Gordon Brown is to announce Labour's plans to reduce public spending, which include streamlining of Whitehall and shelving low-priority programmes.

These "efficiency savings", worth £12bn over four years, are intended to show how the government would half Britain's budget deficit.

It comes ahead of Wednesday's pre-Budget report, in which chancellor Alistair Darling is expected to confirm that annual borrowing will top £175 billion.

Brown will announce £3bn additional efficiency savings identified since the Budget in April. Of this figure, £1.3bn will be saved by streamlining central government, meaning that some projects will be postponed or abandoned.

In a speech later today, he will say: "In order to protect the front-line services we value, at a time when budgets are tighter it means we need to do what households up and down the country do to prioritise the necessities and postpone the things we can do without."

Darling said that parts of the £12bn NHS IT system project, which has been beset by delays and extra costs, would be put on hold as it "isn't essential to the front-line". The exact details are yet to be revealed, but the move is expected to save hundreds of millions of pounds.

Brown will say: "The proposals we are setting out in this plan - which is just one element of our efforts to reduce the deficit - will go further than we have ever gone before in streamlining central government.

"We have already promised savings of £35 billion a year by 2011 on top of the £26.5 billion a year already delivered through the Gershon review. But by identifying new ways of working - and being prepared to make the tough choices - we can deliver in excess of another £12 billion in efficiency savings over the next four years.

He will emphasise the role of technology in making services more cost-effective, with a planned £665m saving through the increased use of the internet to deliver government services.

A 50 per cent cut in government spending on consultants and a 25 per cent reduction on marketing and communications should save a total of £650m, while further energy saving measures in Whitehall are to save £300m.

The government's planned full spending review has been delayed until after the general election.

Meanwhile, the Treasury is considering a possible windfall tax on excessive bonuses to bankers. Darling has ruled out a windfall tax on bank profits, amid fears that it would hit the capital position of banks at a time when the government is eager for them to rebuild their finance.

Government sources say a decision will be reached by tomorrow.

 

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