Brown set to slash and spend

CHANCELLOR Gordon Brown will unveil swingeing job cuts in the Civil Service today as part of a three-year spending review.

His plans are designed to provide new money for public services over the next three years.

Big spending rises have already been agreed for schools and hospitals and were unveiled in the Budget earlier this year.

But paying for those increases will require big cuts in public spending if hefty tax rises are to be avoided.

The Chancellor could double the number of civil service posts already earmarked for redundancy in the Budget – Brown said at the time that some 40,000 jobs were likely to go and at least 20,000 others will be forcibly moved from London to the regions. A doubling of that figure could see some 100,000 jobs go in a bid to free cash for other public services.

The merger of the Inland Revenue and Customs & Excise is also expected to result in thousands of job cuts and the other reductions follow the Gershon report earlier this year which recommended a big efficiency drive throughout Whitehall.

The spending plans unveiled today are also likely to see deep cuts in the defence budget.

Although more money is likely to be made available for the armed forces, it won‘t be nearly enough to make up for the costs the Ministry of Defence has had to find to fight the war in Iraq.

An expected 1.2% increase in real terms is too little to avoid cuts though the Treasury argues that the cuts will be to pay for modernisation and have nothing to do with the Chancellor‘s spending review.

Even so, military sources believe the RAF will lose up to five bases and numerous front-line aircraft, while the Army is expected to cut battalions from numerous regiments. The Navy, meanwhile, will lose up to seven surface ships, leaving its combat fleet smaller than the French navy for the first time in more than 300 years.

The cuts in defence are essential if the Chancellor is to avoid having to put up taxes for what is effectively a spending spree on public services.

About a third of the extra spending has already been allocated to the health service and education.

The Tories have dismissed the Chancellor‘s spending calculations as bogus, dismissing the Treasury‘s claims that it has found some £20bn of spending efficiencies. The Conservatives believe that the Chancellor will put up taxes once the General Election is over.

The Tories‘ claims are backed, to some extent, by the Institute for Fiscal Studies (IFS) which believes that the Chancellor will have to raise taxes by as much as £10bn to pay for his spending plans.