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Spending review: Job cuts as Osborne reaches deal with MoD Spending review: Defence jobs cut as Osborne reaches deal
(35 minutes later)
The Ministry of Defence has reached a budget deal which will see a cut in the number of its civilian staff, the chancellor has said. The Ministry of Defence has reached a budget deal which will see further civilian jobs cut but "no reduction in military capacity", George Osborne has said.
But George Osborne told the BBC there would "not be a reduction in our military capability". The chancellor, due to outline £11.5bn of savings across Whitehall in his spending review on Wednesday, added the economy was "out of intensive care".
The announcement comes three days before the spending review for 2015-16, with Mr Osborne saying the economy was out of "intensive care". He also said he was also looking at the affordability of pensioner benefits.
But Labour said the coalition had left the country in a "mess". Labour said the economy was facing a "difficult few years".
Mr Osborne will outline £11.5bn of Whitehall cuts when he delivers his spending review, but is expected to announce investment in infrastructure projects, including roads, railways, education and science. Mr Osborne will outline cuts when he delivers his 2015/16 spending review, but is expected to announce investment in infrastructure projects, including roads, railways, education and science.
'Tough choice''Tough choice'
Speaking on BBC One's Andrew Marr Show, he said: "I've settled with the defence department. Many people thought that was going to be one of the biggest challenges."Speaking on BBC One's Andrew Marr Show, he said: "I've settled with the defence department. Many people thought that was going to be one of the biggest challenges."
He added that he and Defence Secretary Philip Hammond had come to agree on a "tough choice".He added that he and Defence Secretary Philip Hammond had come to agree on a "tough choice".
Mr Osborne said: "The civilian [MoD staff] head count is going to be reduced. There will not be a reduction in military capability."Mr Osborne said: "The civilian [MoD staff] head count is going to be reduced. There will not be a reduction in military capability."
This comes on top of previous reductions in military and civilian staffing, as the government attempts to reduce the budget deficit.This comes on top of previous reductions in military and civilian staffing, as the government attempts to reduce the budget deficit.
But Mr Osborne also announced that £10m a year would be made available to help veterans injured in recent campaigns and their families. But Mr Osborne also announced that £10m a year would be made available to help veterans injured in recent campaigns and their families. This would come from fines imposed for the Libor bank interest rate-fixing scandal.
This would come from fines imposed for the Libor bank interest rate-fixing scandal.
The chancellor said he had not reached a budget deal with Business Secretary Vince Cable for his department, but added that he was "confident we are going to do this in short order".The chancellor said he had not reached a budget deal with Business Secretary Vince Cable for his department, but added that he was "confident we are going to do this in short order".
Amid the cuts, spending on health, schools and overseas aid have been ring-fenced.Amid the cuts, spending on health, schools and overseas aid have been ring-fenced.
Asked if this meant too big a squeeze on other areas of government spending, Mr Osborne said: "They are called ring-fenced, but they are really are the public's priorities." Asked if this meant too big a squeeze on other areas of government spending, Mr Osborne said: "They are called ring-fenced, but they really are the public's priorities."
Mr Osborne said: "I'm confident we are coming out of intensive care and we can turn this country around. There's certainly a chance of a relapse if we abandon our plan."Mr Osborne said: "I'm confident we are coming out of intensive care and we can turn this country around. There's certainly a chance of a relapse if we abandon our plan."
'Big deficit'
Labour has said it would take winter fuel payments from the richest pensioners, but Prime Minister David Cameron made a pledge at the 2010 general election to protect them.
Mr Osborne said that commitment applied to this parliament, without committing to funding pensioner benefits beyond the 2015 election, acknowledging that "we have got to look at how we can afford them".
He added: "When it comes to pensions and pensioner benefits, our society is getting older, we are going to be spending more on our older people. I want to make sure that's sustainable."
Mr Osborne also said: "All those pensioner benefits - not the basic state pension - all those other pensioner benefits, of course we have got to look at how we can afford them.
"I do think the simplest thing that we can do is to increase the pension age as we have done and set out those increases to 66 and 67.
"I don't want pensioners to be impoverished. I want pensioners to have a standard of living that reflects the fact they have worked hard and saved hard all their lives."
Shadow chancellor Ed Balls said the government should do more to boost the economy to avoid the need to make cuts.Shadow chancellor Ed Balls said the government should do more to boost the economy to avoid the need to make cuts.
Mr Balls told BBC One's Andrew Marr Show he was expecting to "inherit a big deficit" after the next general election in 2015. He told BBC One's Andrew Marr Show he was expecting to "inherit a big deficit" after the next general election in 2015.
And he urged the coalition to spend an extra £10bn on infrastructure projects before then, adding: "I fear we could be in for a difficult few years."And he urged the coalition to spend an extra £10bn on infrastructure projects before then, adding: "I fear we could be in for a difficult few years."
Labour leader Ed Miliband has announced that he would not be able to afford to reverse Mr Osborne's cuts should his party come to power at the next election in 2015. Mr Balls said he did not expect to include a VAT cut in Labour's manifesto for the 2015 general election.
He added: "On current spending, day-to-day spending, we're saying we'll have to make changes within their plans, we're not going to be spending more.
"On capital spending, we're saying this year and next year, the chancellor should be investing to get the economy growing."
Labour leader Ed Miliband has announced that he would not be able to afford to reverse Mr Osborne's cuts should his party come to power in 2015.