George Osborne sounds 'star chamber' threat to ministers who fail to deliver cuts

Chancellor has demanded £11.5bn in spending reductions, with most Whitehall departments required to find savings of up to 10%

George Osborne sounded warnings ahead of 26 June deadline (PA)

Chancellor George Osborne today warned Cabinet colleagues that they could be hauled in front of his "star chamber" if they fail to deliver the cuts he is demanding for the financial year 2015/16.

Mr Osborne has demanded £11.5 billion in spending reductions, with most Whitehall departments required to find savings of up to 10 per cent. Seven departments have already reached settlements, and the Chancellor today told Cabinet that "several" others were close to doing so.

But he warned that "the clock is ticking" towards the deadline of 26 June, when he will set out departmental budget settlements in the Spending Review for 2015/16, and made clear he is ready to convene the "star chamber" to examine the proposals of ministers who fail to reach settlements.

Mr Osborne and Chief Secretary to the Treasury Danny Alexander updated senior colleagues on progress towards the Spending Review at this morning's weekly meeting of Cabinet in 10 Downing Street.

Prime Minister David Cameron's official spokesman told reporters: "It was an opportunity for the Chancellor and Chief Secretary to explain where things are and the fact that we are ahead of where we expected to be, and a reminder - if one were needed - that for those departments that haven't settled, the clock is ticking."

The spokesman said that no ministers had put forward a case during this morning's discussions for their departments to be spared from further cuts. And he declined to say how many are now close to reaching settlements.

The NHS, schools and international aid have been protected by a "ringfence" from cuts in this spending round. But other departments - including the Home Office, defence and environment - are believed to be resisting reductions in their budgets, earning their Secretaries of State Theresa May, Philip Hammond and Owen Paterson the nickname of the National Union of Ministers.

The "star chamber" - officially known as the public expenditure committee - is Mr Osborne's ultimate weapon in bringing ministers into line.

Along with himself and Mr Alexander, it includes former chancellor Kenneth Clarke and Cabinet Office minister Oliver Letwin, and can co-opt ministers from departments which have reached settlements, whose presence is thought to increase pressure on holdouts to show a similar willingness to accept sacrifices.

It met several times to discuss broad strategy on issues like efficiency savings during the 2010 spending round, but was not called upon to interrogate any individual ministers, as Mr Osborne was able to reach agreement with all of them bilaterally.

Mr Osborne announced last week that seven departments - the justice, energy, and communities departments, the Cabinet Office, Treasury, the Foreign Office and Northern Ireland - had reached settlements delivering 20 per cent of the savings he is seeking across government as a whole.

Following the Cabinet session, Mr Cameron's spokesman said that there was "complete agreement around the table about the Government's deficit reduction approach and objectives".

The overall message of Mr Osborne and Mr Alexander's presentation to Cabinet was that "the Government is ahead of where it expected to be, seven departments have already settled, good progress is being made", said the spokesman, adding: "They were able to indicate that several departments are in the final stages of settling."

PA