Even the small cuts will have a big impact

With child trust funds and university spending dominating, the full scale of the Coalition Government's cuts and exactly where they will fall remain to be seen.

Though most of the headlines have been about the scrapping of the child trust fund and the reduction in the number of university places, the full scale of the Coalition Government’s cuts and exactly where they will fall remains to be seen. Also missing from much of the headline reaction is a detailed look at the departments which will ‘only’ have to make ‘modest’ savings this year.

The department for culture, media and sport will have to find £61 million of savings, plus £27 million from the Olympic Delivery Authority – a cut of 3 per cent of the overall budget; this compares to cuts of £836m in BIS, £780m at DCLG, £683m for transport and £670m in education.

Yet it is in the smaller departments that the impact of the cuts on communities can be best seen. Taking DCMS as an example, planned spending on administration for 2010/11 is only £46 million – so the savings could never be made up by axing Whitehall ‘pen pushers’ alone.

So what does it mean in practice? Guardian Online has this afternoon worked out what it may mean to arts funding, concluding that the arts are being “singled out”: the Arts Council England (ACE) will suffer a 4% cut on top of a planned spending review, with the chair of the ACE, Dame Liz Forgan, stating the council “do not understand why we have received a higher percentage cut than other DCMS funded bodies”.

She added:

“Making cuts within the financial year is very difficult. We will now need to carefully assess what this figure of £19m means. The Arts Council has already trimmed its own budgets by £4 million in 2010/11 so this takes our total reduction this year to £23 million.

“We will do our utmost to minimise the impact on the frontline but we cannot guarantee that there will be no effect. Only £23m (5%) of our overall grant-in-aid budget goes on running costs so the vast bulk of our income goes straight to art. It would therefore be impossible to meet a cut of this size from running costs alone.”

In sport, the other primary remit of the department, the picture is little better. In addition to the £27 million reduction in the Olympic Delivery Authority (ODA) budget – which is responsible for developing and building the new venues and infrastructure for the Games and their use after 2012 – 3% savings will have to be found across the board, from public bodies and the department’s core budget.

An example of what this may mean on the ground can be seen in the cuts that may have to be made to Sport Unlimited, a £36 million programme established in 2009 with the aim of attracting 900,000 extra young people into sport by 2011; a 3% cut could result in 27,000 fewer young people taking up sport, to the detriment of the nation’s sporting success and health and wellbeing.

The cut to the ODA budget could have an equally negative impact. According the the latest DCMS annual report:

“Over 4,000 people are working for contractors on the Olympic Park, 9 per cent of whom were previously unemployed – Nearly one in ten workers on the Olympic Park are doing a traineeship, apprenticeship or work placement – 98 per cent of contracts have gone to UK-based businesses, of which over two-thirds are Small and Medium-sized Enterprises and just under half are based outside London.”

ODA chairman John Armitt, howeverm insists the cuts are manageable and the project remains “on track”. He said:

“This saving will be found by continuing to make efficiencies in the way the project is delivered as we have already done in the past. Our regular budget updates have consistently shown that we are on schedule and within budget with savings of around 600 million pounds already delivered to keep us on track.”

It is to be hoped he is right; an immediate 3% cut in a project which has only two years left to run, with the potential job losses and externalities, and the eyes of the world upon following the gold-spinning success of Beijing makes little sense otherwise.

37 Responses to “Even the small cuts will have a big impact”

  1. Liz McShane

    Anon – what other socially progressive benefits would you like to see slashed?

    You & Boudicca seem to forget that if if wasn’t for Labour’s deft handling of the effect of the global economic crisis that faced us we would really be up the creak without a paddle. Many ‘developed’ economies followed Labour’s brave & bold lead to nationalise problem banks.

    The Tories were against this and if we had followed their half-baked ideas we would be facing a 1930s type depression. That is why a lot of City folk just dread George Gideon Osborne – because he hasn’t a clue.

  2. Anon E Mouse

    Liz – Please don’t pursue this line – it makes you look mad woman!! We ARE up that creek already; thanks Gordon.

    “Labour’s deft handling of the economy” is as bonkers a remark as “Gordon Brown’s masterful handling of the economy” – both are examples of how financially reckless and incompetent the last government was – the current overdraft shows it – the proof of the pudding is clear to see.

    Britain’s debt of £890 billion is an all-time high, while the last financial year’s borrowing of £163 billion was another record – on top of that Brown said we would lead the G20 out of recession – wrong again; we were last.

    Labour have spent 13 years wasting our money on stupid things like Child Trust Funds with a complete disregard to the truth – Brown did not end boom and bust and I’m afraid that no matter how often you say it Liz look at the structural debt then you realise that Labour was hopeless with finances – the numbers prove it.

    Lastly why on earth are you defending Labours record with the countries economy when the governor of the Bank Of England (appointed by Brown btw) says the coalition is right to cut wasteful spending immediately? Why wouldn’t someone cut waste – your position is incredible Liz. Sorry.

    What is it that you know Liz that the markets don’t because they jumped as soon as the coalition between Conservatives and the Liberals was announced and surely you can’t be so cold hearted to not agree that this government is SO much better than the serious boring Stalinist bunch the electorate just got rid of…

    Lighten up Liz for goodness sake!

  3. Liz McShane

    Anon – you Lighten up – I really wish U could. I agree I am not a trained economist, but IF GB etc hadn’t taken the steps they took re the banking crisis than we would be in a much worse/dire state.

    I am not one of these people who think that the public finances and Gov’t handling of them can be simplistically compared to domestic household’s management of their credit cards etc. That was what George Gideon tried to make us think.

    I suppose we have different views of economics…. and I prefer the Keynesian variety and I can see that this is not quite to your taste.

    There are still 2 more announcements to come re cost cutting…. the first one was just an aperitif to whet the palette.

    All I would say is brace yourself James!

  4. Shamik Das

    “Liz – Please don’t pursue this line – it makes you look mad woman!!”

    De-lightful. Lovely tone, nice of you to show your true colours again.

  5. Mr. Sensible

    Liz, do you agree with me that, if we cannot afford to keep our public services as they are, we cannot afford the Tories’ pet projects?

    Do you agree with me that, for example, if we cannot afford the Child Trust Funds, we cannot afford to promote 1 type of family over another through the tax and benefits system?

    Similarly, if we cannot afford to keep BSF, we cannot afford to extend ocadomies.

    I’m not sure what part of the country you are in, but here in Nottinghamshire we’ve had this for about a year; Tories saying we’re broke ETC yet among other things finding the £9 million necesary to freeze council tax.

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