Regional agencies and a raft of grants and loans sanctioned by Lord Mandelson in the dying days of the Labour administration are facing the axed as George Osborne sets out details of £6bn of spending cuts.
Vince Cable, who has been charged with finding £900m worth of savings in the Business Department he heads, says that Mandelson was right to bolster industry in the circumstances but said that all financial support promised to industry should be reviewed. “A lot of it was perfectly sensible [...] but some of the decisions will have to be looked at again.”
£1bn worth of discretionary spending has also been targeted for the chop in advertising, consultancy and refurbishment, among other things. A number of quangos are likely to be axed, while those that survive will collectively have to find £513m worth of savings.
There will also be a freeze on recruitment in Whitehall and across the public sector, and even when people leave positions they will not be replaced. The coalition is keen to show that those in government are sharing in the pain, so there will be cuts of £10m to first-class travel by civil servants.
However, health, defence and international development budgets have all been ring-fenced.
The coalition is keen to show that those in government are sharing in the pain, so there will be cuts of £10m to first-class travel by civil servants
Nick Clegg opposed immediate cuts during the election campaign, but said that the eurozone crisis and a realisation that the deficit is larger than first feared had prompted him to change his mind. “The age of plenty is over,” he declared.
On more comfortable territory for the Business Secretary than wielding the axe, Vince Cable has also hinted at further action to get banks lending more. “They were rescued by the taxpayer," he says. "They should be lending to viable, good British companies, and they are not,” he said. “They have been accumulating reserve capital beyond their requirements. George and I are absolutely agreed they should get lending.”
Cable favours imposing net lending targets to force banks to lend more, while a loan guarantee scheme is another possibility.
The Business Secretary denies that he and the Chancellor disagreed substantively about how and when Lloyds and RBS should be privatised. “That is purely an issue of timing. We said from the outset the banks have got to return to the private sector,” he says.
