Education will receive more money as budgets in Whitehall get squeezed, with more schools and transport schemes on the agenda for the government ahead of the Autumn Statement.
Treasury sources have reported that the Autumn Statement, to be released today (December 5th), will include plans for significant cuts in Whitehall, with all but four government departments to be asked to save an extra one per cent next year and a further two per cent the following year.
According to prime minister David Cameron, the £5 billion saved will be spent on capital projects to kickstart growth and make the UK "work better". George Osborne is expected to announce £1 billion of funding that will go towards building 100 new free schools and academies, creating an additional 50,000 new school places.
The only departments to be saved from budget squeezes will be health, education, international development, HM Revenue and Customs and nuclear decommissioning. Frontline services in all other departments will also be shielded, with most of the savings coming from administration and back office staff, government sources say.
Most Whitehall departments will also be expected to cut day-to-day spending to free up money for capital investment. The decision came after a mid-term spending review carried out by chief secretary to the Treasury Danny Alexander, who found most departments were over-achieving on planned saving.
During a school visit Mr Cameron said: "Government departments aren't actually spending up to their budgets so I think we can say to them 'You've got to cut back some spending, including some unnecessary spending', and let's put that money into things that will make a difference in our country and in our economy - more roads, more school buildings, more infrastructure to make our economy work better, to make our country work better."
Changes to the budget will only apply to England, but may have knock-on effects in Scotland, Wales and Northern Ireland.
Posted by Tim Colman