Spending Review: DfE faces cuts despite schools and childcare investment

Despite the investment, the DfE will still have to find savings of 20 per cent to its core administrative budget, while the education services grant (ESG) will also see £600m stripped out of it as the government looks at reducing the role local government plays in education.

The Treasury Spending Review document states that the government will protect the DfE's central children’s services budget "at over £300 million per year to help drive up social care workforce standards to improve support for vulnerable children".

However, cuts to the ESG will hit a wide range of services - it pays for educational welfare support, school attendance orders and salaries of directors of children's services.

In addition, many funding programmes for disadvantaged children, such as the pupil premium and free school meals, will only be protected in cash terms.

The Chancellor used his hour-long speech to outline an additional £350m to fund the doubling to 30 hours a week of free childcare, which he said would see the government spend £1bn more by 2019/20 on free childcare for disadvantaged two-year-olds, and three- and four-year-olds.

A £23bn capital investment over the parliament will pay for the creation of 500 new free schools, 600,000 additional school places and the refurbishment of 500 schools.

There were concerns that further education colleges and the 16 to 19 learning budget would also be badly hit, but Osborne said they will be protected in cash terms. Further education colleges will also be given the opportunity to apply for academy status.

He was also widely cheered by Conservative MPs with the announcement that the government will develop a new funding system for schools that will aim to tackle some of the historical discrepancies in education budgets.

The axe fell heaviest at the Department for Communities and Local Government, which will see its grant reduce by £6.1bn by 2019/20.

In 2016/17, the amount of funding for councils will reduce by £1.9bn, although the Chancellor claimed these cuts will be offset by changes to rules that will allow councils to generate and keep more local funding.

Unison general secretary Dave Prentis said: “Today was a bad day for local government.

“Local councils have already had to cut billions from their budgets, and now they have to dig even deeper. The closure of more essential local services is inevitable, as councils are forced to lay off thousands of experienced staff over the coming months.

“The day is not far off when councils can only afford to run the services the law demands they do. Non-essential services will either disappear or residents will have to pay much more to use them."

The Ministry of Justice will also need to halve its administrative costs by the end of the parliament, with big savings expected to be made from reorganising the secure estate.

In addition, an improvement in the state of the economy enabled the Chancellor to scrap his controversial plans to cut tax credits by £4bn from 2016.

He also unveiled extra funding for women's charities, and reiterated previous announcements on additional money for mental health services, apprenticeships and the National Citizen Service.

He said the government was on target to deliver its pledged £12bn of benefit savings and return the public coffers to a surplus by 2020. If he delivers this, government spending will fall from 45 to 36.5 per cent of national income.