said “All the slack, if there was any, was cut out of the sector in 2012. What is left is the minimum needed to build a cohesive society and support economic growth.”

Kevin Courtney, joint general secretary of the National Education Union, said the suggestion of further cuts “will alarm school and college leaders”.

“There is already a serious funding crisis due to the sharp rise in energy costs and unfunded pay awards, so the education secretary must do everything in his power to protect funding.”

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