George Osborne has told Cabinet ministers to focus on getting “more for less” from their departments ahead of the Spending Review.
The chancellor on Monday chaired the first meeting of the Cabinet-level public expenditure committee (PEX), with Britain’s aid budget and DWP spending reported to be under particular scrutiny as the Treasury seeks £20bn of savings.
The committee was re-established for the Spending Review process, as part of which departments have been asked to draw up plans for cuts to their resource budgets of both 25% and 40%.
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Ministers are now in discussions with the Treasury about departmental settlements before Cabinet signs off the process ahead of the Spending Review announcement next month.
Monday’s meeting was attended by the chancellor, chief secretary to the Treasury Greg Hands, and eight cabinet ministers from spending departments.
Both Philip Hammond, the foreign secretary, and home secretary Theresa May – who did not attend Monday’s meeting – are said to have already warned the chancellor that major cuts to their departments could undermine national security.
Following the meeting, The Financial Times reported that the Treasury had pushed the Department of Work and Pensions to find more savings through a faster rollout of the Personal Independence Payment, which is replacing the Disability Living Allowance. The paper also cited two officials as saying the Treasury was looking at further cuts to Jobcentre Plus staffing.
According to the FT, the average cut in staff costs modelled by departments so far is 12%, with only the Ministry of Justice proposing a 25% reduction.
The Guardian meanwhile reports that Osborne is focusing on redirecting Britain’s aid budget towards humanitarian emergencies.
Overseas aid spending is protected in line with the UK’s commitment that it must make up 0.7% of gross national income, but a Treasury source told the paper the department was “discussing holding more money in reserve so we can respond even better to humanitarian crises”.
At the launch of the Spending Review, Osborne said overseas aid spending would be “protected from cuts but not from scrutiny”. The results of the latest cuts drive will be announced by Osborne on November 25.