Britain unveils harsh spending cuts to tackle deficit

20th October 2010, Comments 0 comments

Britain's government unveiled the harshest spending cuts for decades on Wednesday, slashing nearly half a million public sector jobs and taking the axe to welfare as it battles a record deficit.

Finance minister George Osborne said the Conservative-Liberal Democrat coalition would make "unavoidable" cuts of 83 billion pounds (130 billion dollars, 95 billion euros) by 2014-15 under the comprehensive spending review.

"Today is the day that Britain steps back from the brink. It is a hard road but it leads to a better future," Osborne told parliament as he delivered the review.

Prime Minister David Cameron's coalition came to power in May saying it had to take drastic action to to eliminate Britain's 154.7-billion-pound deficit -- a legacy of the previous Labour government and the recession.

"The action we have taken since May has taken Britain out of the financial danger zone," Osborne said.

He confirmed the government would cut 490,000 public sector jobs over four years. News of the job losses leaked when a minister was photographed on Tuesday night reading confidential briefing papers in his car.

Osborne said the job losses were "unavoidable when the country has run out of money".

Government departments saw their budgets cut, with the Foreign Office achieving savings of 24 percent by reducing London-based diplomats, Osborne said.

Police spending would fall by four percent each year while the budgets of the Home Office and Ministry of Justice would each fall by six percent a year, he added.

Osborne also announced measures to tackle the huge welfare budget, which accounts for a third of state spending, saying that the state pension age would rise to 66 by 2020, saving over five billion pounds a year.

The minister, known as the Chancellor of the Exchequer, said the government was ushering in the "greatest reform to the welfare state for a generation".

Britain's Queen Elizabeth II will also feel the pinch, with royal household spending falling by 14 percent in 2012/2013 and the queen agreeing to a one-year suspension of goverment payments under the so-called "civil list."

The government had already promised that healthcare and international development aid would be protected from the cuts.

The Labour opposition, unions and some economists say the cuts are too steep and risk plunging the fragile economy back into recession, from which it emerged at the end of last year.

The government is "taking the biggest gamble in a generation with growth, with people's jobs and people's livelihoods," the leader of the opposition Labour party, Ed Miliband, told parliament shortly before the announcement.

The coalition started the cuts process Tuesday, announcing that it would shrink the country's armed forces, scrap key assets like a flagship aircraft carrier and reduce the defence budget by eight percent.

Cameron said 17,000 service personnel would go from the British Army, Royal Air Force and Royal Navy by 2015 -- but vowed there would be "no cut whatsoever" to the level of support for forces in Afghanistan.

The International Monetary Fund has endorsed Osborne's spending cuts plans, and European governments facing major protests at their own austerity plans are watching closely to see if Britain's work.

Osborne's announcement on Wednesday came as official data showed British public sector overspending widened in September to 16.2 billion pounds, a record monthly high.

British trade unions have reacted with anger and thousands of union members and protesters rallied in London Tuesday, waving placards that said "Don't Break Britain" and "No more cuts".

© 2010 AFP

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