Treasury looking at cutting ‘ring-fenced’ schools budget to ease cuts at MoD

The Telegraph is reporting that Hundreds of millions of pounds will be taken from the ring-fenced budgets for health and education and used to protect the Armed Forces from a fresh round of spending cuts, under plans being drawn up in Whitehall…

Philip Hammond, the Defence Secretary, is in talks with the Treasury about transferring money earmarked for the Department of Health and the Department for Education and using it to ease the impact of cuts on the Ministry of Defence.

The Daily Telegraph understands that the plan could see as much as £500  million from the two protected departments’ budgets reallocated to defence.

The MoD plan is set out in a confidential document being drawn up as part of the Government’s increasingly acrimonious Spending Review, which will allocate departments’ budgets for 2015-16.

Poor economic growth and tax revenues mean the Government is still borrowing £120 billion a year, forcing ministers to extend the austerity programme into the next parliament.

The Treasury is looking for cuts worth £11.5 billion from Whitehall departments whose budgets have not been protected.

Spending on the NHS, schools and international aid has all been ring-fenced in the review.

Spending on defence equipment will rise in 2015-16, but the remaining part of Mr Hammond’s budget, which funds Armed Forces personnel, could be cut by up to 5 per cent.

Defence chiefs have said that could force yet more military redundancies.

To avert such job losses, Mr Hammond is arguing that some of the protected departments’ cash should be transferred to his department.

The Ministry of Defence currently pays hundreds of millions of pounds a year towards the costs of health care for Armed Forces personnel and the education of their children.

In a formal submission to the Treasury due to be made this week, Mr Hammond is expected to argue that cash from the health and education budgets should be “reclassified” to help meet the MoD’s costs.

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