Page last updated at 16:26 GMT, Friday, 18 September 2009 17:26 UK

Where could spending cuts fall?

The consensus among the main political parties is that cuts in government spending cannot now be avoided to try and help reduce Britain's record budget deficit.

Public sector deficit since WWII

Leaked Treasury figures suggest that total spending on government departments will have to be cut by an average 2.9% a year in real terms over three years from 2011.

Graph shows public spending by function

This graph shows how much was being spent in each area of government activity in 2009 - including the cost of servicing debts, which is manageable now but is expected to become a major drain on the public finances in the years ahead. A lot of this spending will have to be cut if the UK's books are going to be balanced.

Research economist Rowena Crawford from the Institute for Fiscal Studies says: "Whoever is in government after the next election will have to decide how the pain will be shared out.

"As yet none of the main political parties have been clear about where they will cut."

Departmental budgets 2009-2010

This graph shows the budgets for individual departments as set out in the most recent Comprehensive Spending Review.

The government has decided not to hold a Spending Review this year. If it had ministers would have had to set out their departmental spending plans for the next three years.

By delaying a review until after the next general election we will only get a rough projection of the overall total of cuts to spending.

So which areas of government spending could be most vulnerable to cuts?

HEALTH
Hospital ward - generic

The Department of Health is the biggest spending government department, and all three parties say NHS funding is a priority. The Conservatives have promised not to cut spending in real terms over the three year period. This would mean total spending cuts across other departments would need to be higher to compensate.

EDUCATION
Boy writing

All three parties all also see education as a spending priority. Capital spending though, for example on new buildings, is currently being cut by the government, and other parties could follow suit. Potential savings could be made in higher education, through higher tuition fees or by changing the way the student loan system works.

DEFENCE
Trident missile in flight

Defence is the third biggest spending department with a budget of £36.3bn. Budgets have come under scrutiny because of the war in Afghanistan. The cuts debate is now focussing on big projects like the Trident nuclear programme. The Liberal Democrats say they would scrap it. The government says it will not cancel the replacement, but there are suggestions it could reduce the number of submarines.

HOME OFFICE
ID card

The Conservatives and Liberal Democrats have both said they will scrap ID cards. Some government Ministers are said to agree. This would make reasonable savings over several years in the future, but not have a huge impact in terms of a short-term cut, as the system is not yet up and running.

SOCIAL SECURITY
5 notes

Social security spending is growing at 1.4% a year, and will increase more rapidly as an ageing population receives state pensions. The Conservatives and Liberal Democrats suggest some benefits might have to be cut to reduce spending cuts in other departments. They say better-off families with children should not be able to claim tax credits. Universal child benefit is also coming under scrutiny.

HOUSING AND TRANSPORT
A National Express-operated East Coast line train

The Department of Transport, and Communities and Local Government, are the most vulnerable to cuts. Housing and transport spending accounted for around 20% each of public sector gross capital spending this year. Both areas are likely to be squeezed because of bigger reductions on investment spending.



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SEE ALSO
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18 Sep 09 |  Business
Q&A: Spending cuts
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