Chancellor George Osborne was accused of putting 12,000 jobs at risk in Birmingham as he announced in Britain’s biggest spending cuts since the Second World War.
Labour MPs claimed the £81 billion package of cuts would throw thousands on the dole – and could put the public in danger by forcing West Midlands Police to axe staff.
But the Chancellor insisted the cuts would save the Britain’s economy.
Mr Osborne said the painful decisions were “unavoidable” because Labour had left the nation with massive debts, and the country was paying £43 billion a year in interest alone.
And he was able to boast his cuts were lower than expected, because he had managed to find savings of £7 billion a year in welfare bills.
This includes cutting benefits to people claiming to be unable to work because of disability or illness by £2 billion, by ruling that the payment will only be available for a year for everyone except those with the most serious conditions.
The controversial plan to axe child benefit for higher earners will also save the taxman £2.5 billion.
Treasury officials confirmed they had considered also ending child benefit for children aged 16 or above, but eventually concluded the measure was not needed.
It meant the Chancellor was able to boast he was cutting spending in government departments by just 19 per cent on average – less than the 25 per cent he had previously planned and below the 20 per cent cuts Labour had planned.
He was even able to announce funding for transport schemes including the Midland Metro, which will now be extended into the heart of Birmingham.
Trams will run from Snow Hill Station and down Corporation Street before terminating at the redeveloped New Street Station, under the £127.1 million scheme.
And a fleet of new, bigger trams will be introduced onto the existing Black Country line, increasing passenger capacity and frequency of service to every six minutes throughout the day.
The Government’s dramatic reductions in spending included cutting police budgets nationally by a fifth, or £1.2 billion, and cutting local authority budgets by 28 per cent. In a joint statement, Birmingham’s eight Labour MPs said: “The government’s plan to go hell for leather for big cuts almost overnight could see over 12,000 people in Birmingham lose their jobs. It is huge gamble with Birmingham’s future.
“Fewer people in work means less people paying taxes and more claiming benefits. That’s bad for the recovery and is going to make paying down the deficit tougher than ever.”
The figure is based on the Government’s own estimate that 490,000 public sector jobs would be lost across the country over four years, although some of these would be staff who leave and are not replaced rather than sacked.
Labour MP Steve McCabe (Selly Oak) also claimed that police cuts could put the public in danger.
He said: “We are going to lose a phenomenal number of jobs. At the minimum, we will be lucky if we only lose 1,000 officers.”
West Midlands Police Chief Constable Chris Sims said the force would have to cut staff numbers.
He said: “It is going to mean that we have to change the way that we operate and it’s inevitable that, over the next four years, people are going to notice some of these changes.”
Local Government Secretary Eric Pickles said authorities would receive funding to ensure they did not need to cut school budgets or care for the elderly.
He expected councils to save money by sharing senior managers and back office functions with neighbouring authorities, he said. For example, two or three councils could have one chief executive rather than one each.
However, consultants KPMG predicted some authorities could face financial collapse. Iain Hasdell, Partner and UK Head of Local and Regional Government at KPMG, said: “I am expecting this challenge to be beyond some councils, which will run out of cash at some point in the next four years.”
One of the most controversial announcements is likely to be confirmation that new council house tenants will no longer have a council home for life.
Although existing tenants will not be affected by the arrangements, new tenants in any of Birmingham’s 65,000 council homes, or new homes built by the authority and housing associations, will be reviewed regularly to see whether they still need cheap housing.
The Chancellor conceded that 490,000 public sector jobs would be lost over four years, but insisted jobs would be created in the private sector. Major transport schemes in the English regions including the Midland Metro would help the private sector grow, he said.