Hammond wants more public sector spending cuts
The chancellor has told government departments to prepare for further spending cuts before next year’s spending review, putting him at odds with cabinet members who want to ease austerity.
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Philip Hammond wants ministries whose budgets are not protected to identify potential cost savings over the summer, the Times reported. Areas for cuts could include public health, local government and transport. The push for further savings could affect outsourcing companies such as Capita, Serco and Interserve.
The letter from the Treasury, sent by chief secretary Liz Truss, did not specify a savings target but some ministries think budgets could be cut by as much as 5%.
Hammond has said tax rises will be needed to fund an extra £20bn a year of health spending by 2023-24, announced by the prime minister. He has got the prime minister to agree to his fiscal rules for deficit reduction.
Conservative MPs have been less keen on public spending cuts since austerity fatigue was partly blamed for the government losing its majority in 2016.
Some cabinet ministers, including environment secretary Michael Gove and Gavin Williamson, the defence secretary, have tried to shift policy towards stimulating the economy and away from spending cuts.