Spending cuts: at midday the axeman came

Sheffield Forgemasters boss Peter Birtles received a shock phone call from officials in the Department for Business.

Hopes had been raised that funding signed off by the previous government for the development of a massive forge for steel superstructures (such as the cores of nuclear power stations) would be honoured by the new government. The £80m loan was to develop a steel forging facility that would be unrivalled in Europe and enable a deprived part of the country to create jobs in a global growth industry.

But in the phone call Mr Birtles was told “No”, just minutes before Chief Secretary to the Treasury Danny Alexander appeared in parliament.

The decision was one of 12 projects axed, and a further 12 suspended as a result of the coalition government’s review of Labour spending in the final months of office.

The high(or low)lights of the cuts bring the government’s agenda into stark focus:

Scrapping of two job guarantee schemes: £1billion (in addition to £320m cuts to Future Jobs Fund already announced)
Cancellation of North Tees and Hartlepool hospital: £450m
Stonehenge Visitor Centre Project: £25m
Sheffield Forgemasters loan: £80m
Yorkshire Forward’s plan to develop an industrial park on old steel works (Outukumpu): £13m

So 75 per cent of the actual cuts announced to previously approved projects come to jobs schemes and a hospital.

We now have flesh on the bones. These cuts are very far from “efficiency savings“. Real projects, real jobs, real impact. And it is just the start. Twelve further previously approved projects are now suspended and will be considered in the Spending Review.

Library modernisation, Sheffield’s retail quarter regeneration, a university fund for tech start-ups, the A14 road upgrade, and Birmingham’s magistrate court project have all been suspended. The really big suspension though is £7bn search and rescue helicopter PFI project.

On top of all of this, Danny Alexander has found a further £1 billion “black hole” that “must be cut” from further projects that predate January. This is for named projects that the Treasury will not as yet reveal. And the nationwide project to rebuild schools appears to be in deep peril, though is not formally mentioned in the cuts tables.

The big picture here is a cuts frenzy that has very little to do with efficiency savings. The total amount this year is likely to be well above the £6bn mentioned at the election. The government will argue it is a reflection of the fiscal reality.

Many of these projects will be cut without most of the public knowing or caring they were ever funded in the first place. Yet determining that half the cuts should come from job creation schemes at a time of high unemployment, or from a hospital development shows there is no way to sugar coat what is to come.

Today is the day the cuts agenda got very real.