Five departments reach agreement on spending cuts

Cabinet ministers All departments will have to reach agreement on cuts with the Treasury

Five Whitehall departments have reached spending agreements with the Treasury, ahead of next month's spending review.

The Treasury, Cabinet Office, Foreign Office plus the environment and communities departments have reached agreement on cutting their spending.

As a result ministers Eric Pickles and Caroline Spelman have joined the "star chamber", which rules on departments which cannot agree cuts.

Labour said the five agreeing cuts were only a "tiny" proportion of the budget.

Most government departments have been told to agree 25% cuts by next month.

Analysis

Until now ministers have batted away claims about the spending review with the assurance no deals have been done.

Now we know five departments have settled their budgets with the Treasury.

Ministers at the Treasury, the Foreign Office and the Cabinet Office already have places on the Star Chamber that will rule on negotiations.

The ministers for Communities and Defra will now join them.

All five are small spenders in government terms, with day-to-day expenditure of about £2bn to £4bn a year.

Similar costs in the NHS in England amount to almost £100bn, and education runs to over £50bn.

And we are missing a key piece of information - just how much they have agreed to cut.

That will be announced on 20 October in the spending review.

Plenty of journalists will be working hard to secure a leak before then.

Final agreements must be reached by all departments before Chancellor George Osborne outlines the results of his spending review on 20 October.

A Treasury spokesman confirmed the five departments had reached a "provisional" settlements with the chancellor - although the agreements were on day-to-day "resource" spending, not capital spending which will be decided separately by the star chamber committee.

Details of the scale of the five departments' budget cuts have not be revealed.

A spokesman said the Department of Communities and Local Government's agreement focused on cuts to the housing and regeneration budget, not money given to local authorities.

'Gamble on growth'

But shadow financial secretary to the Treasury, Stephen Timms, said: "These departments represent a tiny proportion of the government's overall budget, but if they want to make a big deal of it the coalition should do it in the House and not to the media.

"The real issue is that, on a day when the Irish economy has fallen back into recession on the back of major spending cuts and tax rises, the risks posed by this government's gamble with growth and jobs are all too clear."

Foreign Secretary William Hague, Cabinet Office Minister Francis Maude and Mr Osborne were already on the public expenditure committee - known as the star chamber - a cabinet committee which will sit in judgement on those ministers who have not yet reached agreement on cuts with the Treasury.

A Treasury spokesman confirmed on Thursday that both Mr Pickles, Secretary of State for Communities and Local Government, and Environment Secretary Mrs Spelman had been appointed by the prime minister, on Mr Osborne's recommendation, to the committee.

He added: "This is because they have reached provisional departmental resource spending settlements. HM Treasury, the Cabinet Office and the Foreign and Commonwealth Office have also reached provisional settlements. Details of all departmental settlements will be published on 20th October."

Spending review branding

A special BBC News season examining the approaching cuts to public sector spending

One Treasury source suggested Eric Pickles was well-known as a "political bruiser" and that he would probably "enjoy holding some of his colleagues' feet to the fire".

BBC political correspondent Reeta Chakrabarti said the departments revealed were the smaller spending departments but the news was likely to put further pressure on the larger departments such as Work and Pensions and the Ministry of Defence to come to agreements.

Most Whitehall departments have been told to plan for savings of between 25% and 40%, part of the government's effort to tackle the £155bn budget deficit.

Labour argues that the plans could undermine the economic recovery and damage front line services, hitting the poor hardest.

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