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  • Budget: Extra £2.5bn Boost For SpendingView PhotoBudget: Extra £2.5bn Boost For Spending

George Osborne has ordered government departments to slash their budgets by another £2.5bn to fund extra capital spending.

The Chancellor and Chief Secretary to the Treasury Danny Alexander told ministers that they can afford to trim another 1% a year until 2015.

Mr Osborne said at Cabinet that it was possible because departments have under-spent their budgets this year by more than the average.

The extra cuts will not hit the departments protected by ring-fences – the NHS, international aid and schools. HMRC is also protected, as is the police budget for the first year.

There is no detail yet on how the extra cash will be spent, but it will help Mr Osborne satisfy critics that he is not doing enough to boost growth.

The announcement comes on the eve of his Budget, in which he is under intense pressure to inject some life into an economy teetering on the brink of a triple-dip recession.

The Ministry of Defence will be allowed to roll over unspent money to compensate for the cuts being demanded from the department.

But others including environment, energy, transport and justice will have to find the 1% annual savings to day-to-day resource budgets in full.


Sky NewsSky News

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