The Department for Transport (DfT) is facing a further £545m spending cut this year the chancellor has announced, as part £4.5bn of new measures to reduce public debt.
The DfT's cash total includes £345m that is set to be raised by bringing forward the sale of land around King’s Cross, which is valued in the department’s accounts at £345m, leaving £200m to come directly from cost savings.
Elsewhere the Department for Communities and Local Government has signed up to £230m of savings, although some of this total has already been generated by better than expected receipts from sales of public land.
As part of the Queen’s Speech debate on the economy, chancellor George Osborne confirmed that Whitehall departments outside of protected areas like the NHS, schools and aid have identified a further £3bn savings in total this financial year or around 3% of unprotected departmental spending.
The rest of the savings will come from Government selling its remaining 30% shareholding in the Royal Mail, which currently has a market value of around £1.5bn.
The Department for Business will start selling the remaining shareholding this year completing the privatisation begun with an Initial Public Offering of shares in October 2013.
Mr Osborne said: ‘It is the right thing to do for the Royal Mail, the businesses and families who depend on it – and crucially for the taxpayer.
‘Further savings in departments this year – and selling our stake in the Royal Mail. Getting on with what we promised. Reducing the deficit – that is how you deliver lasting economic security for working people.
‘For as everyone knows, when it comes to living within your means, the sooner you start the smoother the ride.’
The move is the latest in a series of controversial public sector divestments in recent years, including selling off a profitable stake in Eurostar, a profitable control of the East Coast Mainline and the sale of an earlier stake in Royal Mail, which many agreed undervalued the shares.
Department Savings (£m)
Education non-schools 450
Department for Health non NHS 200
Transport incl. King’s Cross property 545
CLG Communities 230
Business, Innovation and Skills 450
Home Office 30
Foreign and Commonwealth Office 20
Energy and Climate Change 70
Environment, Food and Rural Affairs 83
Culture, Media and Sport 30
Work and Pensions 105
HM Revenue and Customs 80
HM Treasury 7
Cabinet Office 17